Attached files

file filename
EXCEL - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.Financial_Report.xls
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R3.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R2.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R7.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R6.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R5.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R4.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R9.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R8.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R1.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R18.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R14.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R22.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R11.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R17.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R20.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R21.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R13.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R10.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R12.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R16.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R19.htm
XML - IDEA: XBRL DOCUMENT - FUTURA PICTURES, INC.R15.htm
EX-31.1 - FUTURA PICTURES, INC.ex31-1.htm
EX-32.1 - FUTURA PICTURES, INC.ex32-1.htm
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

  Form 10-Q
(Mark One)
[X]
Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended November 30, 2012

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

Commission File Number: 333-123611

FUTURA PICTURES, INC.
(Exact name of small business issuer as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)
56-2495218
(I.R.S. Employer Identification No.)

17337 Ventura Boulevard, Suite 216
Encino, California    91316
Issuer's Telephone Number:  (818) 784-0040
(Address and phone number of principal executive offices)

Indicate by a check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X]   No [  ]

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [_]
Accelerated filer [_]
Non-accelerated filer [_]
Smaller reporting company [X]

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

The Registrant has 1,599,750 shares of Common stock, par value $.0001 per share issued and outstanding as of December 31, 2012.
 
 
1

 

INDEX TO QUARTERLY REPORT
ON FORM 10-Q


PART 1
FINANCIAL INFORMATION
Page
     
Item 1.
Financial Statements (Unaudited)
 
 
Condensed Balance Sheets
 
 
November 30, 2012 and February 29, 2012
4
 
Condensed Statements of Operations
 
 
For the Three and Nine Month Periods Ended
November 30, 2012 and 2011
 
5
 
Condensed Statements of Stockholders' Deficit
 
 
For the Nine Months Ended November 30, 2012
6
 
Condensed Statements of Cash Flows
 
 
For the Nine Months Ended November 30, 2012 and 2011
7
 
Notes to Condensed Financial Statements
8
     
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
14
     
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
20
     
Item 4.
Controls and Procedures
20
     
PART II
OTHER INFORMATION
 
     
Item 1.
Legal Proceedings
21
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
21
     
Item 3.
Defaults upon Senior Securities
21
     
Item 4.
Mine Safety Disclosures
21
     
Item 5.
Other Information
21
     
Item 6.
Exhibits
21
     
Signatures
22


 
2

 

FINANCIAL INFORMATION

ITEM 1.                 FINANCIAL STATEMENTS

(Financial Statements Commence on Following Page)







 
3

 

FUTURA PICTURES, INC.
CONDENSED BALANCE SHEETS


   
November 30,
2012
(Unaudited)
   
February 29,
2012
 
ASSETS
           
Cash
  $ 4,408     $ 2,409  
Accounts receivable
    11,207       2,483  
Prepaid expenses
    -       270  
Deposits
    900       900  
                 
TOTAL ASSETS
  $ 16,515     $ 6,062  
                 
                 
                 
LIABILITIES
               
Line of credit
  $ -     $ 39,421  
Accrued expenses
    24,164       41,708  
Unearned revenue
    100       100  
Accrued interest – related party
    28,922       18,205  
Loan payable – related party
    189,354       98,989  
                 
TOTAL LIABILITIES
    242,540       198,423  
                 
STOCKHOLDERS’ DEFICIT
               
Common stock, par value $0.0001 per share
       Authorized – 100,000,000 shares
       Issued and outstanding – 1,599,750 shares
    160       160  
Additional paid-in capital
    348,204       317,004  
Accumulated deficit
    (574,389 )     (509,525 )
                 
TOTAL STOCKHOLDERS’ DEFICIT
    (226,025 )     (192,361 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
  $ 16,515       6,062  
 
The accompanying notes are an integral part of these financial statements.
 
 
4

 
 
FUTURA PICTURES, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2012 AND 2011
UNAUDITED
 
 
   
For the Three
Months Ended
November 30,
2012
   
For the Three
Months Ended
November 30,
2011
   
For the Nine
Months Ended
November 30,
2012
   
For the Nine
Months Ended
November 30,
2011
 
                         
REVENUE
  $ 23,668     $ 17,598     $ 59,000     $ 58,089  
                                 
COST OF REVENUE
    4,340       1,861       12,050       11,180  
                                 
GROSS PROFIT
    19,328       15,737       46,950       46,909  
                                 
OPERATING EXPENSES
                               
Selling, general and administrative
    29,892       31,260       97,074       98,260  
                                 
TOTAL OPERATING EXPENSES
    29,892       31,260       97,074       98,260  
                                 
(LOSS) FROM OPERATIONS
    (10,564 )     (15,523 )     (50,124 )     (51,351 )
                                 
OTHER INCOME (EXPENSE)
                               
Other income
    -       283       -       1,487  
Interest expense
    (4,457 )     (4,238 )     (13,940 )     (11,926 )
                                 
TOTAL OTHER INCOME (EXPENSE)
    (4,457 )     (3,955 )     (13,940 )     (10,439 )
                                 
(LOSS) BEFORE INCOME TAXES
    (15,021 )     (19,478 )     (64,064 )     (61,790 )
                                 
Income tax expense
    -       -       800       800  
                                 
NET (LOSS)
  $ (15,021 )   $ (19,478 )   $ (64,864 )   $ (62,590 )
                                 
NET (LOSS) PER COMMON SHARE
                               
Basic and diluted
  $ (0.01 )   $ (0.01 )   $ (0.04 )   $ (0.04 )
                                 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
                               
Basic and diluted
    1,599,750       1,599,750       1,599,750       1,599,750  
 
The accompanying notes are an integral part of these financial statements.
 
 
5

 
 
FUTURA PICTURES, INC.
CONDENSED STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR THE NINE MONTHS ENDED NOVEMBER 30, 2012 AND 2011
UNAUDITED
 
 
    Common Stock                    
    Shares     Amount    
Additional
Paid-in Capital
    Accumulated Deficit    
Total
Stockholders’
Equity (Deficit)
 
Balance, March 1, 2012
    1,599,750     $ 160     $ 317,004     $ (509,525 )   $ (192,361 )
                                         
Contributed services
    -       -       31,200       -       31,200  
                                         
Net loss for the nine months ended November 30, 2012
    -       -       -       (64,864 )     (64,864 )
                                         
Balance, November 30, 2012
    1,599,750     $ 160     $ 348,204     $ (574,389 )   $ (226,025 )
 
The accompanying notes are an integral part of these financial statements.
 
 
6

 
 
FUTURA PICTURES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED NOVEMBER 30, 2012 AND 2011
UNAUDITED
 
 
   
2012
   
2011
 
             
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net loss
  $ (64,864 )   $ (62,590 )
Adjustments to reconcile net loss to net cash (used) by operating activities:
               
Amortization expense
    270       271  
Contributed services
    31,200       31,200  
Changes in operating assets and liabilities:
               
     Accounts receivable
    (8,724 )     (1,154 )
     Prepaid expenses
    -       2  
     Accrued expenses
    (6,827 )     6,311  
                 
  NET CASH USED BY  OPERATING ACTIVITIES
    (48,945 )     (25,960 )
                 
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Repayments on line of credit
    (39,421 )     -  
Proceeds from loan payable – related party
    90,365       24,550  
Repayment of loan payable – related party
    -       (4,315 )
                 
  NET CASH PROVIDED BY FINANCING ACTIVITIES
    50,944       20,235  
                 
NET INCREASE (DECREASE) IN CASH
    1,999       (5,725 )
                 
CASH AT THE BEGINNING OF THE PERIOD
    2,409       9,683  
                 
CASH AT THE END OF THE PERIOD
  $ 4,408     $ 3,958  
                 
                 
NON-CASH INVESTING AND FINANCING ACTIVITIES:
               
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                
    Interest paid   $ 3,223     $ 7,048  
    Taxes paid   $ 800     $ 800  
 
The accompanying notes are an integral part of these financial statements.
 
 
7

 
 
FUTURA PICTURES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOVEMBER 30, 2012
UNAUDITED

NOTE 1                 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Nature of Business

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

As a result of not being able to raise the necessary funds to either co-finance or produce any motion pictures, management changed the Company’s business plan to that of producing and distributing selfimprovement/educational DVDs and workforce training programs.

Effective January 1, 2011, pursuant to an Asset Transfer, Assignment and Assumption Agreement, we acquired from Progressive Training, Inc. all of its assets and liabilities related to Progressive’s workforce training business.

Unclassified Balance Sheet

The Company has elected to present an unclassified balance sheet.

Use of Estimates

Interim financial reporting standards require us to make estimates that are based on assumptions regarding the outcome of future events and circumstances not known at that time, including the use of estimated effective tax rates. Inevitably, some assumptions will not materialize, unanticipated events or circumstances may occur which vary from those estimates and such variations may significantly affect our future results. Additionally, interim results may not be indicative of our results for future interim periods or our annual results.

Disclosure About Fair Value of Financial Instruments

The Company estimates that the fair value of all financial instruments at November 30, 2012 does not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying balance sheet.  The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies.  Considerable judgment is required in interpreting market data to develop the estimates of fair value, and accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

 
8

 
 
Concentrations and Credit Risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of accounts receivable.

Two customers represented approximately 48% (11% and 37%) of total accounts receivable as of November 30, 2012.  Five customers represented approximately 89% (11%, 12%, 19%, 23%, and 24%) of total accounts receivable as of February 29, 2012.

Two customers in the three months ended November 30, 2012 and 2011 represented approximately 25% (14% and 11%) and 37% (11% and 26%), respectively, of total revenues for those periods.  Three and one customer(s) in the nine months ended November 30, 2012 and 2011, respectively, represented approximately 33% (10%, 12% and 11%) and 21%, respectively, of total revenues for those periods.
No other customers represented greater than 10% of total revenues in the three and nine months ended November 30, 2012 and 2011, or total accounts receivable at November 30, 2012 and February 29, 2012.

Revenue Recognition

Sales are recognized upon shipment of videos to the customer or upon website download by the customer. The Company's products may not be returned by the customer. Accordingly, the Company has made no provision for returns.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

Prepaid Expenses

The Company amortizes its prepaid expenses on a straight-line basis over the period during which it will receive the underlying services.

 
9

 
 
Production Costs

The Company periodically incurs costs to produce new management training videos and enhance current videos. Historically, the Company has been unable to accurately forecast revenues to be earned on these videos and has, accordingly, expensed such costs as incurred. The Company expensed $10,320 and zero in production costs for the nine months ended November 30, 2012 and 2011, respectively.

Value of Stock Issued for Services

The Company periodically issues shares of its common stock in exchange for, or in settlement of, services.  The Company’s management values the shares issued in such transactions at either the then market price of the Company’s common stock, as determined by the Board of Directors and after taking into consideration factors such as volume of shares issued or trading restrictions, or the value of the services rendered, whichever is more readily determinable.

Net Income (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period.  Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.  Any anti-dilutive effects on net income (loss) per share are excluded.  The Company has no potentially dilutive securities outstanding at November 30, 2012.

Income Taxes

Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements.  Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled.  As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.
 
Recent Pronouncements

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

 
10

 
 
NOTE 2         SIGNIFICANT UNCERTAINTY REGARDING THE COMPANY’S ABILITY TO CONTINUE AS A GOING CONCERN AND MANAGEMENT PLANS
 
The Company has incurred significant losses over recent years and currently has a working capital deficit of approximately $226,000. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company's current financial resources are not considered adequate to fund its planned operations.  This condition raises substantial doubt about its ability to continue as a going concern.  The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company's continuation as a going concern currently is dependent upon  timely  procuring  significant  external  debt  and/or  equity financing  to  fund  its  immediate  and  near-term  operations,  and subsequently realizing  operating  cash  flows  from sales of its film products  sufficient to sustain its  longer-term  operations and growth initiatives.  During the next 12 months the Company will be seeking to produce, or acquire another one or two “self-improvement/educational” DVDs, and to expand their library of workforce training programs.
 
NOTE 3                 LINE OF CREDIT

On March 21, 2012, the Company paid the outstanding balance of $39,421 on its line of credit.  This payment was made possible by an additional advance from the Company’s President.  The line of credit is closed and has not been renewed as of November 30, 2012.
 
NOTE 4                 UNEARNED REVENUE

On August 12, 2009, the Company signed an agreement with Gaiam America, licensing them the distribution rights to "The Five Secrets of Communication That Swept Obama to the Presidency." Under the terms of the agreement, Gaiam America will distribute the DVD throughout the world to the non-educational market. Further, pursuant to the agreement the Company received the $15,000 advance on September 14, 2009. Sales of the DVD under the Gaiam America distribution agreement commenced during the last quarter of fiscal 2010 and the company has recorded $361 of income since the effective date of the agreement. Due to minimal sales of the DVD under the Gaiam America distribution agreement, management estimated the only about $100 can be collected in the future and the rest of the advance in the amount of $14,539 was recognized as revenue during last quarter of fiscal year ended February 29, 2012.
 
 
11

 
 
NOTE 5                 RELATED PARTY TRANSACTION

Prepaid Loan Commitment

On February 16, 2005, the Company’s President, Buddy Young, accepted an unsecured promissory note from the Company and agreed to lend up to $200,000 to the Company to fund any cash shortfalls through December 31, 2012.  The note bears interest at 8% and is due upon demand, no later than June 30, 2013.  The outstanding balance was $189,354 as of November 30, 2012.   Management is currently in negotiations with Mr. Young to extend this agreement.

NOTE 6                 STOCKHOLDERS’ DEFICIT

For the nine months ended November 30, 2012 and 2011, the Company’s President devoted time to the development process of the Company.  Compensation expense totaling $31,200 has been recorded in each period.  The President has waived reimbursement of $31,200 during each of the nine months ended November 30, 2012 and 2011, and accordingly the amounts have been recorded as a contribution to capital.

NOTE 7                 INCOME TAXES

Deferred Tax Components

Significant components of the Company’s deferred tax assets are as follows at November 30, 2012:
 
Net operating loss carry-forward
  $ 46,810  
    Less valuation allowance
    (46,810 )
    Net deferred tax assets
  $ 0  
         
Summary of valuation allowance:
       
         
Balance, March 1, 2012
  $ 42,221  
Addition for the nine months ended November 30, 2012
    4,589  
Balance, November 30, 2012
  $ 46,810  
 
 
12

 
 
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.  Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

Net Operating Loss

The Company has approximately $208,000 net operating loss carry-forwards, which expire in various years through 2032.

Examination

The Company’s tax returns are open to examination for the years ended 2008 and forward.
 
 
13

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 
You should read this section together with our financial statements and related notes thereto included elsewhere in this report. In addition to the historical information contained herein, this report contains forward-looking statements that are subject to risks and uncertainties. Forward-looking statements are not based on historical information but relate to future operations, strategies, financial results or other developments. Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. Certain statements contained in this Form 10, including, without limitation, statements containing the words "believe," "anticipate," "estimate," "expect," "are of the opinion that" and words of similar import, constitute "forward-looking statements." You should not place any undue reliance on these forward-looking statements.
 
You should be aware that our results from operations could materially be effected by a number of factors, which include, but are not limited to the following: economic and business conditions specific to the motion picture, television, and home video industries; competition from other producers of home video content; and television documentaries, our ability to control costs and expenses, access to capital, and our ability to meet contractual obligations. There may be other factors not mentioned above or included elsewhere in this report that may cause actual results to differ materially from any forward-looking information.

CRITICAL ACCOUNTING POLICIES

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

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

 
14

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

Non-Cash Equity Issuances. We periodically issue shares of our common stock in exchange for, or in settlement of, services. Our management values the shares issued in such transactions at either the then market value of our common stock, as determined by the Board of Directors and after taking into consideration factors such as the volume of shares issued or trading restrictions, or the value of the services received, whichever is more readily determinable.
 
Revenue Recognition.  Sales are recognized upon shipment of videos to the customer or upon website download by the customer. The Company's products may not be returned by the customer. Accordingly, the Company has made no provision for returns.

General

We were incorporated in the State of Delaware on December 10, 2003.  From the date of incorporation through December 2007 the sole component of our business plan called for the producing and co-financing of motion pictures whose production budgets are estimated to range between $500,000 and $1,500,000, produced solely for distribution to the domestic and international home video markets.
 
As a result of not being able to raise the necessary funds to either co-finance or produce any motion pictures, management changed the Company’s business plan to that of producing and distributing self- improvement/educational DVDs and workforce training programs. The major reasons for this decision was that the funds needed to produce or acquire self- improvement/educational DVDs and workforce training programs are substantially less than required for the production of motion pictures. Additionally, our management has years of experience in the production and distribution of this type of product.

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

The DVD uses video examples of President Barack Obama’s most memorable speeches to illustrate five essential secrets of effective public and personal communication.  International communication analyst and coach Richard Greene hosts the DVD and instructs in the system of communication techniques he created. The DVD was completed in February 2009, and is being sold and marketed to individuals via the internet and through distributors specializing in the sale of product to the educational market, i.e. libraries, universities etc. Additionally, the Company created a “Business Edition” version of the DVD. This version includes the 47 minute DVD, along with a Leader Guide, Participant workbook, and Power Point presentation. It is being marketed both domestically and internationally by distributors to organizations for the training of their personnel in communication skills.

 
15

 
 
        Effective January 1, 2011, pursuant to an Asset Transfer, Assignment and Assumption Agreement, we acquired from Progressive Training, Inc. all of its assets and liabilities related to Progressive’s workforce training business.  Among the assets we acquired in the transaction described above are fourteen training video programs including: Twelve Angry Men: Teams That Don't Quit.  The video is based on the classic film starring Henry Fonda and utilizes 12 minutes of clips from the film, The Cuban Missile Crisis: A Case Study in Decision Making and Its Consequences.  This video is based on the decision making process of President Kennedy and his Cabinet during the Cuban missile crisis, It’s a Wonderful Life: Leading Through Service, features film clips from the classic motion picture It’s a Wonderful Life, starring Jimmy Stewart, along with on-camera commentary by Dr. Wheatley, How Do You Put A Giraffe Into A Refrigerator?  an animated short that is used as a meeting opener to stimulate the thinking of the participants, Character in Action: The United States Coast Guard on Leadership. This video demonstrates the highest qualities of leadership, and how to apply them, using the example of the United States Coast Guard.  Additionally, we acquired the best-selling and critically acclaimed training video entitled Work Teams and The Wizard of Oz.

In addition to the assets listed above, we acquired a website, www.advancedknowledge.com for the online sale and marketing of our products. We market and sell all our training programs and self-improvement DVDs under the Company’s dba Advanced Knowledge.

Since the acquisition mentioned above we have worked to expand both our domestic and foreign distributor network. We have succeeded in establishing non-exclusive distribution agreements with a number of additional distributors to market and sell our product.  In many instances, we have mutual non-exclusive distribution agreements to market/distribute their products.

During the second quarter of fiscal 2013, we completed and commenced the distribution of one new workforce training DVD. The DVD is based on the resourceful teamwork during the successful Chilean mine rescue.  In the beginning of the third quarter of fiscal 2013, we completed and commenced the distribution of a second DVD that teaches the extraordinary elements of teamwork employed by the Navy’s world renowned Blue Angel flight demonstration team.

Three-Month Period Ended November 30, 2012 Compared to Three-Month Period Ended November 30, 2011

Revenues

Our revenues for the three months ended November 30, 2012 were $23,668. Revenues for the three months ended November 30, 2011 were $17,598. This increase in revenue resulted from the initial sales income earned from the distribution of two new training programs released into the market during the second and third quarters of fiscal 2013.
 
 
16

 
 
The cost of revenues during the three months ended November 30, 2012, were $4,340. The cost of revenues during the three months ended November 30, 2011, were $1,861.

Expenses

Selling, general and administrative expenses were $29,892 during the three months ended November 30, 2012 as compared to $31,260 during the three months ended November 30, 2011.

Selling and marketing expenses were $5,031 for the three months ended November 30, 2012 as compared to $2,017 for the three months ended November 30, 2011. The increase in these costs are mainly related to the production and marketing of two new training programs released into the market during the second and third quarters of fiscal 2013.

During the three month period ended November 30, 2012, we incurred a total of $24,861 in general and administrative expenses.  This consisted primarily of $10,400 of contributed services by our CEO, Buddy Young, and $9,891 of professional fees incurred for our audited financial statements and related filings. We valued the contributed services from Buddy Young at $100 per hour. During the same period in 2011, we incurred a total of $29,243 general and administrative expenses. This consisted primarily of $10,400 of contributed services by our CEO, Buddy Young, and $13,112 of professional fees incurred for our audited financial statements and related filings.

We incurred $4,457 and $4,238 in interest expense during the three months ended November 30, 2012 and 2011, respectively.  Of this amount, $3,777 and $1,794 related to the interest charges we incur on our loan from Buddy Young in each period, respectively.  The remaining interest expense relates to a company credit card and our line of credit.

While we cannot guarantee the level of our expenses in the future, we anticipate them to increase as we develop new employee training and self-improvement DVDs.

Nine-Month Period Ended November 30, 2012 Compared to Nine-Month Period Ended November 30, 2011

Revenues

Our revenues for the nine months ended November 30, 2012 were $59,000. Revenues for the nine months ended November 30, 2011 were $58,089. This increase in revenue resulted from the initial sales income earned from the distribution of two new training programs released into the market during the second and third quarters of fiscal 2013, offset by the decrease in royalties earned from the marketing and distribution of "The Five Secrets of Communication That Swept Obama to the Presidency,” as well as from the training programs acquired from Progressive Training.
 
 
17

 
 
The cost of revenues during the nine months ended November 30, 2012, was $12,050. The cost of revenues during the nine months ended November 30, 2011, were $11,180.

Expenses

Selling, general and administrative expenses were $97,074 during the nine months ended November 30, 2012 as compared to $98,260 during the nine months ended November 30, 2011.

Selling and marketing expenses were $18,171 for the nine months ended November 30, 2012 as compared to $8,439 for the nine months ended November 30, 2011. These costs are mainly related to the marketing of two new training programs released into the market during the second and third quarters of fiscal 2012, and the training programs acquired from Progressive Training during Fiscal 2011.

During the nine month period ended November 30, 2012, we incurred a total of $78,903 in general and administrative expenses.  This consisted primarily of $31,200 of contributed services by our CEO, Buddy Young, and $30,261 of professional fees incurred for our audited financial statements and related filings. We valued the contributed services from Buddy Young at $100 per hour. During the same period in 2011, we incurred a total of $89,821 general and administrative expenses. This consisted primarily of $31,200 of contributed services by our CEO, Buddy Young, and $41,867 of professional fees incurred for our audited financial statements and related filings.

We incurred $13,940 and $11,926 in interest expense during the nine months ended November 30, 2012 and 2011, respectively.  Of this amount, $10,717 and $4,878 related to the interest charges we incur on our loan from Buddy Young in each period, respectively.  The remaining interest expense relates to a company credit card and our line of credit.

Plan of Operation

During the past twelve months we concentrated our efforts on further maximizing the revenue potential of the training programs we acquired in January 2011, by expanding our domestic and international distributor network. Additionally, we acquired the master distribution rights to a new training program entitled, “The Power of Teamwork”. The program is based on the extraordinary elements of teamwork employed by the Navy’s world renowned Blue Angel flight demonstration team. Further, during the first quarter of fiscal 2013, we developed and have completed production of a new training program entitled, “Chilean Mine Rescue: The Unstoppable Team.” This program focuses on the resourceful teamwork during the successful Chilean mine rescue.   The program was released during the second quarter of fiscal 2013, and has received very favorable reviews. It is too early to predict the videos revenue potential. Our second new program, “The Power of Teamwork” was introduced to the marketplace during the third quarter of fiscal 2013.
 
 
18

 
 
We anticipate that during the next 12 months our efforts will consist of: (a) raising funds through a private placement sale of equity, to be used for the purpose of adding to our library of programs, (b) continue to improve the functionality and visibility of our website advancedknowledge.com, (c) increase revenue by hiring additional commissioned sales personnel and (d) concentrate on the marketing and distribution of the two new training programs mentioned above.
 
We expect that cash resulting from the further sales and licensing of our existing programs, and the sales of the two new workforce training videos that have recently been released during fiscal 2013, along with the funds provided to us by our president and principal shareholder, under a promissory note dated February 16, 2005, as amended and if we are able to extend it (see Note 5), will be sufficient to fund our cash requirements to continue our efforts through December 2013.

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

Employees

Due to our very limited financial resources, the Company’s President, Buddy Young, along with Joseph Adelman, and Mel Powell, our Director of acquisitions, work on a part-time basis. We have one part-time employee and one commissioned sales person.  Additionally, we regularly utilize the services of independent firms to handle our accounting and certain administrative matters. If and when our capital resource permits, we will hire full-time professional and administrative employees.

Liquidity and Capital Resources

We had a cash balance of $4,408 on November 30, 2012. Other than funds received from the sale of our two recently completed training programs, along with the training programs acquired from Progressive Training, at this time, our only other known cash resource comes from an agreement with our President and majority shareholder to fund any shortfall in cash flow up to $200,000 at 8% interest through December 31, 2012.  As of November 30, 2012 the balance owing on this agreement is $189,354. Payment of principal and interest is due on this loan on June 30, 2013.   Management is currently in negotiations to extend this agreement.

We believe that revenue derived from the sale of the above mentioned programs and further borrowings from our President, if we are able to extend the terms, will be sufficient to satisfy our budgeted cash requirement through December 31, 2013.
 
 
19

 

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
Based on the nature of our current operations, we have not identified any issues of market risk at this time.

ITEM 4.  CONTROLS AND PROCEDURES

The principal executive officer and principal financial officer of the Company, who are the same person (“the Certifying Officer”) with the assistance of advisors, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in section 240.13a-14(c) and 240.15d-14(c) under the Exchange Act) within 90 days prior to the filing of this report. Based upon the evaluation, the Certifying Officer concludes that the Company’s disclosure controls and procedures are effective in timely alerting management to material information relative to the Company which is required to be disclosed in its periodic filings with the SEC.

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

 
20

 
 
PART II
OTHER INFORMATION
 
 
ITEM 1.
LEGAL PROCEEDINGS     None
   
ITEM 2.
UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS     None.
   
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES     None.
   
ITEM 4.
MINE SAFETY DISCLOSURES   Non Applicable.
   
ITEM 5. OTHER INFORMATION  None.
   
ITEM 6. EXHIBITS

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

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

 
101.INS
XBRL Instance
 
 
101.SCH
XBRL Taxonomy Extension Schema
 
 
101.CAL
XBRL Taxonomy Extension Calculation
 
 
101.DEF
XBRL Taxonomy Extension Definition
 
 
101.LAB
XBRL Taxonomy Extension Labels
 
 
101.PRE
XBRL Taxonomy Extension Presentation
 
 
21

 
 
SIGNATURES

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

 
 
FUTURA PICTURES, INC.
(Registrant)
 
     
     
     
Date: January 10, 2013
/s/ Buddy Young  
  Buddy Young, President and Chief Executive Officer  
     
     

 
 
 
 
 
22