ODYSSEY PICTURES CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
----
Report of Independent Accountants F-2
Financial Statements:
Consolidated Balance Sheets
as of June 30, 2000, 1999 and 1998 F-3
Consolidated Statements of Operations for the
Years Ended June 30, 2000, 1999, 1998 and 1997 F-4
Consolidated Statements of Changes in Shareholders'
Equity (Deficit) for the Years Ended June 30,
2000, 1999, 1998 and 1997 F-5
Consolidated Statements of Cash Flows for the
Years Ended June 30, 2000, 1999, 1998 and 1997 F-6 - F-7
F-1
<PAGE>
WANT & ENDER, CPA, P.C.
386 PARK AVENUE SOUTH, SUITE 1618
NEW YORK, NY 10016
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Odyssey Pictures Corporation
In our opinion, the accompanying consolidated balance sheets and related
consolidated statement of operations, shareholders' equity and of cash flows
present fairly, in all material respects, the financial position of Odyssey
Pictures Corporation and its subsidiaries at June 30, 2000,1999 and 1998 and the
results of their operations and their cash flows for the period ended June 30,
2000,1999 and 1998 in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.
As discussed in Note 7 to the financial statement, the Company defaulted on
payments due August and October 1996 relating to notes payable. The Company
proposed to the noteholders to defer maturity of the notes and exchange
exisiting warrants for shares, or cancel the notes and existing warrants in
their entirety in exchange for shares. The Company offered to register any
shares issued in exchange for the notes as of August 12, 1997 the date the
registration becomes effective, and all but one of the noteholders agreed to
exchange their notes for registered stock. The remaining notes for $50,000 (held
by a single investor) have not been paid and are in default. Additionally, an
unsecured note of $179,000 is also in default. At this time, the ultimate
outcome of this matter cannot be determined.
As discussed in Note 8, the Company is a defendant in various lawsuits. The
Company has filed counteractions and preliminary hearings and discovery
proceedings on several actions are in progress. The ultimate outcome of the
litigation cannot be determined at present. Not all liabilities that may result
upon adjudication have been accrued in the accompanying financial statements.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has suffered recurring losses from operations,
has a net capital deficiency and has insufficient working capital to meet its
current obligations and liquidity needs. These factors raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
in regard to these matters are also described in Note 3. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
New York City, New York
/s/ Want & Ender, CPA
----------------------
Want & Ender, CPA, P.C.
November 16, 2000
F-2
<PAGE>
<TABLE>
<CAPTION>
ODYSSEY PICTURES CORPORATION
Consolidated Balance Sheets
<S> <C> <C> <C>
June 30, June 30, June 30,
Assets 2000 1999 1998
---------------- -------------- --------------
Cash $ 31,215 $ 4,715 $ 4,331
Accounts receivable, net of allowances
of $0 and $0 208,511 81,986 9,500
Notes receivable 149,296 131,272 100,000
Film costs, net 4,095,824 4,383,629 110,422
Prepaid expenses and other 450,906 380,906 1,200
Investments 1,001,100 456,600 450,000
---------------- -------------- --------------
TOTAL ASSETS $ 5,936,852 $ 5,439,108 $ 675,453
================ ============== ==============
Liabilities and Shareholders' Equity (Deficit)
Liabilities
Accounts payable and accrued expenses $ 819,038 $ 805,071 $ 865,923
Accrued wages 709,545 839,185 457,794
Accrued interest 226,414 163,198 77,168
Due to producers and participants 250,000 250,000 250,000
Deferred revenues 29,000 29,000 29,000
Notes and loans payable 835,680 1,192,081 1,079,000
---------------- -------------- --------------
Total Liabilities $ 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
Common stock, par value $.01;
Authorized - 40,000,000 shares
Issued and outstanding -
13,103,428,8,284,728 and 5,029,285 131,034 82,847 50,293
Capital in excess of par value 34,820,445 32,704,197 27,552,973
Accumulated deficit (32,334,304) (31,126,471) (29,736,698)
---------------- -------------- --------------
Total shareholders' equity (deficit) $ 3,067,175 $ 2,160,573 $(2,083,432)
---------------- -------------- --------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) $ 5,936,852 $ 5,439,108 $ 675,453
================ ============== ==============
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
ODYSSEY PICTURES CORPORATION
Consolidated Statements of Operations
For the Years Ended June 30,
<S> <C> <C> <C> <C>
2000 1999 1998 1997
----------------- --------------- --------------- --------------
Revenue
$ 146,485 $ 288,430 $ 42,630 $ 141,202
Expenses
Costs related to revenues 140,580 261,050 20,019 565,610
Selling, general and
administrative expenses 1,136,617 1,282,553 1,073,134 1,678,450
----------------- --------------- --------------- --------------
1,277,197 1,543,603 1,093,153 2,244,060
----------------- --------------- --------------- --------------
Operating income (loss) (1,130,712) (1,255,173) (1,050,523) (2,102,858)
Other income (expenses)
Other income - - - -
Interest income 25,944 15,004 - -
Interest expense (103,063) (149,604) (68,891) (91,435)
Loss on sale of joint venture interests - - - -
Other income 2,263,101
----------------- --------------- --------------- --------------
Income (loss) from operations
before provision for income taxes (1,207,831) (1,389,773) (1,119,414) 68,808
Provision / Benefit for income taxes - - - -
NET INCOME (LOSS) $ (1,207,831) $(1,389,773) $(1,119,414) $ 68,808
================= =============== =============== ==============
Basic income (loss) per share $ (0.11) $ (0.22) $ (0.25) $ 0.02
Weighted average common
shares outstanding 11,093,198 6,459,396 4,403,435 2,993,809
================= =============== =============== ==============
Diluted income (loss) per share $ (0.11) $ (0.22) $ (0.25) $ 0.02
Weighted average common
shares outstanding 11,093,198 6,459,396 4,403,435 2,993,809
================= =============== =============== ==============
</TABLE>
F-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 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
======== ======= ========= ======== =========== ======== ============ ============= ===========
</TABLE>
F-5
<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
------------ ------------- ------------- -----------
Cash Flows From Operating Activities:
Net income (loss) $(1,207,831) $(1,389,773) $ (1,119,414) $ 68,808
Adjustments to reconcile net income (loss)
to net cash used in
operating activities:
Amortization of film costs 318,387 162,931 36,976 1,660,440
Additions to film costs (30,583) (153,179) (26,926) (779,944)
Other depreciation and amortization 21,500 10,961 18,963
Issuance of shares of common stock in consideration
for services rendered 76,816 50 34,100
Changes in assets and liabilities:
Accounts receivable, net (126,525) (72,486) 282,751 704,323
Notes receivable and advances (18,024) (31,272) 200,000 (300,000)
Prepaid expenses and other (70,000) (10,165) 5,837 (536)
Accounts payable and accrued expenses 13,967 (60,852) 272,240 219,035
Due to producers and participants - (310,499) (2,924,643)
Deferred revenues - 9,200 16,800
Accrued wages (129,640) 381,391 121,798 318,624
Accrued interest 63,217 113,255 12,567 18,329
------------ ------------- ------------- -----------
Net cash used in operating activities (1,187,032) (961,834) (504,459) (945,701)
------------ ------------- ------------- -----------
Cash Flows From Investing Activities:
Purchase of stock in E-3 Sports New Mexico, Inc. (6,600)
Acquisition of fixed assets (Purchase Pooling) (544,500) (8,480)
------------ ------------- ------------- -----------
Net cash used in investing activities (544,500) (6,600) - (8,480)
------------ ------------- ------------- -----------
Cash Flows From Financing Activities:
Payment of note payable in settlement of Generale
Bank litigation - (25,000) -
Net proceeds from private placement sale of common stock 1,200,000 440,693 - 375,000
Net proceeds/payments - notes and loans payable (356,401) 528,125 (25,000) 125,000
Issuance of shares of preferred stock to equity investors - - 500,000 -
Issuance of shares of common stock to equity investors 914,433 - 50,000 -
------------ ------------- ------------- -----------
Net cash provided by financing activities 1,758,032 968,818 500,000 500,000
------------ ------------- ------------- -----------
Net increase (decrease) in cash 26,500 384 (4,459) (454,181)
Cash at beginning of period 4,715 4,331 8,790 462,971
------------ ------------- ------------- -----------
Cash at end of period 31,215 $ 4,715 $ 4,331 $ 8,790
============ ============= ============= ===========
</TABLE>
F-6
<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 $ - $ - $ - $ -
============= ============= ============= ============
</TABLE>
F-7
