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, 2000
[ ] 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 16,545,804 outstanding shares as of
September 30, 2000.
<PAGE>
ODYSSEY PICTURES CORPORATION
INDEX
Page
Part I - Financial Information
Accountant's Report 1
Consolidated Balance Sheets as of 2
September 30, 2000, June 30, 2000, June 30, 1999,
and June 30, 1998
Consolidated Statements of Operations 3
for the Three Month Periods Ended
September 30, 2000, 1999 and 1998
Consolidated Statements of Changes In 4
Shareholders' Equity (Deficit) for the
Year Ended June 30, 2000 and June 30, 1999
Consolidated Statements of Cash Flows for the Three 5-6
Month Periods Ended September 30, 2000
and 1999 and 1998 and for the fiscal years ended June 30,
2000, 1999, 1998
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II - Other Information 9
Signatures 10
<PAGE>
PART 1 - FINANCIAL INFORMATION:
WANT & ENDER
Certified Public Accountants
386 Park Avenue South
Suite 1618
New York, NY 10016
Odyssey Pictures Corporation
Dallas, TX
To the Board of Directors and Stockholders:
We have reviewed the accompanying balance sheet of Odyssey Pictures Corporation
as of September 30, 2000 and the related income statement for the three months
then ended in accordance with standards established by the American Institute of
Certified Public Accountants. All information in these financial statements is
the representation of the management of Odyssey Pictures Corporation.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
/s/ Want & Ender CPA, P.C.
----------------------------
Want & Ender CPA, P.C.
November 21, 2000
1
<TABLE>
<CAPTION>
ODYSSEY PICTURES CORPORATION
Consolidated Balance Sheets
<S> <C> <C> <C>
September 30, June 30, June 30, June 30,
Assets 2000 2000 1999 1998
------ ------------- -------------- ------------ ------------
Cash $ 11,241 $ 31,215 $ 4,715 $ 4,331
Accounts receivable, net of allowances
of $0 and $0 295,517 208,511 81,986 9,500
Notes receivable 153,410 149,296 131,272 100,000
Film costs, net 4,077,078 4,095,824 4,383,629 110,422
Prepaid expenses and other 450,906 450,906 380,906 1,200
Investments 1,180,416 1,001,100 456,600 450,000
--------------- -------------- ------------ ------------
TOTAL ASSETS $ 6,168,567 $ 5,936,852 $ 5,439,108 $ 675,453
=============== ============== ============ ============
Liabilities and Shareholders' Equity (Deficit)
---------------------------------------------
Liabilities
Accounts payable and accrued expenses $ 819,310 $ 819,038 $ 805,071 $ 865,923
Accrued wages 797,545 709,545 839,185 457,794
Accrued interest 226,414 226,414 163,198 77,168
Due to producers and participants 250,000 250,000 250,000 250,000
Deferred revenues 29,000 29,000 29,000 29,000
Notes and loans payable 1,136,518 835,680 1,192,081 1,079,000
--------------- -------------- ------------ ------------
Total Liabilities 3,258,788 2,869,678 3,278,535 2,758,885
--------------- -------------- ------------ ------------
Commitments and contingencies
Shareholders' Equity (Deficit)
Preferred stock, Series A, par value $.10;
Authorized - 10,000,000 shares
Issued - 500,000 shares - - 50,000 50,000
Preferred stock, Series B, par value $.10
Authorized - 10,000,000 shares
Issued - 4,500,000 shares 450,000 450,000 450,000 -
Common stock, par value $.01;
Authorized - 40,000,000 shares
Issued and outstanding -
8,284,728 and 5,029,285 135,731 135,731 82,847 50,293
Capital in excess of par value 34,840,747 34,815,747 32,704,197 27,552,973
Accumulated deficit (32,516,699) (32,334,304) (31,126,471) (29,736,698)
--------------- -------------- ------------ ------------
Total shareholders' equity (deficit) 2,909,780 3,067,174 2,160,573 (2,083,432)
--------------- -------------- ------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) $ 6,168,567 $ 5,936,852 $ 5,439,108 $ 675,453
=============== ============== ============ ============
The accompanying notes are an integral part of these financial statements.
2
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<PAGE>
<TABLE>
<CAPTION>
ODYSSEY PICTURES CORPORATION
Consolidated Statements of Operations
For the Three Months Ended September 30,
<S> <C> <C> <C>
2000 1999 1998
----------------- ----------------- -----------------
Revenue $ - 0
$ 1,431 $ 37,653 $ 143,700
Expenses - -
- -
Costs related to revenues 27,621 37,180 126,469
Selling, general and - -
administrative expenses 151,950 292,145 331,693
----------------- ----------------- -----------------
179,571 329,325 458,162
----------------- ----------------- -----------------
Operating income (loss) (178,140) (291,672) (314,462)
Other income (expenses)
Other income - - -
Interest income 6,012 4,348 2,798
Interest expense (8,755) (29,132) (32,241)
Loss on sale of joint venture interests - - -
Other income - - -
----------------- ----------------- -----------------
Income (loss) from operations
before provision for income taxes (180,883) (316,456) (343,905)
Provision / Benefit for income taxes - - -
----------------- ----------------- -----------------
NET INCOME (LOSS) $ (180,883) $ (316,456) $ (343,905)
================= ================= =================
Basic income (loss) per share $ (0.02) $ (0.04) $ (0.07)
Weighted average common
shares outstanding 11,589,301 8,764,728 5,074,285
================= ================= =================
Diluted income (loss) per share $ (0.02) $ (0.04) $ (0.07)
Weighted average common
shares outstanding 11,589,301 8,764,728 5,074,285
================= ================= =================
The accompanying notes are an integral part of these financial statements.
3
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<PAGE>
<TABLE>
ODYSSEY PICTURES CORPORATION
Consolidated Statements Of Changes in Shareholders' Equity (Deficit)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Preferred Stock Preferred Stock
Series A Series B Common Stock Total
Capital in Shareholders'
Excess of Accumulated Equity
Shares Amount Shares Amount Shares Amount 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) -
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 1,500,000 15,000 425,693 440,693
Issuance of shares of common stock
to officer as contract signing bs 50,000 500 16,500 17,000
Issuance of shares in consideration
for services to be rendered 181,667 1,816 104,000 105,816
Issuance of shares of common stock
in full satisfaction of a loan
and accrued interest 348,721 3,487 158,738 162,225
Net loss (1,389,773) (1,389,773)
-------- ------- --------- -------- ----------- -------- ----------- ------------- -----------
Balances - June 30, 1999 500,000 $50,000 4,500,000 $450,000 8,284,728 $ 82,847 $32,704,197 $(31,126,471) $2,160,573
Issuance of shares of common stock
as partial consideration for
loans made to company 3,000,000 30,000 1,170,000 1,200,000
Issuance of shares of common stock
to equity investors (500,000) (50,000) 1,818,700 18,187 946,246 914,433
Net loss (1,207,831) (1,207,831)
-------- ------- --------- -------- ----------- -------- ------------ ------------- -----------
Balances - June 30, 2000 - - 4,500,000 $450,000 13,103,428 $131,034 $34,820,443 $(32,334,302) $3,067,175
======== ======= ========= ======== =========== ======== ============ ============= ===========
The accompanying notes are an integral part of these financial statements.
4
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<PAGE>
<TABLE>
<CAPTION>
ODYSSEY PICTURES CORPORATION
Consolidated Statements of Cash Flows
For the Three Months Ended September 30,
<S> <C> <C> <C>
2000 1999 1998
-------------- ----------- -----------
Cash Flows From Operating Activities:
Net income (loss) $ (180,883) $ (316,456) $ (343,905)
Adjustments to reconcile net income (loss)
to net cash used in
operating activities:
Amortization of film costs 25,746 34,081 71,100
Additions to film costs 1,875 - -
Other depreciation and amortization (1,511) - -
Issuance of shares of common stock in consideration - -
for services rendered - - -
Changes in assets and liabilities:
Accounts receivable, net (65,006) - (68,436)
Notes receivable and advances (4,348) (3,037)
Prepaid expenses and other (21,728) - (96)
Accounts payable and accrued expenses 300,838 (5,535) 142,666
Due to producers and participants - - -
Deferred revenues - - -
Accrued wages 88,000 - -
Accrued interest (5,989) - -
-------------- ----------- -----------
Net cash used in operating activities 141,342 (292,258) (201,708)
-------------- ----------- -----------
Cash Flows From Investing Activities:
Purchase of stock in E-3 Sports New Mexico, Inc. - - -
Acquisition of fixed assets (Purchase Pooling) 44,500 - -
Acquisition activity of Odyssey Pictures for
Feature Films 7,000 - -
Acquisition Activity of Odyssey Ventures Online (223,816) - -
-------------- ----------- -----------
Net cash used in investing activities (186,316) - -
-------------- ----------- -----------
Cash Flows From Financing Activities:
Payment of note payable in settlement of
Generale Bank litigation - - -
Net proceeds from private placement sale
of common stock - (16,448) 8,767
Net proceeds/payments - notes and loans payable - 467,944 -
Issuance of shares of preferred stock to
equity investors - - -
Issuance of shares of common stock to
equity investors 25,000 - -
-------------- ----------- -----------
Net cash provided by financing activities 25,000 451,496 8,767
-------------- ----------- -----------
Net increase (decrease) in cash (19,974) 159,238 4,436
-------------- ----------- -----------
Cash at beginning of period 31,215 4,715 4,331
-------------- ----------- -----------
Cash at end of period 11,241 163,953 $ 8,767
============== =========== ===========
The accompanying notes are an integral part of these financial statements.
5
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<PAGE>
<TABLE>
<CAPTION>
ODYSSEY PICTURES CORPORATION
Consolidated Statements of Cash Flows
For the Years Ended June 30,
<S> <C> <C> <C> <C>
2000 1999 1998 1997
------------- ------------- ------------- ------------
Supplemental Disclosures of Cash Flow Information:
Non-cash transactions:
Issuance of shares of preferred stock for purchase of
Kimon film library and other assets $4,500,000
=============
Issuance of shares in consideration for services
rendered and to be rendered $ 250,816 $ 50 $ 34,100
============= ============= ============
Issuance of shares of common stock in full satisfaction
of loans and accrued interest $ 162,225 $ 539,338
============= =============
Issuance of shares of common stock as partial
consideration for loans made to company $ 19,800
=============
Issuance of shares to officers in payment of notes
in 2000 (1999) and deferred compensation
(1998 and 1997) $ 252,187 $ 260,244 $ 172,499 $ 45,000
============= ============= ============= ============
Issuance of note payable to purchase stock in
E-3 Sports New Mexico, Inc. $ 135,000
=============
Issuance of note payable to purchase stock in
Media Trust S.A. $ 315,000
=============
Cash paid during the year for:
Interest $ - $ - $ 18,476 $ 48,240
============= ============= ============= ============
Income taxes $ - $ - $ - $ -
============= ============= ============= ============
The accompanying notes are an integral part of these financial statements.
6
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<PAGE>
ODYSSEY PICTURES CORPORATION
Notes to Consolidated Financial Statements
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, 2000.
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, 2000, (b) the results of operations for the three month periods
ended September 30, 2000 and 1999 (c) cash flows for the three month periods
ended September 30, 2000 and 1999 and (d) statements of changes in shareholders'
equity (deficit) for the year ended June 30, 2000 and June 30, 1999 and the
three month period ended September 30, 2000.
2. Sale of Valuation Key for Company Preferred Stock
In December 1999 , the Company sold its Valuation Key software (included in
the balance sheet in Film costs, net) for all 500,000 shares of the Company's
Series A Preferred Stock. The Valuation Key was part of the Kimon assets
purchased in July 1998. Certain of Kimon's assets were acquired in consideration
of such an exchange, and the Company is now in the process of completing a stock
purchase of an internet company, a subsidiary of Kimon, of which the Company
will own 100%.
3. Litigation - Accrued Wages
Included in accrued wages is a contingent amount for Ian Jessel, the former
CEO of the film division of the Company. Mr. Jessel brought suit against the
Company on November 9, 1999, in the Los Angeles Superior Court, State of
California. The matter is styled Ian Jessel v. Odyssey Pictures Corp. In the
suit, the Plaintiff alleges breach of employment contract, fraud, and fraudulent
conveyance. An Answer to the lawsuit has been filed and discovery is underway.
The Plaintiff seeks unspecified compensatory damages. Management of the Company
believes that there are substantial defenses to this action.
4. Private Placement
During the quarter ended September 30, 2000, the Company raised
approximately $400,000 in a Private Placement of the Company's Common Stock for
$ 1.00 per share.
5. Agreements to Satisfy Certain Liabilities through Issuances of Common Stock
During the quarter ended September 30, 1999, the Company has agreed to
satisfy its Augustine Note Payable in the amount of $150,000 by issuing 300,000
shares of Common Stock.
6. Also during the quarter ended September 30, 1999, the Company satisfied
all of its liability for accrued wages to two individuals through the agreement
to pay $100,000 to each individual (one such amount was paid by September 30,
1999 and the other was paid in June of 2000). There was an issuance of 200,000
shares of Common Stock to each individual.
7. Establishment of New Majority Owned Subsidiary
During the quarter ended June 30, 2000, the Company capitalized, along with
another party, a company, domiciled in Luxembourg, named Odyssey Ventures Online
Holding, S.A. (OVO). The Company capitalized OVO with $544,500 in exchange for
99% of the Common Stock of OVO. In April 2000, OVO made an equity investment in
PurchasePooling.com, Inc., an internet purchasing aggregation company.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three Months Ended September 30, 2000 and 1999
Revenues for the three months ended September 30, 2000 decreased to $ 1,431
from $37,653 and $143,700 for the comparable three month periods ended September
30, 1999 and 1998. This decrease is due to less aggressive exploitation of the
film library and more activity in the acquisition of additional film product.
Costs related to revenues decreased to $ (27,621) respectively for the
three month periods ended September 30, 2000 from $ (37,180) and $ (126,469) for
the comparable three months ended September 30, 1999 and 1998. This decrease is
due to less aggressive exploitation of the film library and no deliveries having
been made.
Selling, general and administrative expenses decreased by $ 140,195 to $
151,950 for the three month period ended September 30, 2000, from $ 292,145 for
the comparable 1999 period and $331,693 for the same period ended September 30,
1998. This is primarily due to efforts by management to streamline the Company's
operations and overhead expenses.
Interest expense decreased to $ 8,755 for the three month period ended
September 30, 2000, from $29,132 and $32,241 for the comparable 1999 nine and
1998 three month periods. This is due to the payoff of loans and conversion of
certain notes payable into shares of Company Common Stock during fiscal year
2000 resulting in a lower average outstanding aggregate balance of notes payable
and resulting in reduced interest expense.
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, 2000, the Company had a federal net operating loss
carryforward, for tax purposes, of approximately $32,500,000, expiring through
2014, 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, 2000, 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, 2000, the Company held $ 11,241 of cash.
The Company had no material commitments for capital expenditures as of
September 30, 2000.
8
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Lawsuit - Ian Jessel v. Odyssey Pictures Corp., Johan Schotte and Does 1
through 5 - Los Angeles Superior Court, State of California - Filed November 9,
1999.
a. Complaint for alleged breach of employment contract, fraud and
fraudulent conveyance - Plaintiff alleges breach of an employment
contact. An Answer to the lawsuit has been filed and discovery is
underway. Plaintiff seeks unspecified compensatory damages. The
company has advised that there are substantial defenses to this
action.
Lawsuit - Dennis Morgan v. Odyssey Pictures Corp., Johan Schotte, Johan
Schotte Productions, Inc., Red Sun Productions, Inc., Matrusa Corp., Medina
Trust, S.A. and Does 1 through 100 - Complaint filed December 15, 1999, Los
Angeles Superior Court, State of California.
a. Plaintiff alleges unspecified damages for alleged breach of oral
contract, breach of written contract, breach of implied contract,
fraud, and negligent misrepresentation of conveyance. The action has
been served and the company intends to file a demurrer to the
Complaint. The company advises that Mr. Morgan was not an employee of
the company and there are substantial defenses to the action.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
ITEM 5. OTHER INFORMATION.
The Company is currently in negotiations to acquire the distribution rights
for the film Virtue. Virtue is owned indirectly by a company controlled by and
affiliated with certain members of management of the Company. The Company had
acquired the rights to a feature film entitled Camera which is in post
production and is scheduled for release in early 2001.
During the quarter ended June 30, 2000, and upon the approval of the Board
of Directors, the Company capitalized, along with another party, a company
domiciled in Luxembourg under the name Odyssey Ventures Online Holding, S.A.
(OVO). The Company capitalized OVO with $544,500 in exchange for 99% of the
Common Stock of OVO. In April 2000, OVO made an equity investment in
PurchasePooling.com, Inc., an internet purchasing aggregation company. OVO
continues to seek additional similar investments for expansion of its media
activities.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibits. None
Reports on Form 8-K. None
9
<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/ John Foster
---------------------
John Foster
President
By: /s/ Johan Schotte
----------------------
Johan Schotte
CEO and Chairman
Principal Executive &
Financial Officer)
DATED: November 20, 2000
10
