SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From _______ to _______
Commission File No. 0-18954
ODYSSEY PICTURES CORPORATION
--------------------------------------------------
(Exact name of registrant as specified in charter)
Nevada 95-4269048
- ----------------------- -------------------
(State or other juris- (I.R.S. Employer
diction of incorporation Identification No.)
or organization)
1601 ELM STREET, STE 4000, DALLAS, TX 75201-2522
- ------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone No., including area code (214) 720-1622
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 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 --
6,879,340 outstanding shares as of December 31, 1998
<PAGE>
ODYSSEY PICTURES CORPORATION
INDEX
Page
Part I - Financial Information
Consolidated Balance Sheets as of 1
December 31, 1998 and June 30, 1998
Consolidated Statements of Operations 2
for the Six and Three Month Periods Ended
December 31, 1998 and 1997
Consolidated Statements of Cash Flows 3
for the Six Month Periods Ended
December 31, 1998 and 1997
Consolidated Statements of Changes In 5
Shareholders' Equity (Deficit) for the
Six Month Period Ended December 31, 1998
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Part II - Other Information 8
Signatures 9
<PAGE>
<TABLE>
<CAPTION>
ODYSSEY PICTURES CORPORATION
Consolidated Balance Sheets
------------------------------
<S> <C> <C>
December 31,
1998 June 30, 1998
-----------------
ASSETS:
Cash $5,799 $4,331
Accounts receivable, net of allowances
of $0 and $0 84,986 9,500
Notes receivable 111,727 100,000
Film costs, net 4,337,234 110,422
Other assets 788,488 451,200
----------------- ----------------
$5,328,234 $675,453
================= ================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Accounts payable and accrued expenses $828,194 $865,923
Accrued wages 447,290 457,794
Accrued interest 118,122 77,168
Due to producers and participants 250,000 250,000
Deferred revenues 29,000 29,000
Notes and loans payable 1,309,449 1,079,000
----------------- ----------------
Total liabilities 2,982,055 2,758,885
----------------- ----------------
Shareholders' Equity (Deficit):
Preferred stock, par value $.10;
Authorized - 10,000,000 shares
Issued - 5,000,000 shares 500,000 50,000
Common stock, par value $.01;
Authorized - 40,000,000 shares
Issued -6,879,340 and 5,029,285
shares 68,794 50,293
Capital in excess of par value 32,197,016 27,552,973
Accumulated deficit (30,419,631) (29,736,698)
----------------- ----------------
Total shareholders' equity (deficit) 2,346,179 (2,083,432)
----------------- ----------------
$5,328,234 $675,453
================= ================
The accompanying notes are an integral part of these statements.
1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ODYSSEY PICTURES CORPORATION
Consolidated Statements Of Operations
<S>
For the Six Months For the Three Months
Ended December 31, Ended December 31,
---------------------------- -----------------------------
<C> <C> <C> <C>
1998 1997 1998 1997
REVENUES: $208,379 $38,816 $64,679 $3,500
----------- ------------ ------------- ------------
EXPENSES:
Costs related to revenues 189,040 11,252 $62,571 3,415
Selling, general and
administrative expenses 633,142 648,371 $301,449 319,190
----------- ------------ ------------- ------------
822,182 659,623 364,020 322,605
----------- ------------ ------------- ------------
Operating loss (613,803) (620,807) (299,341) (319,105)
OTHER INCOME (EXPENSES):
Other income 6,688 - $3,890 -
Interest expense (75,818) (40,263) ($43,577) (16,898)
----------- ------------ ------------- ------------
Net loss ($682,933) ($661,070) ($339,028) ($336,003)
============ ============ ============= ============
Net loss per share ($0.11) ($0.16) ($0.06) ($0.08)
============ ============ ============= ============
Weighted average common shares outstanding 5,976,813 4,110,410 5,976,813 4,110,410
============ ============ ============= ============
The accompanying notes are an integral part of these statements.
2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ODYSSEY PICTURES CORPORATION
Consolidated Statements Of Cash Flows
<S>
For the Six Months
Ended December 31,
------------------------------------
1998 1997
<C> <C>
Cash Flows from Operating Activities:
Net loss ($682,933) ($661,070)
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Amortization of film costs 109,811 13,954
Additions to film costs (4,336,623) (26,926)
Other depreciation and amortization -- 3,575
Issuance of shares of common stock as partial
consideration for loans made to company 19,800
Issuance of shares of preferred stock
for purchase of Kimon film library & other assets 4,500,000 500,000
Issuance of shares of common stock in exchange for
cancellation of notes and other liabilities -- 539,339
Issuance of shares of common stock to
equity investors 187,500 50,000
Issuance of shares of common stock to officer as contract
signing bonus 17,000 --
Issuance of shares of common stock in consideration
for services rendered 128,000 50
Decrease (increase) in assets:
Accounts receivable, net (75,486) 116,670
Note receivable (11,727) (25,000)
Other (337,288) --
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (7,279) (81,921)
Due to producers and participants -- (129,493)
Deferred revenues -- 9,200
-------------------- --------------------
Net cash used in
operations (489,225) 308,378
-------------------- --------------------
Cash Flows from Investing Activities:
Acquisition of fixed assets -- --
-------------------- --------------------
Net cash used in investing
activities -- --
-------------------- --------------------
Cash Flows from Financing Activities:
Note payable in settlement of Generale Bank
complaint -- (25,000)
Notes payable exchanged for common stock 260,244 (282,500)
Net proceeds from interim financing 322,649
Repayments of interim financing (92,200) 26,173
-------------------- --------------------
Net cash provided by
financing activities 490,693 (281,327)
-------------------- --------------------
Net (decrease) increase in cash and equivalents 1,468 27,051
Cash and equivalents at beginning of period 4,331 1,468
-------------------- --------------------
Cash and equivalents at end of period $5,799 $28,519
==================== ====================
The accompanying notes are an integral part of these statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
ODYSSEY PICTURES CORPORATION
Consolidated Statements Of Cash Flows
For the Three Months
Ended December 31,
----------------------------------
<S> <C> <C>
1998 1997
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for-
Interest $0 5,370
============== ===============
Income taxes -- --
============== ===============
The accompanying notes are an integral part of these statements.
</TABLE>
4
<PAGE>
<TABLE>
ODYSSEY PICTURES CORPORATION
Consolidated Statements Of Changes in Shareholders' Equity (Deficit)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Preferred Stock Common Stock Total
Amount Amount Capital in Shareholders'
($.10 Par ($.01 Par Excess of Accumulated Equity
Shares Value) Shares Value) Par Value Deficit (Deficit)
Balances - June 30, 1996 - - 2,591,242 25,913 25,911,366 (28,686,092) (2,748,813)
Issuance of shares to officers
in payment of notes 78,948 789 44,211 45,000
Re-issue of unexchanged shares
shares previously cancelled 65,825 659 (659) 0
Issuance of shares in consideration
for services rendered 43,500 435 33,665 34,100
Sale of shares to equity
investors 500,000 5,000 370,000 375,000
Net income 68,808 68,808
------------ --------- ------------ ----------- ------------ ------------- ------------
Balances - June 30, 1997 - - 3,279,515 $32,796 $26,358,583 ($28,617,284) ($2,225,905)
Issuance of shares of preferred
stock to equity investors 500,000 50,000 450,000 500,000
Issuance of shares of common stock
in exchange for cancellation
notes payable and other
liabilities 1,010,455 10,104 529,235 539,339
Issuance of shares of common stock
to equity investors 66,667 667 49,333 50,000
Issuance of shares of stock in
exchange for cancellation of
deferred compensation notes 667,648 6,676 165,823 172,499
Issuance of shares of common stock
in consideration for service
rendered 5,000 50 50
Net loss (1,119,414) (1,119,414)
------------ --------- ------------ ----------- ------------ ------------- ------------
Balances - June 30, 1998 500,000 $50,000 5,029,285 $50,293 $27,552,973 ($29,736,698) ($2,083,432)
Issuance of shares of common stock
as partial consideration for
loans made to company 45,000 450 19,350 19,800
Issuance of shares of preferred
stock for purchase of Kimon
film library and other assets 4,500,000 450,000 4,050,000 4,500,000
Issuance of shares to officers
in payment of notes 830,055 8,301 251,943 260,244
Issuance of shares of common stock
in consideration for barter
services to be rendered 200,000 2,000 86,000 88,000
Issuance of shares in consideration
for legal services rendered 100,000 1,000 39,000 40,000
Issuance of shares of common stock
to equity investors 625,000 6,250 181,250 187,500
Issuance of shares of common stock
to officer as contract signing
bonus 50,000 500 16,500 17,000
Net loss (682,933) (682,933)
------------- --------- ------------- -------- ------------ -------------- -------------
Balances - December 31, 1998 5,000,000 $500,000 6,879,340 $68,794 $32,197,016 ($30,419,631) $2,346,179
============= ========= ============= ======== ============ ============== =============
The accompanying notes are an integral part of these statements.
5
</TABLE>
<PAGE>
ODYSSEY PICTURES CORPORATION
Notes to Consolidated Financial Statements
December 31, 1998
1. Basis of Financial Statement Preparation:
The Consolidated Financial Statements for Odyssey Pictures Corporation and
subsidiaries (collectively the "Company"), included herein, have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. These financial
statements should be read in conjunction with the consolidated financial
statements and the notes thereto included in the Company's Report on Form 10-K
for the period ended June 30, 1998.
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly (a) the financial position as of
December 31, 1998, (b) the results of operations for the six and three month
periods ended December 31, 1998 and 1997 and (c) cash flows for the six month
periods ended December 31, 1998 and 1997.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Nine and Three Months Ended December 31, 1998 and 1997
Revenues for the six months ended December 31, 1998 increased to $208,379
and $64,679 from $38,816 and $3,500 for the comparable six and three month
periods ended December 31, 1997. This increase is due to the purchase of the
Kimon Film Library which the company is currently exploiting.
Costs related to revenues increased to $189,040 and $62,571 respectively
for the 1998 six and three month periods ended December 31, 1998 from $11,252
and $3,415 for the comparable six and three months ended December 31, 1997. This
increase is due to the distribution costs incurred in the exploitation of the
Kimon Film Library.
Selling, general and administrative expenses increased by $331,693 (110.0%)
to $633,142 for the six month period from $301,449 for the comparable 1997
period. For the 1998 three month period such expenses increased by $329,181
(103.1%) to $648,371 from $319,190 for the comparable 1997 three month period.
This is primarily due to the fact that the company was inactive during the 1997
period.
Interest income for the six and three month periods was $6,688 and $3,890
respectively. This is primarily due to loans made to E3 Sports New Mexico, Inc.,
in which the company has a minority interest in. There was no interest income
for the comparable six and three month periods.
Interest expense increased to $75,818 and $43,577 for the 1998 three month
period from $40,263 and $16,898 for the comparable 1997 six and three month
periods. This is primarily related to interest on notes due for the purchase of
a monority interest in E3 Sports New Mexico, Inc. and Media Trust S.A. and from
interim loans made to the Company by various individuals and entities.
The Company did not recognize any tax benefits related to its losses from
operations for either period due to its inability to carry-back such losses to
prior years.
As of December 31, 1998, the Company had a federal net operating loss
carryforward, for tax purposes, of approximately $30,000,000, expiring through
2010, available to be used to reduce future tax liability. Due to limitations
imposed by the Internal Revenue Service, the utilization of approximately
$4,900,000 of these net operating losses will be limited to approximately
$350,000 per year.
The Company's principal activities have been the acquisition of rights in
either completed or incomplete motion pictures and the licensing of these rights
to sub-distributors in foreign countries. As of December 31, 1998, the Company
had no agreements with sub-distributors relating to distribution commitments or
guarantees that had not been recognized in the statement of operations.
Liquidity and Capital Resources
At December 31, 1998, the Company held approximately $5,799 of cash.
The Company had no material commitments for capital expenditures as of
December 31, 1998.
PART II - OTHER INFORMATION
Items 1 through 6 of part II are not applicable.
7
<PAGE>
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
By: /s/ Pierre Koshakji
------------------------
Pierre Koshakji
President
By: /s/ Johan Schotte
----------------------
Johan Schotte
CEO and Chairman
(Principal Executive &
Financial Officer)
DATED: February 18, 1999
8
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 5,799
<SECURITIES> 0
<RECEIVABLES> 111,727
<ALLOWANCES> 0
<INVENTORY> 4,337,234
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,328,234
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
500,000
<COMMON> 68,794
<OTHER-SE> 1,777,385
<TOTAL-LIABILITY-AND-EQUITY> 5,328,234
<SALES> 208,379
<TOTAL-REVENUES> 208,379
<CGS> 189,040
<TOTAL-COSTS> 822,182
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 75,818
<INCOME-PRETAX> (682,933)
<INCOME-TAX> 0
<INCOME-CONTINUING> (682,933)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (682,933)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
