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U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
Form 10-Q
 
(Mark One)
     
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended February 29, 2012
 
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission File Number
 
LUX DIGITAL PICTURES, INC.
(Exact name of registrant as specified in its charter)
 
Wyoming
 
22-2589503
(State or other jurisdiction of
incorporation or organization)
 
(IRS Employer
Identification No.)
 
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 x  No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the  preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes   o No
 
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.
 
Large accelerated filer o Accelerated filer o
Non-accelerated filer o Smaller reporting company x
(Do not check if a smaller reporting company)      
 
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 5, 2012 the Company’s stock has a bid price of $.0018 and an ask price of $.0025 per share.

At April 5, 2012, there were 132,600,547 shares outstanding of the Company’s common stock.
 


 
 

 
 
LUX DIGITAL PICTURES, INC.
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED November 30, 2011
 
     
Page
 
     
Number
 
PART I. FINANCIAL INFORMATION
         
Item 1.
Financial Statements
  3  
         
 
Balance Sheets at May 31, 2010 (unaudited) and August 31, 2009 (audited)
    F-2  
           
 
Statements of Operations for the three and six months ended May 31, 2010 and 2009 (unaudited)
    F-3  
           
 
Statement of Shareholders’ Equity of as of May 31, 2010 (unaudited)
    F-4  
           
 
Statements of Cash Flows for the three and six months ended May 31, 2010 and 2009  (unaudited)
    F-5  
           
 
Notes to  Financial Statements
    F-6  
           
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
    4  
           
Item 3.
Controls and Procedures
    6  
           
PART II. OTHER INFORMATION
           
Item 1.
Legal Proceedings
    7  
           
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds 
    7  
           
Item 3.
Defaults upon senior securities
    7  
           
Item 4.
Submissions of matters to a vote of securities holders
    7  
           
Item 5.
Other Information
    7  
           
Item 6.  
Exhibits
    8  
           
 
Exhibit 31.1
 
 
Exhibit 32.1
 
 
 
2

 
 
 
PART I — FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS


 
 
 
 
 
 
LUX DIGITAL PICTURES, INC.

FINANCIAL STATEMENTS

FEBRUARY 29, 2012
 
 
 
 
 
 
 
3

 
 
LUX DIGITAL PICTURES, INC.

TABLE OF CONTENTS

FEBRUARY 29, 2012
 
CONTENTS

    PAGE  
         
Balance Sheets as of February 29, 2012 and August 31, 2011 (Unaudited)
    F-2  
         
Statements of Operations for the three and six months ended February 29, 2012 and February 28, 2011 (Unaudited)
    F-3  
         
Statement of Stockholders’ Equity as of February 29, 2012 (Unaudited) 
    F-4  
         
Statements of Cash Flows for the six months ended February 29, 2012 and February 28, 2011 (Unaudited)
    F-5  
         
Notes to the Financial Statements
    F-6 to F-13  
 
 
F-1

 
 
LUX DIGITAL PICTURES, INC.
BALANCE SHEETS (UNAUDITED)
AS OF FEBRUARY 29, 2012 AND AUGUST 31, 2011
 
   
February 29,
2012
   
August 31,
2011
 
ASSETS
Current Assets
           
Cash
  $ 148,272     $ 34,928  
Accounts receivable
    189,347       248,700  
                 
Total Current Assets
    337,619       283,628  
                 
Property and equipment, net
    6,242       6,810  
                 
Other Assets
               
Unamortized film costs, net
    327,432       295,414  
                 
TOTAL ASSETS
  $ 671,293     $ 585,852  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
                 
Liabilities
               
Current Liabilities
               
Accounts payable
  $ 2,748     $ 22,020  
Accrued interest
    16,058       15,573  
Estimated costs to complete films
    25,000       15,000  
Note payable – legal
    17,997       17,997  
Note payable – shareholder
    0       13,500  
Note payable – shareholder
    13,575       15,050  
Convertible note payable
    157,000       28,500  
Total Current Liabilities
    232,378       127,640  
                 
STOCKHOLDERS’ EQUITY
               
Common stock (1,000,000,000 shares authorized; $.001 par value; 128,391,023 and 61,268,701 shares issued and outstanding, respectively)
    128,390       61,268  
Preferred stock (10,000,000 shares authorized; $.001 par value; 0 and 2,500,000 shares issued and outstanding, respectively)
    0       2,500  
Paid in capital
    689,729       704,008  
Treasury stock
    400       400  
Accumulated deficit
    (379,604 )     (309,964 )
Total Stockholders’ Equity
    438,915       458,212  
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  $ 671,293     $ 585,852  
 
The accompanying notes are an integral part of the financial statements.
 
 
F-2

 
 
LUX DIGITAL PICTURES, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 29, 2012 AND FEBRUARY 28, 2011
 
   
Three months
ended
February 29, 2012
   
Three months
ended
February 28, 2011
   
Six months
ended 
February 29, 2012
   
Six months
ended 
February 28, 2011
 
                         
GROSS REVENUES
  $ 15,981     $ 43,021     $ 26,865     $ 61,247  
                                 
OPERATING EXPENSES
                               
Bank fees
    153       193       246       258  
Consulting fees
    2,500       4,951       15,000       8,972  
Depreciation
    284       0       567       0  
Filing fees
    2,135       631       2,894       501  
General administrative expenses
    6,819       7,124       10,480       9,187  
Insurance
    1,509       1,151       4,595       5,322  
Licenses
    0       0       0       0  
Marketing
    0       150       0       150  
Office expenses
    690       1,627       690       3,913  
Professional fees/Compensation
    6,900       1,335       18,120       5,885  
Travel
    0       696       0       4,176  
Utilities
    778       519       1,772       1,507  
Amortization of film costs
    12,373       12,000       36,307       19,500  
Impairment of film costs
    0       0       0       0  
TOTAL OPERATING EXPENSES
    34,141       30,377       90,671       59,371  
                                 
INCOME (LOSS) FROM OPERATIONS
    (18,160 )     12,644       (63,806 )     1,876  
                                 
OTHER INCOME (EXPENSE)
                               
Impairment of prepaid advertising
    0       0       0       0  
Interest income
    28       22       37       116  
Interest expense
    (3,446 )     (2,049 )     (5,873 )     (4,121 )
Recovery of bad debt
    0       0       0       0  
Bad debt expense
    0       0       0       0  
TOTAL OTHER INCOME (EXPENSE)
    (3,418 )     (2,027 )     (5,836 )     (4,005 )
                                 
LOSS BEFORE PROVISION FOR INCOME TAXES
    (21,578 )     10,617       (69,642 )     (2,129 )
                                 
(PROVISION) BENEFIT FOR INCOME TAX EXPENSE
    0       5,155       0       820  
                                 
NET LOSS
  $ (21,578 )   $ 5,462     $ (69,642 )   $ (2,949 )
                                 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING FOR THE PERIOD
    128,391,023         50,554,694       98,791,985       50,413,270  
                                 
NET LOSS PER SHARE
  $ (0.00 )   $ 0.00     $ (0.00 )   $ (0.00 )
 
The accompanying notes are an integral part of the financial statements.
 
 
F-3

 
 
LUX DIGITAL PICTURES, INC.
STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)
AS OF FEBRUARY 29, 2012
 
   
Common Stock
   
Preferred Stock
   
Additional
Paid in
Capital
   
 
Treasury
Stock
   
Accumulated
Deficit
    Total  
   
Shares
   
Amount
   
Shares
   
Amount
                                                 
Balance, August 31, 2010
    50,273,400       50,273       2,500,000       2,500       673,503       400       (104,344 )     622,332  
                                                                 
Issuance of common stock in exchange for convertible debt
    10,995,301       10,995       -       -       30,505       -       -       41,500  
                                                                 
Net loss for the year ended August 31, 2011
    -       -       -       -       -       -       (205,620 )     (205,620 )
                                                                 
Balance, August 31, 2011
    61,268,701     $ 61,268       2,500,000     $ 2,500     $ 704,008     $ 400     $ (309,964 )   $ 458,212  
                                                                 
Issuance of common stock in exchange for convertible debt
    6,272,322       6,272       -       -       27,571       -       -       33,843  
                                                                 
Issuance of common stock in exchange for services at $.01/sh
    1,650,000       1,650       -       -       14,850       -       -       16,500  
                                                                 
Conversion of preferred shares for common
    25,000,000       25,000       (2,500,000 )     (2,500 )     (22,500 )     -       -       -  
                                                                 
Issuance of anti-dilution common shares
    34,200,000       34,200       -       -       (34,200 )     -       -       -  
                                                                 
Net loss for the six months ended February 29, 2012
    -       -       -       -       -       -       (69,642 )     (69,642 )
                                                                 
Balance February 29, 2012
    128,391,023     $ 128,390       -     $ -     $ 689,729     $ 400     $ (379,604 )   $ 438,915  
 
The accompanying notes are an integral part of the financial statements.
 
 
F-4

 
 
LUX DIGITAL PICTURES, INC.
STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED FEBRUARY 29, 2012 AND FEBRUARY 28, 2011
 
   
Six months
ended
February 29, 2012
   
Six months
ended 
February 28, 2011
 
             
Cash Flows from Operating Activities:
           
Net loss for the year
  $ (69,642 )   $ (2,949 )
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
               
Depreciation
    567       0  
Stock issued for services
    4,000       0  
Stock issued for accrued interest in convertible loan
    5,343       10,000  
Stock issued as compensation
    12,500       0  
Amortization of film assets
    36,307       19,500  
Deferred tax provision
    0       820  
Changes in Assets and Liabilities
               
(Increase) decrease in accounts receivable
    59,353       (45,937 )
(Increase) decrease in prepaid consulting
    0       8,042  
Increase (decrease) in accounts payable
    (19,269 )     (4,942 )
Increase (decrease) in accrued interest – related parties
    485       4,121  
Increase (decrease) in estimated cost to complete films
    10,000       0  
Net Cash Provided by (Used in) Operating Activities
    39,644       (11,345 )
                 
Cash Flows from Investing Activities:
               
Purchase of assets
    0       0  
Investment in new films
    (68,325 )     (57,627 )
Net Cash Used in Investing Activities
    (68,325 )     (57,627 )
                 
Cash Flows from Financing Activities:
               
Repayment of loans
    (14,975 )     0  
Proceeds from loans
    0       0  
Proceeds (repayment) convertible note payable – related party
    157,000       (10,000 )
Net Cash Provided by (Used in) Financing  Activities
    142,025       (10,000 )
                 
Net Increase (Decrease) in Cash and Cash Equivalents
    113,344       (78,972 )
Cash and Cash Equivalents – Beginning
    34,928       133,537  
Cash and Cash Equivalents – Ending
  $ 148,272     $ 54,565  
                 
Supplemental Cash Flow Information:
               
Cash Paid for Interest
  $ 0     $ 0  
Cash Paid for Income Taxes
  $ 0     $ 0  
Supplemental Non-Cash Investing and Financing Transactions
               
Conversion of debt to common stock
  $ 33,843     $ 10,000  
Reclassification of accounts receivable to unamortized film costs
  $ 0     $ 0  
 
The accompanying notes are an integral part of the financial statements.
 
 
F-5

 
 
LUX DIGITAL PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2012

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.

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, 2011.  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.

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.

Property and Equipment
The capital assets are being depreciated over their estimated useful lives using the straight-line method of depreciation for book purposes.

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.

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. See Note 4.
 
 
F-6

 
 
LUX DIGITAL PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2012

NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

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.

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 3.

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 9.

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.
 
 
F-7

 
 
LUX DIGITAL PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2012

NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

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 29, 2012 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.

NOTE 2:  PROPERTY AND EQUIPMENT

Property and equipment consist of the following as of February 29, 2012 and August 31, 2011:

   
February 29,
2012
   
August 31,
2011
 
Furniture and fixtures
  $ 7,945     $ 7,945  
Less accumulated depreciation
    (1,703 )     (1,135 )
Property and equipment, net
  $ 6,242     $ 6,810  

NOTE 3:  UNAMORTIZED FILM COSTS

Unamortized Film Costs included the following:

   
February 29,
2012
   
August 31,
2011
 
Night of the Living Dead 3D,
  $ 59,221     $ 59,221  
Nightmares in Red, White and Blue, American Grindhouse
    138,376       138,181  
Area 51: The Alien Interview film assets
    200,000       200,000  
Acquisition of remaining 50% of Alien film
    33,400       33,400  
Production contracts
    26,000       26,000  
Media insurance and legal opinion
    38,771       38,771  
SAG residuals
    7,500       7,500  
Films of Fury
    120,018       119,847  
Gameplay
    60,446       45,304  
Money for Nothing
    80,242       51,135  
Night of the Living Dead 3D Prequel
    88,522       76,386  
ModRock
    7,219       0  
Yoga Project
    3,810       0  
New Project
    545       0  
Total Unamortized Film Costs
    864,070       795,745  
Less: amortization
    (144,994 )     (108,687 )
Less: impairment charges
    (391,644 )     (391,644 )
Unamortized Film Costs, net
  $ 327,432     $ 295,414  
 
 
F-8

 
 
LUX DIGITAL PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2012

NOTE 3:  UNAMORTIZED FILM COSTS (CONTINUED)

Unamortized film costs assigned to film asset purchases and film production and marketing expenses include costs for completed motion pictures “Night of the Living Dead 3D”, “Nightmares in Red, White and Blue”, “American Grindhouse” and “Area 51: The Alien Interview”, all of which remain in worldwide distribution, and recently completed motion pictures “Films of Fury” and the ‘prequel’ to “Night of the Living Dead 3D”, “Night of the Living Dead 3D:Reanimation”, as well as two films still in production “Gameplay” and “Money For Nothing”, and development projects “ModRock” and the “Yoga Project” and certain production contracts, media insurance and legal costs.

The Company originally issued shares of its stock in 2008 valued at $397,402 to acquire films assets including “Night of the Living Dead 3D”, two films in developments and an interest in “Area 51; The Alien Interview” and, subsequently, forgave an additional $33,400 in debt to acquire full ownership of “Area 51: The Alien Interview”. In its fiscal year ended August 31, 2010 the Company, in addition to its customary amortization of these capitalized expenses, recognized a $195,411 impairment charge to “Area 51: The Alien Interview” based on conservative estimates of future revenues. The other original films and projects continue to meet revenue forecasts and the Company has amortized an additional $31,500 for these films for the fiscal year ended August 31, 2011.

The Company has secured both domestic and international distribution for its recently completed motion picture “Films of Fury” and has entered into licensing contracts which provide for advance guarantees. The Company is conservatively estimating that this film will not, likely, earn revenues beyond the contracted guarantees, during the next two years, so it is electing to fully impair the $120,018 in costs accrued in connection with the production and marketing of this film  as of the period ending February 29, 2012.

 The Company’s motion picture ‘Night of the Living Dead 3D: Reanimation” was completed at the end of 2011 and the Company has contracted for its worldwide distribution, which provides for an advance guarantee payable to the Company for these rights. The Company estimates that it will not collect additional revenues beyond the advance guarantee, within the next two years, so it has, elected to impair the aggregate of $88,300 of its investment in this film as of the Quarter ending February 29, 2012.

The Company’s motion pictures “Gameplay” and “Money For Nothing” continue to progress in production and are expected to be completed in early 2012. The Company will begin to amortize those capitalized expenses once the films have been delivered and distribution is determined.

During the period the ended February 29, 2012, the Company initiated and began developing two new projects  a documentary film on the yoga industry tentatively entitled the “Yoga Project” and a stage musical investment entitled “ModRock”. Expenses for both projects will be amortized in the ordinary course.
 
 
F-9

 
 
LUX DIGITAL PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2012
 
NOTE 4: 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. In its 3rd Quarter of its fiscal year ending August 31, 2011 the Company determined that there was no, current, certainty that this assets would be, timely, utilized so the asset has been determined to be impaired and an expense of $100,000 has been recognized. The carrying value of the prepaid advertising is $0 at February 29, 2012.
 
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 $0 as of February 29, 2012.

NOTE 5: NOTE PAYABLE – LEGAL

The Company entered into negotiations, during the period for a reverse merger.  After careful due diligence it was determined that the prospective merger candidate misrepresented itself and its financial position thus ending the reverse merger.  The prospective merger candidate had a written contract to assume all legal costs in connection with the transaction however they failed to pay the debts.  The Company has assumed the legal costs believing that it may have use for the work product in the future.  The Company entered into an unsecured note with a law firm as means of paying these legal fees. The terms of the note are 7.5% interest with full payment due on or before July 31, 2012.  The balance of the note payable at February 29, 2012 is $17,997, with interest for the six months ending February 29, 2012 of $674.

NOTE 6: NOTES PAYABLE – SHAREHOLDERS

The Company’s principal shareholder, Lux Digital Pictures GmbH Partners loaned the Company $15,050 on May 29, 2008. The loan is unsecured, bears 18% interest and is due on demand. A principal payment of $1,475 was made on January 20, 2012 reducing the balance to $13,575. Interest expense of $639 was recorded on this loan during the three months ended February 29, 2012.

The Company’s CEO loaned the Company $13,500 on March 30, 2011. The loan is unsecured, bears no interest if the balance is paid in full by December 31, 2011. If unpaid at that date the Company agrees to pay 10% interest and the loan becomes is due on demand. This loan was completely paid off during the quarter ended February 29, 2012. Interest expense of $0 was recorded on this loan during the three months ended February 29, 2012.
 
 
F-10

 
 
LUX DIGITAL PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2012
 
NOTE 7: CONVERTIBLE NOTE PAYABLE

The Company issued a convertible note for $70,000 to an unrelated party on May 14, 2010.  The note bore 8% interest and matured on February 14, 2011. The note was fully converted into common shares of the Company as follows:

On February 9, 2011, the Company converted $10,000 of the loan to 1,265,823 shares of common stock.

On August 10, 2011, the Company converted $31,500 of the loan to 9,729,478 shares of common stock.

On September 6, 2011 the Company converted $9,878 of the loan to 2,173,913 shares of common stock.

On September 9, 2011 the Company converted $6,955 of the loan to 1,530,612 shares of common stock.

On September 14, 2011 the Company converted $6,816 of the loan to 1,500,000 shares of common stock.

On September 20, 2011 the Company converted $4,852 of the loan to 1,067,797 shares of common stock.

The Company, subsequently, issued a second convertible note for $78,500 to the same unrelated party on September 27, 2011. The note bears 8% interest and will mature on May 27, 2012. 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 $1,566 was recorded on this loan for the three months ended February 29, 2012.

The Company, subsequently, issued a third convertible note for $78,500 to the same unrelated party on December 28, 2011. The note bears 8% interest and will mature on May 27, 2012. 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 $860 was recorded on this loan for the three months ended February 29, 2012.
 
NOTE 8: 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.
 
 
F-11

 
 
LUX DIGITAL PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2012

NOTE 8: STOCKHOLDERS’ EQUITY (CONTINUED)

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.

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 and these shares were converted to common on November 28, 2011.

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.

On August 10, 2011, the Company issued 9,729,478 shares of common stock in exchange for $31,500 of the convertible note payable.

On September 6, 2011 the Company issued 2,173,913 shares of common stock in conversion of $9,878 of convertible debt.

On September 9, 2011 the Company issued 1,530,612 shares of common stock in conversion of $6,955 of convertible debt.

On September 13, 2011 the Company issued 1,250,000 shares of common stock as a result of a Management Agreement with its CEO to provide him 1,250,000 shares of common stock each quarter, for a year, in lieu of any cash compensation. The Company has booked an expense of $12,500 for these shares for the period ending November 30, 2011. The Company filed a Form S-8 Registration Statement No. 333-177311 which was declared effective October 14, 2011.

On September 14, 2011 the Company issued 1,500,000 shares of common stock in conversion of $6,816 of convertible debt.

On September 20, 2011 the Company issued 1,067,797 shares of common stock in conversion of $4,852 of convertible debt.

On November 21, 2011 the Company issued 400,000 shares of common stock as payment for legal services received.
 
 
F-12

 
 
LUX DIGITAL PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2012

NOTE 8: STOCKHOLDERS’ EQUITY (CONTINUED)

On November 28, 2011 the Company issued 25,000,000 shares of common stock in conversion of 2,500,000 shares of its own preferred stock.

On November 28, 2011 the Company issued 34,200,000 shares of common stock to its principal shareholder in resolution of an anti-dilution provision.

The Company had 128,391,023 shares of common stock issued as of March 19, 2012.

NOTE 9 – INCOME TAXES

The components of the provision for income tax expense (benefit) are as follows:

   
February 29,
2012
   
February 28,
2011
 
Current:
           
Federal corporate income tax (20%)
  $ 0     $ 500  
State corporate income tax (13%)
    0       320  
Total
    0       820  
Deferred:
               
Federal corporate income tax
    (13,928 )     0  
State corporate income tax
    (9,053 )     0  
Less: valuation allowance
    22,981       0  
Total
    0       0  
                 
Total Provision (Benefit) for Income Taxes
  $ 0     $ 820  

NOTE 10 – 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 11 – SUBSEQUENT EVENTS

In accordance with ASC Topic 855-10, the Company has analyzed its operations subsequent to February 29, 2012 to the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these financial statements other than the events discussed above.
 
 
F-13

 

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 in the digital 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 only been able to raise limited amounts of new capital, at this point, to grow and expand its businesses and it is actively seeking opportunities to capitalize, re-capitalize the Company, acquire affiliated and unaffiliated businesses and assets or combine or sell the Company in a manner that will be beneficial to shareholders. The Company hired an outside advisor during the 1st Quarter of its fiscal 2012 to help it develop strategies, review opportunities and evaluate affiliate assets and in early April 2012 the Company was in active negotiations with a business to do a reverse merger via an asset acquisition or other combination. As of this filing there were, however, no binding agreements in place nor is there any assurance that such a transaction will occur in the near future.
 
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 29, 2012

Assets

As of the three months ending February 29, 2012 the Company had Total Assets of $671,293, Total Current Liabilities of $232,378 and Total Stockholders’ Equity of $438,915 compared with Total Assets of $585,852, Total Current Liabilities of $127,640 and Total Stockholders’ Equity of $458,212 for the Company’s prior fiscal year ending August 31, 2011. The increase in Company assets in the current three month period is, principally, attributable to increased capitalized production expense and to receiving cash from a new Convertible Note.

 
4

 
 
Revenue and Operating Expense and Net Income

For the three months ending February 29, 2012 the Company had a Net Loss of $21,578, Gross Revenues of $15,981, and Total Operating Expenses of $34,141 compared with a Net Income of $5,462, Gross Revenues of $43,021 and Total operating Expenses of $30,377 for the Company’s three month period ending February 29, 2012. The  Net Loss in this period is due, primarily, to the Company amortizing more of its film costs, increased professional and consulting fees, the retirement of a shareholder note and collecting less film product revenue. Revenues decline in the period, primarily, due to older film product producing less domestic revenue and the Operating Expenses increased, primarily, due to incurring more professional and consulting fees during the period.

Liquidity and Capital Resources

As of the period ending February 29, 2012 the Company had $148,272 in cash, $189,347 in Accounts Receivable and $327,432 in net unamortized film costs. As of August 31, 2011 the Company had $34,928 in cash, $248,700 in Accounts Receivable and $295,414 in net unamortized film costs. The Company’s cash was, primarily, generated from its motion picture distribution and a new Convertible Note for $78,500. The increase in cash is due, primarily, to the receipt of the funds from the Convertible Note. The Company believes it has sufficient cash resources available to fund its primary operations for the next twelve (12) months subject to the timely collection of its Account Receivables. The Company cannot, however, fully fund its prospective digital online business concepts or grow the Company in any material way until it is able to raise additional monies. 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 S-1 accepted by the SEC on May 21, 2009. During the three months ending February 29, 2012 there have been no significant changes in our critical accounting policies.

Recent Accounting Pronouncements

During the three months ending February 29, 2012 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 29, 2012 the Company believes it has sufficient cash resources available to fund its primary operations for the next twelve (12) months.  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 and via the conversion of Notes; however, as of April 3, 2012 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.

 
5

 
 
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 29, 2012.  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.
 
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 29, 2012, our Chief Executive Officer and Chief Financial Officer as of February 29, 2012, 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.
 
 
6

 
 
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 29, 2012, 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.

PART II. OTHER INFORMATION
 
ITEM 1. LEGAL PROCEEDINGS

The Company is not, currently, party to any legal proceeding.
 
ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
None
 
ITEM 3.  DEFAULTS UPON SENIOR SECURITEIES
 
None
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
None

ITEM 5.  OTHER INFORMATION
 
None

 
7

 
 
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.)
 
101.INS **
 
XBRL Instance Document
     
101.SCH **
 
XBRL Taxonomy Extension Schema Document
     
101.CAL **
 
XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF **
 
XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB **
 
XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE **
 
XBRL Taxonomy Extension Presentation Linkbase Document
__________
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
 
 
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 13, 2012
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 13, 2012
By:
/s/ Ingo Jucht  
    Name: Ingo Jucht  
    Title:   Director