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 September 30, 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 --
5,074,285 outstanding shares as of September 30, 1998
<PAGE>
ODYSSEY PICTURES CORPORATION
INDEX
Page
Part I - Financial Information
Consolidated Balance Sheets as of 1
September 30, 1998 and June 30, 1998
Consolidated Statements of Operations 2
for the Three Month Periods Ended
September 30, 1998 and 1997
Consolidated Statements of Cash Flows 3
for the Three Month Periods Ended
September 30, 1998 and 1997
Consolidated Statements of Changes In 5
Shareholders' Equity (Deficit) for the
Three Month Period Ended September 30, 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>
September 30,
1998 June 30, 1998
-----------------
ASSETS:
Cash $8,767 $4,331
Accounts receivable, net of allowances
of $0 and $0 261,112 9,500
Notes receivable 103,037 100,000
Film costs, net 4,375,946 110,422
Other assets 451,296 451,200
----------------- ----------------
$5,200,158 $675,453
================= ================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Accounts payable and accrued expenses $876,847 $865,923
Accrued wages 557,294 457,794
Accrued interest 109,410 77,168
Due to producers and participants 250,000 250,000
Deferred revenues 29,000 29,000
Notes and loans payable 1,285,144 1,079,000
----------------- ----------------
Total liabilities 3,107,695 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 -5,074,285 and 5,029,285
shares 50,743 50,293
Capital in excess of par value 31,622,323 27,552,973
Accumulated deficit (30,080,603) (29,736,698)
----------------- ----------------
Total shareholders' equity (deficit) 2,092,463 (2,083,432)
----------------- ----------------
$5,200,158 $675,453
================= ================
The accompanying notes are an integral part of these statements.
1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ODYSSEY PICTURES CORPORATION
Consolidated Statements Of Operations
For the Three Months
Ended September 30,
-------------------------------
<S> <C> <C>
1998 1997
REVENUES: $143,700 $35,316
-------------- --------------
EXPENSES:
Costs related to revenues 126,469 7,837
Selling, general and
administrative expenses 331,693 329,181
-------------- --------------
458,162 337,018
-------------- --------------
Operating loss (314,462) (301,702)
OTHER INCOME (EXPENSES):
Interest income 2,798 ---
Interest expense (32,241) (23,365)
-------------- --------------
Net loss ($343,905) ($325,067)
============== ==============
Net loss per share ($0.07) ($0.08)
============== ==============
Weighted average common shares outstanding 5,074,285 3,861,182
============== ==============
The accompanying notes are an integral part of these statements.
2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ODYSSEY PICTURES CORPORATION
Consolidated Statements Of Cash Flows
For the Three Months
Ended September 30,
---------------------------------
<S> <C> <C>
1998 1997
Cash Flows from Operating Activities:
Net loss ($343,905) ($325,067)
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Amortization of film costs 71,100 10,539
Additions to film costs (4,336,624) (11,264)
Other depreciation and amortization 2,682
Issuance of shares of common stock as partial
consideration for loans made to company 19,800 --
Issuance of shares of preferred stock to
equity investors 500,000
Issuance of shares of preferred stock to
for purchase of Kimon film library & other assets 4,500,000 --
Issuance of shares of common stock in exchange for
cancellation of notes and other liabilities -- 302,679
Issuance of shares of common stock to
equity investors -- 50,000
Decrease (increase) in assets:
Accounts receivable, net (251,612) 50,006
Note receivable (3,037) (250,000)
Other (96) --
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 142,666 (199,700)
Due to producers and participants -- (79,101)
Deferred revenues -- 9,200
--------------- ---------------
Net cash used in
operations (201,708) 59,974
--------------- ---------------
Cash Flows from Investing Activities:
Acquisition of fixed assets -- --
--------------- ---------------
Net cash used in investing
activities -- --
--------------- ---------------
Cash Flows from Financing Activities:
Note payable exchanged for common stock -- (70,000)
Net proceeds from interim financing 281,144 26,173
Repayments of interim financing (75,000)
--------------- ---------------
Net cash provided by
financing activities 206,144 (43,827)
--------------- ---------------
Net (decrease) increase in cash and equivalents 4,436 16,147
Cash and equivalents at beginning of period 4,331 8,790
--------------- ---------------
Cash and equivalents at end of period $8,767 $24,937
=============== ===============
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 September 30,
----------------------------------
<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
Net loss (343,905) (343,905)
------------ --------- ------------ ----------- ------------ ------------- ------------
Balances - September 30, 1998 5,000,000 $500,000 5,074,285 $50,743 $31,622,323 ($30,080,603) $2,092,463
============ ========= ============ =========== ============ ============= ============
The accompanying notes are an integral part of these statements.
5
</TABLE>
<PAGE>
ODYSSEY PICTURES CORPORATION
Notes to Consolidated Financial Statements
September 30, 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 September 30, 1998, (b) the
results of operations for the three month periods ended
September 30, 1998 and 1997 and (c) cash flows for the three
month periods ended September 30, 1998 and 1997.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three Months Ended September 30, 1998 and 1997
Revenues for the three months ended September 30, 1998 were $143,700. This
is an increase of $108,384 from the comparable three month period ended
September 30, 1997. This increase is due to the purchase of the Kimon Film
Library which the company is currently exploiting.
Costs related to revenues for the three months ended September 30, 1998
were $126,469. This is an increase of $118,632 from the comparable three month
period ended September 30, 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 $2,512 (.8%) to
$331,693 for the 1998 three month period from $329,181 for the comparable 1997
period.
Interest income for the three months ended September 30, 1998 was $2,798.
This is primarily due to loans made to E3 Sports New Mexico, Inc., in which the
company has a minority interest. There was no interest income for the comparable
three month period ended September 30, 1997.
Interest expense increased to $32,241 for the 1998 three month period from
$23,365 for the comparable 1997 three month period.
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 September 30, 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 September 30, 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 September 30, 1998, the Company held approximately $8,767 of cash.
The Company had no material commitments for capital expenditures as of
September 30, 1998.
7
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(b) Reports on Form 8-K.
A Report on Form 8-K was filed on January 7, 1999 with respect to the
acquisition of certain assets from Kimon Mediaright KB on July 14,
1998.
8
<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: January 11, 1999
9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> JUN-30-1998 JUN-30-1997
<PERIOD-START> JUL-01-1998 JUL-01-1997
<PERIOD-END> SEP-30-1998 SEP-30-1997
<CASH> 8,767 24,937
<SECURITIES> 0 0
<RECEIVABLES> 364,149 792,245
<ALLOWANCES> 0 0
<INVENTORY> 4,375,946 121,197
<CURRENT-ASSETS> 0 0
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 5,200,158 953,695
<CURRENT-LIABILITIES> 0 0
<BONDS> 0 0
0 0
500,000 50,000
<COMMON> 50,743 38,612
<OTHER-SE> 1,541,720 (1,786,905)
<TOTAL-LIABILITY-AND-EQUITY> 5,200,158 953,695
<SALES> 143,700 35,316
<TOTAL-REVENUES> 143,700 35,316
<CGS> 126,469 7,837
<TOTAL-COSTS> 458,162 377,018
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 32,241 23,365
<INCOME-PRETAX> (343,905) (325,067)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (343,905) (325,067)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (343,905) (325,067)
<EPS-PRIMARY> (.07) (.08)
<EPS-DILUTED> (.07) (.08)
</TABLE>
