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, 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
13,573,018 outstanding shares as of March 31, 2000.
<PAGE>
ODYSSEY PICTURES CORPORATION
INDEX
Page
Part I - Financial Information
Consolidated Balance Sheets as of 1
March 31, 2000 and June 30, 1999
Consolidated Statements of Operations 2
for the Nine and Three Month Periods Ended
March 31, 2000 and 1999
Consolidated Statements of Changes In 3
Shareholders' Equity (Deficit) for the
Year Ended June 30, 1999 and the
Nine Month Period Ended March 31, 2000
Consolidated Statements of Cash Flows 4-5
for the Nine Month Periods Ended
March 31, 2000 and 1999
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 10
<PAGE>
<TABLE>
<CAPTION>
ODYSSEY PICTURES CORPORATION
Consolidated Balance Sheets
<S> <C> <C>
March 31, June 30,
Assets 2000 1999
- ------ --------------- ----------------
Cash $ 570,147 $ 4,715
Accounts receivable, net of allowances
of $0 and $0 94,287 81,986
Notes receivable 142,468 131,272
Film costs, net 4,182,487 4,383,629
Prepaid expenses and other 481,906 380,906
Investments 456,600 456,600
--------------- ----------------
TOTAL ASSETS $5,927,895 $5,439,108
=============== ================
Liabilities and Shareholders' Equity
- ------------------------------------
Liabilities
Accounts payable and accrued expenses $ 695,965 $ 805,071
Accrued wages 843,545 839,185
Accrued interest 204,570 163,198
Due to producers and participants 250,000 250,000
Deferred revenues 29,000 29,000
Notes and loans payable 729,469 1,192,081
--------------- ----------------
Total Liabilities 2,752,549 3,278,535
--------------- ----------------
Commitments and contingencies
Shareholders' Equity
Preferred stock, Series A, par value $.10;
Authorized - 10,000,000 shares
Issued - 500,000 shares - 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 -
13,573,018 and 8,284,728 135,730 82,847
Capital in excess of par value 34,598,150 32,704,197
Accumulated deficit (32,008,534) (31,126,471)
--------------- ----------------
Total shareholders' equity 3,175,346 2,160,573
--------------- ----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,927,895 $5,439,108
=============== ================
The accompanying notes are an integral part of these financial statements.
1
</TABLE>
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<TABLE>
<CAPTION>
ODYSSEY PICTURES CORPORATION
Consolidated Statements of Operations
For the Three Months Ended For the Nine Months Ended
March 31, March 31,
<S> <C> <C> <C> <C>
2000 1999 2000 1999
------------ ----------- ------------ -------------
Revenue $ 25,180 $ 37,390 $ 86,432 $ 245,769
Expenses
Costs related to revenues 35,746 28,522 118,134 217,562
Selling, general and
administrative expenses 196,854 297,561 778,123 930,703
------------ ----------- ------------ -------------
232,600 326,083 896,257 1,148,265
------------ ----------- ------------ -------------
Operating income (loss) (207,420) (288,693) (809,825) (902,496)
Other income (expenses)
Interest income 286 8,982
Interest expense (21,845) (35,279) (81,220) (111,097)
Other income 4,084 10,772
------------ ----------- ------------ -------------
Income (loss) from operations
before provision for income taxes (228,979) (319,888) (882,063) (1,002,821)
Provision / Benefit for income taxes - - - -
NET INCOME (LOSS) $(228,979) $(319,888) $(882,063) $ (1,002,821)
============ =========== ============ =============
Basic income (loss) per share $ (0.02) $ (0.05) $ (0.08) $ (0.16)
Weighted average common
shares outstanding 11,912,601 6,327,655 10,928,873 6,327,655
============ =========== ============ =============
Diluted income (loss) per share $ (0.02) $ (0.05) $ (0.08) $ (0.16)
Weighted average common
shares outstanding 11,912,601 6,327,655 10,928,873 6,327,655
============ =========== ============ =============
The accompanying notes are an integral part of these financial statements.
2
</TABLE>
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<TABLE>
ODYSSEY PICTURES CORPORATION
Consolidated Statements Of Changes in Shareholders' Equity (Deficit)
<CAPTION>
<S> <C> <C> <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, 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 to equity investors 4,120,000 41,200 1,554,719 1,595,919
Issuance of shares of common stock
for conversion of notes payable
and related accrued interest 1,099,990 11,000 446,173 457,173
Issuance of shares of common stock
for services rendered 68,300 683 41,797 42,480
Exchange of certain film cost assets
for all outstanding series A
preferred stock (500,000) (50,000) (148,736) (198,736)
Net loss (882,063) (882,063)
-------- ------- --------- -------- ---------- -------- ----------- ------------- -----------
- $ - 4,500,000 $450,000 13,573,018 $135,730 $34,598,150 $(32,008,534) $3,175,346
======== ======= ========= ======== ========== ======== =========== ============= ===========
The accompanying notes are an integral part of these statements.
</TABLE>
3
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<TABLE>
<CAPTION>
ODYSSEY PICTURES CORPORATION
Consolidated Statements of Cash Flows
For the Nine Months Ended
March 31,
<S> <C> <C>
2000 1999
------------- -------------
Cash Flows From Operating Activities:
Net loss $(882,063) $(1,002,821)
Adjustments to reconcile net income (loss)
to net cash used in
operating activities:
Amortization of film costs 88,906 128,311
Issuance of shares of common stock for services
and other consideration 42,480 260,800
Changes in assets and liabilities:
Accounts receivable, net (12,301) (88,373)
Notes receivable (11,196) (27,040)
Accounts payable and accrued expenses (109,106) 285,210
Other 34,566 333
------------- -------------
Net cash used in operating activities (848,714) (443,580)
------------- -------------
Cash Flows From Investing Activities:
- -
None
------------- -------------
Net cash used in investing activities - -
------------- -------------
Cash Flows From Financing Activities:
Net proceeds/(payments) - notes and loans payable (181,773) 253,581
Issuance of shares of common stock to equity investors 1,595,919 187,500
------------- -------------
Net cash provided by financing activities 1,414,146 441,081
------------- -------------
Net increase (decrease) in cash 565,432 (2,499)
Cash at beginning of period 4,715 4,331
------------- -------------
Cash at end of period $ 570,147 $ 1,832
============= =============
The accompanying notes are an integral part of these financial statements.
4
</TABLE>
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<TABLE>
<CAPTION>
ODYSSEY PICTURES CORPORATION
Consolidated Statements of Cash Flows
For the Nine Months Ended
March 31,
<S> <C> <C>
2000 1999
-------------- -------------
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 of common stock for services and other
consideration $ 42,480 $ 260,800
============== =============
Issuance of shares of common stock for conversion of notes payable and
related accrued interest and accrued wages $ 457,173 $ 260,244
============== =============
Exchange of certain film cost assets for all outstanding Series A
preferred stock $ 198,736
==============
Cash paid during the period for:
Interest $ 26,190 $ -
============== =============
Income taxes $ - $ -
============== =============
The accompanying notes are an integral part of these financial statements.
5
</TABLE>
<PAGE>
ODYSSEY PICTURES CORPORATION
Notes to Consolidated Financial Statements
March 31, 2000
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, 1999.
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, 2000, (b) the results of operations for the nine and three month periods
ended March 31, 2000 and 1999 (c) cash flows for the nine month periods ended
March 31, 2000 and 1999 and (d) statements of changes in shareholders' equity
(deficit) for the year ended June 30, 1999 and the nine month period ended March
31, 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.
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 March 31, 2000, the Company raised approximately
$1.1 million in a Private Placement of the Company's Common Stock for $.40 per
share.
5. Agreements to Satisfy Certain Liabilities through
Issuances of Common Stock
During the quarter ended March 31, 2000, the Company has agreed to satisfy
its Augustine Note Payable in the amount of $150,000 by issuing 300,000 shares
of Common Stock.
Also during the quarter ended March 31, 2000, 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 March 31, 2000) and the
issuance of 200,000 shares of Common Stock to each individual.
6. Establishment of New Majority Owned Subsidiary
During the quarter ended March 31, 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.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Nine and Three Months Ended March 31, 2000 and 1999
Revenues for the nine months and three months ended March 31, 2000
decreased to $86,432 and $25,180 from $245,769 and $37,390 for the comparable
three month and nine month periods ended March 31, 1999. This decrease is due to
less aggressive exploitation of the film library.
Costs related to revenues decreased to $118,134 and $35,746 respectively
for the nine and three month periods ended March 31, 2000 from $217,562 and
$28,522 for the comparable nine and three months ended March 31, 1999. This
decrease is due to less aggressive exploitation of the film library.
Selling, general and administrative expenses decreased by $152,580 to
$778,123 for the nine month period ended March 31, 2000, from $930,703 for the
comparable 1999 period. For the three month period ended March 31, 2000, such
expenses decreased by $100,708 to $196,854 from $297,561 for the comparable 1999
three month period. This is primarily due to efforts by management to streamline
the Company.
Interest expense decreased to $81,220 and $21,845 for the nine and three
month periods ended March 31, 2000, from $111,097 and $35,279 for the comparable
1999 nine and three month periods. This is due to the payoff 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 thus 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 March 31, 2000, the Company had a federal net operating loss
carryforward, for tax purposes, of approximately $32,000,000, 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 March 31, 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 March 31, 2000, the Company held $570,147 of cash.
The Company had no material commitments for capital expenditures as of
March 31, 2000.
7
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
a. Jessel v. Odyssey Pictures Corporation
--------------------------------------
Los Angeles Superior Court No. BC 219 846
The plaintiff was hired in November 1998 to be the Chief Executive
Officer of the Motion Picture and Television Division of Odyssey Pictures
Corporation. Jessel contends that his contract was terminated either
actually or constructively and further contends that the capital and income
sources available to Odyssey Pictures Corporation were misrepresented to
induce him to come to work for Odyssey Pictures Corporation. Lastly, Jessel
contends that funds were improperly disbursed to other creditors affiliated
with management when Jessel should have received those funds as
compensation and reimbursement.
b. Morgan v. Odyssey Pictures Corporation
--------------------------------------
Los Angeles Superior Court No. BC 221 681
This case arises from a claim by Mr. Morgan that he has a contract to
head a music division to be established by Odyssey Pictures Corporation.
Odyssey Pictures Corporation takes the position that there was no
employment contract with Mr. Morgan.
On March 21, 2000, the court found Morgan's claim to a written
contract and claims of fraudulent conveyance toi be legally inadequate. The
court gave plaintiff 10 days to amend those claims. Plaintiff failed to do
so.
c. Pfannebecker, et al. vs. Muller, et al.
---------------------------------------
Los Angeles Superior Case No. BC 195401
This court action is part of a long-term attempt by plaintiffs to
assert a class action securities as under Federal and California law. Over
a period of time, the complaint has been aggressively challenged and the
allegations of breaches of securities law have been eliminated. The Federal
Court case was dismissed. Further, the California court has determined that
only plaintiff Nagy may proceed in an effort to have a class certified. The
putative class (the class that would exist if a motion for class
confirmation were approved) is relatively limited. This possible class
would consist of all purchasers of common stock of Communications and
Entertainment Corp. ("Com Ent"), a predecessor of Registrant, who were
shareholders in Com Ent before issuance of Com Ent's 1991, 1992 and 1993
Annual Reports and 10Ks, and who invested after those documents were issued
and disseminated. The court defined this as the "First Sub Class".
Additionally, Nagy may also seek class certification on behalf of all
purchasers of Com Ent stock in private placements completed in November
1991 and March through April 1992 pursuant to uniformly disseminated
prospectuses issued in November 1991 and March through April 1992. The
court has defined this possible class as the "Second Sub Class". The motion
to determine whether a class will in fact be certified must be filed by the
plaintiffs on or before July 5, 2000. The hearing on the certification
motion is currently set for September 13, 2000.
In addition to the class action issues, the court has allowed the
three plaintiffs, Pfannebecker, Robinson, and Nagy, to proceed with their
individual claims to the extent not otherwise barred.
8
<PAGE>
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.
During the quarter ended March 31, 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.
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: May 15, 2000
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 570,147
<SECURITIES> 0
<RECEIVABLES> 236,755
<ALLOWANCES> 0
<INVENTORY> 4,182,487
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,927,895
<CURRENT-LIABILITIES> 2,752,549
<BONDS> 0
0
450,000
<COMMON> 135,730
<OTHER-SE> 2,589,616
<TOTAL-LIABILITY-AND-EQUITY> 5,927,895
<SALES> 25,180
<TOTAL-REVENUES> 35,746
<CGS> 45,208
<TOTAL-COSTS> 232,600
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,845
<INCOME-PRETAX> (228,779)
<INCOME-TAX> 0
<INCOME-CONTINUING> (228,779)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (228,779)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
