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 March 31, 1999
[ ] 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 --
7,029,340 outstanding shares as of March 31, 1999
<PAGE>
ODYSSEY PICTURES CORPORATION
INDEX
Page
Part I - Financial Information
Consolidated Balance Sheets as of 1
March 31, 1999 and June 30, 1998
Consolidated Statements of Operations 2
for the Nine and Three Month Periods Ended
March 31, 1999 and 1998
Consolidated Statements of Cash Flows 3
for the Nine Month Periods Ended
March 31, 1999 and 1998
Consolidated Statements of Changes In 5
Shareholders' Equity (Deficit) for the
Nine Month Period Ended March 31, 1999
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Part II - Other Information 7
Signatures 8
<PAGE>
<TABLE>
<CAPTION>
ODYSSEY PICTURES CORPORATION
Consolidated Balance Sheets
------------------------------
<S> <C> <C>
March 31,
1999 June 30, 1998
----------------- -------------
ASSETS:
Cash $1,832 $4,331
Accounts receivable, net of allowances
of $0 and $0 97,873 9,500
Notes receivable 127,040 100,000
Film costs, net 4,318,734 110,422
Other assets 874,488 451,200
----------------- ----------------
$5,419,967 $675,453
================= ================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Accounts payable and accrued expenses $867,825 $865,923
Accrued wages 666,291 457,794
Accrued interest 151,979 77,168
Due to producers and participants 250,000 250,000
Deferred revenues 29,000 29,000
Notes and loans payable 1,332,581 1,079,000
----------------- ----------------
Total liabilities 3,297,676 2,758,885
----------------- ----------------
Shareholders' Equity (Deficit):
Preferred stock, par value $.10;
Authorized - 10,000,000 shares
Issued-5,000,000 and 500,000 shares 500,000 50,000
Common stock, par value $.01;
Authorized - 40,000,000 shares
Issued -7,029,340 and 5,029,285
shares 70,294 50,293
Capital in excess of par value 32,291,516 27,552,973
Accumulated deficit (30,739,519) (29,736,698)
----------------- ----------------
Total shareholders' equity (deficit) 2,122,291 (2,083,432)
----------------- ----------------
$5,419,967 $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 Nine Months For the Three Months
Ended March 31, Ended March 31,
---------------------------- -----------------------------
<C> <C> <C> <C>
1999 1998 1999 1998
---- ---- ---- ----
REVENUES: $245,769 $42,630 $37,390 $3,814
----------- ------------ ------------- ------------
EXPENSES:
Costs related to revenues 217,562 11,252 $28,522 -
Selling, general and
administrative expenses 930,703 834,537 $297,561 186,166
----------- ------------ ---------- ------------
1,148,265 845,789 326,083 186,166
----------- ------------ ---------- ------------
Operating loss (902,496) (803,159) (288,693) (182,352)
OTHER INCOME (EXPENSES):
Other income 10,772 - $4,084 -
Interest expense (111,097) (53,981) ($35,279) (13,718)
----------- ------------- ---------- ------------
Net loss ($1,002,821) ($857,140) ($319,888) ($196,070)
============= ============= ========== ============
Net loss per share ($0.16) ($0.20) ($0.05) ($0.05)
============ ============= ========== ============
Weighted average common shares outstanding 6,327,655 4,194,819 6,327,655 4,194,819
============ ============= ========== ============
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 Nine Months
Ended March 31,
------------------------------------
1999 1998
---- ----
<C> <C>
Cash Flows from Operating Activities:
Net loss ($1,002,821) ($857,140)
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Amortization of film costs 128,311 13,954
Additions to film costs (4,336,623) (26,926)
Other depreciation and amortization -- 4,468
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 260,244 539,339
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
Issuance of shares of common stock in consideration
for services to be rendered 96,000 --
Decrease (increase) in assets:
Accounts receivable, net (88,373) 116,670
Note receivable (27,040) 175,000
Other (423,288) --
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 285,210 7,070
Due to producers and participants -- (130,162)
Deferred revenues -- 9,200
-------------------- --------------------
Net cash used in
operations (256,080) 401,523
-------------------- --------------------
Cash Flows from Investing Activities:
Purchase of stock in E-3 Sports Mexico, S.A. -- (135,000)
Purchase of stock in Media Trust S.A. -- (315,000)
Acquisition of fixed assets -- --
-------------------- --------------------
Net cash used in investing
activities -- (450,000)
-------------------- --------------------
Cash Flows from Financing Activities:
Note payable in settlement of Generale Bank
complaint -- (25,000)
Notes payable exchanged for common stock -- (282,500)
Notes payable - investment in E-3 Sports New Mexico, Inc -- 135,000
Notes payable - investment in Media Trust S.A. -- 315,000
Net proceeds from interim financing 351,481 28,173
Repayments of interim financing (97,900) --
-------------------- --------------------
Net cash provided by
financing activities 253,581 170,673
-------------------- --------------------
Net (decrease) increase in cash and equivalents (2,499) 122,196
Cash and equivalents at beginning of period 4,331 8,790
-------------------- --------------------
Cash and equivalents at end of period $1,832 $130,986
==================== ====================
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 Nine Months
Ended March 31,
----------------------------------
<S> <C> <C>
1999 1998
---- ----
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
Issuance of shares in consideration
for services to be rendered 150,000 1,500 94,500 96,000
Net loss (1,002,821) (1,002,821)
------------- --------- ------------- -------- ------------ -------------- -------------
Balances - March 31, 1999 5,000,000 $500,000 7,029,340 $70,294 $32,291,516 ($30,739,519) $2,122,291
============= ========= ============= ======== ============ ============== =============
The accompanying notes are an integral part of these statements.
5
</TABLE>
<PAGE>
ODYSSEY PICTURES CORPORATION
Notes to Consolidated Financial Statements
March 31, 1999
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 March
31, 1999, (b) the results of operations for the nine and three month periods
ended March 31, 1999 and 1998 and (c) cash flows for the nine month periods
ended March 31, 1999 and 1998 and (d) statements of changes in shareholders'
equity (deficit) as of March 31, 1999.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Nine and Three Months Ended March 31, 1999 and 1998
Revenues for the nine months ended March 31, 1999 increased to $245,7699
and $37,390 from $42,630 and $3,814 for the comparable nine three month periods
ended March 31, 1998. This increase is due to the purchase of the Kimon Film
Library which the company is currently exploiting.
Costs related to revenues increased to $217,562 and $28,522 respectively
for the nine and three month periods ended March 31, 1999 from $11,252 and $0
for the comparable nine and three months ended March 31, 1998. This increase is
due to the distribution costs incurred in the exploitation of the Kimon Film
Library.
Selling, general and administrative expenses increased by $96,166 (12%) to
$930,703 for the nine month period ended March 31, 1999, from $834,537 for the
comparable 1998 period. For the three month period ended March 31, 1999, such
expenses increased by $111,395 (60%) to $297,561 from $186,166 for the
comparable 1998 three month period. This is primarily due to the fact that the
company was inactive during the 1998 period.
Interest income for the nine and three month periods ended March 31, 1999
was $10,772 and $4,084 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 1998 six and three month periods.
Interest expense increased to $111,097 and $35,279 for the nine and three
month period ended March 31, 1999, from $53,981 and $13,718 for the comparable
1998 nine and three month periods. This is primarily related to interest on
notes due for the purchase of a minority 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 March 31, 1999, 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 March 31, 1999, 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 March 31, 1999, the Company held approximately $1,832 of cash.
The Company had no material commitments for capital expenditures as of
March 31, 1999.
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: May 21, 1999
8
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 1,832
<SECURITIES> 0
<RECEIVABLES> 224,913
<ALLOWANCES> 0
<INVENTORY> 4,318,734
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,419,967
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
500,000
<COMMON> 70,294
<OTHER-SE> 1,551,997
<TOTAL-LIABILITY-AND-EQUITY> 5,419,967
<SALES> 245,769
<TOTAL-REVENUES> 245,769
<CGS> 217,562
<TOTAL-COSTS> 1,148,265
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 111,097
<INCOME-PRETAX> (1,002,821)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,002,821)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,002,821)
<EPS-PRIMARY> (.16)
<EPS-DILUTED> (.16)
</TABLE>
