Imk (IMKG) 10-Q 2014 Q2 Quarterly report

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended August 31, 2013

[ ] Transition Report under Section 13 or 15(d) of the Exchange Act for the Transition Period from ________ to ___________

Commission File Number: 000-54211

FUTURA PICTURES, INC.

(Exact name of small business issuer as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization) 56-2495218 (I.R.S. Employer Identification No.)

17337 Ventura Boulevard, Suite 216

Encino, California    91316

Issuer's Telephone Number: (818) 784-0040

(Address and phone number of principal executive offices)

Indicate by a check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [_] No [_]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if smaller reporting company)	Smaller reporting company ☒

Check whether the issuer is a “shell company” as defined in Rule 12b-2 of the Exchange Act Yes [_] No [X ]

As of October 7, 2013 the issuer had 1,599,750 shares of common stock outstanding.

FUTURA PICTURES, INC.

CONDENSED BALANCE SHEETS

INDEX TO QUARTERLY REPORT

ON FORM 10-Q

PART I	FINANCIAL INFORMATION	Page
Item 1.	Financial Statements (Unaudited)	3
	Condensed Balance SheetsAugust 31, 2013 and February 28, 2013	5
	Condensed Statements of OperationsFor the Three and Six MonthsEnded August 31, 2013 and 2012	6
	Condensed Statements of Stockholders’ DeficitFor the Six Months Ended August 31, 2013	7
	Condensed Statements of Cash FlowsFor the Six Months Ended August 31, 2013and 2012	8
	Notes to Condensed Financial Statements	9
Item 2.	Management’s Discussion and Analysis or Plan of Operation	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4	Controls and Procedures	21
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	22
Item 6.	Exhibits	22
Signatures		23

FUTURA PICTURES, INC.

CONDENSED BALANCE SHEETS

PART I

FINANCIAL INFORMATION

ITEM 1.                 FINANCIAL STATEMENTS

(Financial Statements Commence on Following Page)

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FUTURA PICTURES, INC.

CONDENSED BALANCE SHEETS

FUTURA PICTURES, INC.

INDEX TO FINANCIAL STATEMENTS

	Page
Condensed Balance Sheets as of August 31, 2013 and February 28, 2013	5
Condensed Statements of Operations Three and Six Months Ended August 31, 2013 and 2012	6
Condensed Statement of Stockholders’ Deficit Six Months Ended August 31, 2013	7
Condensed Statements of Cash Flows Six Months Ended August 31, 2013 and 2012	8
Condensed Notes to Financial Statements – August 31, 2013	9

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FUTURA PICTURES, INC.

CONDENSED BALANCE SHEETS

	August 31, 2013 (Unaudited)			February 28,  2013
ASSETS
Cash	$	6,236		$	5,972
Accounts receivable, net		3,531			6,260
Deposits		900			900
TOTAL ASSETS	$	10,667		$	13,132
LIABILITIES
Accrued expenses	$	21,468		$	26,679
Unearned revenue		1,300			1,300
Accrued interest – related party		40,034			32,604
Loan payable – related party		187,604			186,354
TOTAL LIABILITIES		250,406			246,937
STOCKHOLDERS’ DEFICIT
Common stock, par value $0.0001 per shareAuthorized – 100,000,000 sharesIssued and outstanding – 1,599,750 shares		160			160
Additional paid-in capital		390,204			358,604
Accumulated deficit		(630,103	)		(592,569	)
TOTAL STOCKHOLDERS’ DEFICIT		(239,739	)		(233,805	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	10,667		$	13,132

The accompanying notes are an integral part of these financial statements. 

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FUTURA PICTURES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2013 AND 2012

(UNAUDITED)

	For the Three Months Ended August 31, 2013			For the Three Months Ended August 31, 2012			For the Six Months Ended August 31, 2013			For the Six Months Ended August 31, 2012
REVENUE	$	16,889		$	19,078		$	38,564		$	29,564
COST OF REVENUE		1,062			305			5,065			1,942
GROSS PROFIT		15,827			18,773			33,499			27,622
OPERATING EXPENSES
Selling, general and administrative		36,344			31,587			61,547			67,182
TOTAL OPERATING EXPENSES		36,344			31,587			61,547			67,182
LOSS FROM OPERATIONS		(20,517	)		(12,814	)		(28,048	)		(39,560	)
OTHER (EXPENSE)
Interest expense		(4,308	)		(4,317	)		(8,686	)		(9,483	)
TOTAL OTHER (EXPENSE)		(4,308	)		(4,317	)		(8,686	)		(9,483	)
LOSS BEFORE INCOME TAXES		(24,825	)		(17,131	)		(36,734	)		(49,043	)
Income tax expense		-			-			800			800
NET LOSS	$	(24,825	)	$	(17,131	)	$	(37,534	)	$	(49,843	)
NET LOSS PER COMMON SHARE
Basic and diluted	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	(0.03	)
WEIGHTED AVERAGE NUMBER OF COMMONSHARES OUTSTANDING
Basic and diluted		1,599,750			1,599,750			1,599,750			1,599,750

  The accompanying notes are an integral part of these financial statements.

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FUTURA PICTURES, INC.

CONDENSED STATEMENT OF STOCKHOLDERS' DEFICIT

FOR THE SIX MONTHS ENDED AUGUST 31, 2013

(UNAUDITED)

	Common Stock									Total
	Shares		Amount		AdditionalPaid-in Capital		Accumulated Deficit			Stockholders’Equity (Deficit)
Balance, March 1, 2013		1,599,750	$	160	$	358,604	$	(592,569	)	$	(233,805	)
Contributed services		-		-		31,600		-			31,600
Net (loss) for the six monthsended August 31, 2013		-		-		-		(37,534	)		(37,534	)
Balance, August 31, 2013		1,599,750	$	160	$	390,204	$	(630,103	)	$	(239,739	)

  The accompanying notes are an integral part of these financial statements.

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FUTURA PICTURES, INC.

CONDENSED STATEMENTS OF CASH FLOW

FOR THE SIX MONTHS ENDED AUGUST 31, 2013 AND 2012

		2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(37,534	)	$	(49,843	)
Adjustments to reconcile net loss to net cashprovided (used) by operating activities:
Amortization expense			-			180
Contributed services			31,600			20,800
Changes in operating assets and liabilities:
Accounts receivable			2,729			(4,581	)
Accrued expenses			2,219			(15,928	)
NET CASH (USED) BY OPERATING ACTIVITIES	��		(986	)		(49,372	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of line of credit			-			(39,421	)
Proceeds from loan payable – related party			9,250			89,465
Repayment of loan payable – related party			(8,000	)		-
NET CASH PROVIDED BY FINANCING ACTIVITIES			1,250			50,044
NET INCREASE IN CASH			264			672
CASH AT THE BEGINNING OF THE PERIOD			5,972			2,409
CASH AT THE END OF THE PERIOD		$	6,236		$	3,081
SUPPLEMENTAL DISCLOSURE OF           CASH FLOW INFORMATION
Interest paid		$	1,255		$	2,542
Taxes paid		$	800		$	800

  The accompanying notes are an integral part of these financial statements.

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FUTURA PICTURES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

AUGUST 31, 2013

NOTE 1                  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Nature of Business

Futura Pictures, Inc. (the “Company”) was incorporated under the laws of the state of Delaware on December 10, 2003. The Company was formed to engage in the production and the co-financing of films, documentaries and similar products produced solely for the distribution directly to the domestic and international home video markets.

As a result of not being able to raise the necessary funds to either co-finance or produce any motion pictures, management changed the Company’s business plan to that of producing and distributing self-improvement/educational DVDs and workforce training programs.

Effective January 1, 2011, pursuant to an Asset Transfer, Assignment and Assumption Agreement, we acquired from Progressive Training, Inc. all of its assets and liabilities related to Progressive’s workforce training business.

Unclassified Balance Sheet

The Company has elected to present an unclassified balance sheet.

Use of Estimates

Interim financial reporting standards require us to make estimates that are based on assumptions regarding the outcome of future events and circumstances not known at that time, including the use of estimated effective tax rates. Inevitably, some assumptions will not materialize, unanticipated events or circumstances may occur which vary from those estimates and such variations may significantly affect our future results. Additionally, interim results may not be indicative of our results for future interim periods or our annual results.

Reclassifications

Certain reclassifications have been made to the prior year financial statements in order for them to be in conformity with the current year presentation.

Disclosure About Fair Value of Financial Instruments

The Company estimates that the fair value of all financial instruments at August 31, 2013 does not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying balance sheet. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value, and accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

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Concentrations and Credit Risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of accounts receivable.

Three customers represented approximately 46% (11%, 13% and 22%) of total accounts receivable as of August 31, 2013.  Two customers represented approximately 44% (10% and 34%) of total accounts receivable as of February 28, 2013.

One customer in the six months ended August 31, 2013 represented approximately 43% of total revenues for that period.  Three customers in the six months ended August 31, 2012 represented approximately 35% (10%, 11% and 14%) of total revenues for that period.

No other customers represented greater than 10% of total revenues in the six months ended August 31, 2013 and 2012, or total accounts receivable at August 31, 2013 and February 28, 2013.

Revenue Recognition

The Company sells videos produced by the Company, as well as videos produced by third parties. Sales are recognized upon shipment of videos to the customer or upon website download by the customer. The products sold may not be returned by the customer. Accordingly, the Company has made no provision for returns.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

The Company establishes the allowance for doubtful accounts based on its assessment of the collectability of individual customer accounts. The adequacy of these allowances is regularly reviewed by considering internal factors such as historical experience, credit quality and age of the receivable balances as well as external factors such as economic and political conditions that may affect a customer's ability to pay, historical default rates, and long-term historical loss rates published by major third-party credit-rating agencies. The Company also considers the concentration of receivables outstanding with a particular customer in assessing the adequacy of its allowances. An allowance for doubtful accounts is provided for at the point it is probable that the receivable is uncollectible. An Allowance for Doubtful Accounts amounting to $6,952 is recorded as of both August 31, 2013 and February 28, 2013. The Company does not require collateral to support its accounts receivables nor does it accrue interest thereon.

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Prepaid Expenses

The Company amortizes its prepaid expenses on a straight-line basis over the period during which it will receive the underlying services.

Production Costs

The Company expenses production costs as incurred when the costs are related to videos where there is no historical revenue to aid the Company in accurately forecasting revenues to be earned on the related videos.

Value of Stock Issued for Services

The Company periodically issues shares of its common stock in exchange for, or in settlement of, services. The Company’s management values the shares issued in such transactions at either the then market price of the Company’s common stock, as determined by the Board of Directors and after taking into consideration factors such as volume of shares issued or trading restrictions, or the value of the services rendered, whichever is more readily determinable.

Net Income (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Any anti-dilutive effects on net income (loss) per share are excluded. The Company has no potentially dilutive securities outstanding at August 31, 2013.

Income Taxes

Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

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Recent Pronouncements 

There are no recently issued accounting standards with pending adoptions that the Company’s management currently anticipates will have any material impact upon its financial statements.

NOTE2 SIGNIFICANT UNCERTAINTY REGARDING THE COMPANY’S ABILITY TO CONTINUE AS A GOING CONCERN AND MANAGEMENT PLANS

The Company has incurred significant losses over recent years and currently has a working capital deficit of approximately $240,000. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company's current financial resources are not considered adequate to fund its planned operations. This condition raises substantial doubt about its ability to continue as a going concern. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company's continuation as a going concern currently is dependent upon timely procuring significant external debt and/or equity financing to fund its immediate and near-term operations, and subsequently realizing operating cash flows from sales of its film products sufficient to sustain its longer-term operations and growth initiatives. During the next 12 months the Company will be seeking to produce, or acquire another one or two “self-improvement/educational” DVDs, and to expand their library of workforce training programs.

NOTE 3                  UNEARNED REVENUE

On August 12, 2009, the Company signed an agreement with Gaiam America, licensing them the distribution rights to "The Five Secrets of Communication That Swept Obama to the Presidency." Under the terms of the agreement, Gaiam America will distribute the DVD throughout the world to the non-educational market. Further, pursuant to the agreement the Company received the $15,000 advance on September 14, 2009. Sales of the DVD under the Gaiam America distribution agreement commenced during the last quarter of fiscal 2010 and the company has recorded $361 of income since the effective date of the agreement. Due to minimal sales of the DVD under the Gaiam America distribution agreement, management estimated that only about $100 can be collected in the future, and the rest of the advance in the amount of $14,539 was recognized as revenue during the fiscal year ended February 29, 2012.

On October 17, 2012, the Company signed an agreement with EBSCO Publishing, Inc., licensing them the distribution rights to four DVD’s owned by the Company in exchange for royalties on the net revenue collected. Under the terms of the agreement, the Company received a $1,200 advance on royalties. The entire amount is classified as Unearned Revenue on the accompanying Balance Sheet as of August 31, 2013 as there have not been any sales of the DVD reported to the Company.

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NOTE 4                  RELATED PARTY TRANSACTION

Prepaid Loan Commitment

On February 16, 2005, the Company’s President, Buddy Young, accepted an unsecured promissory note from the Company and agreed to lend up to $225,000 to the Company to fund any cash shortfalls through December 31, 2013. The note bears interest at 8% and is due upon demand, no later than June 30, 2014. The outstanding balance was $187,604 as of August 31, 2013.

NOTE 5                  STOCKHOLDERS’ DEFICIT

For the six months ended August 31, 2013 and 2012, the Company’s President devoted time to the development process of the Company. Compensation expense totaling $31,600 and $20,800 has been recorded in the six months ended August 31, 2013 and 2012, respectively. The President has waived reimbursement of $31,600 and $20,800 during the six months ended August 31, 2013 and 2012, respectively, and accordingly the amounts have been recorded as a contribution to capital.

NOTE 6                  INCOME TAXES

Deferred Tax Components

Significant components of the Company’s deferred tax assets are as follows at August 31, 2013:

Net valuation allowance	$	48,608
Less valuation allowance		(48,608	)
Net deferred tax assets	$	0
Summary of valuation allowance:
Balance, March 1, 2013	$	48,982
Reduction for the six months ended August 31, 2013		(374	)
Balance, August 31, 2013	$	48,608

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

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Net Operating Loss

The Company has approximately $211,000 net operating loss tax carry-forwards, which expire in various years through 2032.

Examination

The Company’s tax returns are open to examination for the year ended 2010 and forward. The Company recognizes and measures uncertain tax positions using a more-likely-than-not approach. The Company had no material uncertain tax positions at August 31, 2013.

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ITEM 2. MANAGEMENT"S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

You should read this section together with our financial statements and related notes thereto included elsewhere in this report. In addition to the historical information contained herein, this report contains forward-looking statements that are subject to risks and uncertainties. Forward-looking statements are not based on historical information but relate to future operations, strategies, financial results or other developments. Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. Certain statements contained in this Form 10, including, without limitation, statements containing the words "believe," "anticipate," "estimate," "expect," "are of the opinion that" and words of similar import, constitute "forward-looking statements." You should not place any undue reliance on these forward-looking statements.

You should be aware that our results from operations could materially be effected by a number of factors, which include, but are not limited to the following: economic and business conditions specific to the motion picture, television, and home video industries; competition from other producers of home video content; and television documentaries, our ability to control costs and expenses, access to capital, and our ability to meet contractual obligations. There may be other factors not mentioned above or included elsewhere in this report that may cause actual results to differ materially from any forward-looking information.

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based upon our statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. In consultation with our Board of Directors, we have identified two accounting policies that we believe are key to an understanding of our financial statements. These are important accounting policies that require management's most difficult, subjective judgment.

Going Concern.  The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company's current financial resources are not considered adequate to fund its planned operations.  This condition raises substantial doubt about its ability to continue as a going concern.  The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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The Company's continuation as a going concern currently is dependent upon timely procuring significant external debt and/or equity financing to fund its immediate and near-term operations, and subsequently realizing operating cash flows from sales of its film products sufficient to sustain its longer-term operations and growth initiatives, including its desired marketing and new potential film screenplays.

Revenue Recognition.The Company sells videos produced by the Company, as well as videos produced by third parties. Sales are recognized upon shipment of videos to the customer or upon website download by the customer. The products sold may not be returned by the customer. Accordingly, the Company has made no provision for returns.

Non-Cash Equity Issuances. We periodically issue shares of our common stock in exchange for, or in settlement of, services. Our management values the shares issued in such transactions at either the then market value of our common stock, as determined by the Board of Directors and after taking into consideration factors such as the volume of shares issued or trading restrictions, or the value of the services received, whichever is more readily determinable.

General

We were incorporated in the State of Delaware on December 10, 2003.  From the date of incorporation through December 2007 the sole component of our business plan called for the producing and co-financing of motion pictures whose production budgets are estimated to range between $500,000 and $1,500,000, produced solely for distribution to the domestic and international home video markets.

As a result of not being able to raise the necessary funds to either co-finance or produce any motion pictures, management changed the Company’s business plan to that of producing and distributing self- improvement/educational DVDs and workforce training programs. The major reasons for this decision was that the funds needed to produce or acquire self- improvement/educational DVDs and workforce training programs are substantially less than required for the production of motion pictures. Additionally, our management has years of experience in the production and distribution of this type of product.

In November 2008, the Company commenced the production of a 47 minute “self-improvement/educational” DVD entitled, “The 5 Communication Secrets That Swept Obama to the Presidency.”

The DVD uses video examples of President Barack Obama’s most memorable speeches to illustrate five essential secrets of effective public and personal communication.  International communication analyst and coach Richard Greene hosts the DVD and instructs in the system of communication techniques he created. The DVD was completed in February 2009, and is being sold and marketed to individuals via the internet and through distributors specializing in the sale of product to the educational market, i.e. libraries, universities etc. Additionally, the Company created a “Business Edition” version of the DVD. This version includes the 47 minute DVD, along with a Leader Guide, Participant workbook, and Power Point presentation. It is being marketed both domestically and internationally by distributors to organizations for the training of their personnel in communication skills.

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Effective January 1, 2011, pursuant to an Asset Transfer, Assignment and Assumption Agreement, we acquired from Progressive Training, Inc. all of its assets and liabilities related to Progressive’s workforce training business.  Among the assets we acquired in the transaction described above are fourteen training video programs including:Twelve Angry Men: Teams That Don't Quit.  The video is based on the classic film starring Henry Fonda and utilizes 12 minutes of clips from the film,The Cuban Missile Crisis: A Case Study in Decision Making and Its Consequences.  This video is based on the decision making process of President Kennedy and his Cabinet during the Cuban missile crisis,It’s a Wonderful Life: Leading Through Service, features film clips from the classic motion pictureIt’s a Wonderful Life, starring Jimmy Stewart, along with on-camera commentary by Dr. Wheatley,How Do You Put A Giraffe Into A Refrigerator?  an animated short that is used as a meeting opener to stimulate the thinking of the participants,Character in Action: The United States Coast Guard on Leadership. This video demonstrates the highest qualities of leadership, and how to apply them, using the example of the United States Coast Guard.  Additionally, we acquired the best-selling and critically acclaimed training video entitledWork Teams and The Wizard of Oz.

In addition to the assets listed above, we acquired a website,www.advancedknowledge.com for the online sale and marketing of our products. We market and sell all our training programs and self-improvement DVDs under the Company’s dba Advanced Knowledge.

Since the acquisition mentioned above we have worked to expand both our domestic and foreign distributor network. We have succeeded in establishing non-exclusive distribution agreements with a number of additional distributors to market and sell our product.  In many instances, we have mutual non-exclusive distribution agreements to market/distribute their products.

During the second quarter of fiscal 2013, we completed and commenced the distribution of one new workforce training DVD. The DVD is based on the resourceful teamwork during the successful Chilean mine rescue. In the beginning of the third quarter of fiscal 2013, we completed and commenced the distribution of a second DVD that teaches the extraordinary elements of teamwork employed by the Navy’s world renowned Blue Angel flight demonstration team. Due to limited cash resources we did not produce any additional videos in the fourth quarter of fiscal 2013. During the first quarter of fiscal 2014, we produced and commenced distribution of a four minute inspirational meeting opener entitled “Fall Seven Times, Stand Up Eight.” The video uses quotes, pictures and video clips of world renowned personalities including: Winston Churchill, Steve Jobs, Oprah Winfrey and Michael Jordan. We anticipate producing one or two additional inspirational meeting openers during fiscal 2014.

Three-Month Period Ended August 31, 2013 Compared to Three-Month Period Ended August 31, 2012

Revenues

Our revenues for the three months ended August 31, 2013 were $16,889. Revenues during the three months ended August 31, 2012 were $19,078. This decrease of $2,189 in revenue is attributed to less revenue derived from the sales of the training video, “Chilean Mine Rescue”, which had its initial release in the quarter ended August 31, 2012. Of the $16,889 of revenues a total of $4,451 was the result of the sale of third party videos.

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The cost of revenues during the three months ended August 31, 2013, was $1,062. The cost of revenues during the three months ended August 31, 2012, was $305. Cost of revenues is mainly comprised of the cost of videos purchased for resale from other producers. The increase noted is due to more third party video sales during the current period as compared to the prior period.

General and Administrative

To date, our expenses have consisted mainly of selling, general and administrative expenses. The main components being compensation to the Company’s President, Buddy Young, and professional services. Mr. Young has waived reimbursement and his compensation expense has been applied to additional paid-in capital.

During the three months ended August 31, 2013, we incurred a total of $36,344 selling, general and administrative expenses, compared to a total of $31,587 during the three months ended August 31, 2012. This represents an increase of $4,757. This increase is mainly the result of an increase in professional fees.   

InterestExpense

We incurred $4,308 and $4,317 in interest expense during the three months ended August 31, 2013 and 2012, respectively. Of this amount, $3,744 and $3,743 is related to the interest charges we incur on our loan from Buddy Young in each period, respectively. The remaining interest expense relates to a company credit card.

While we cannot guarantee the level of our expenses in the future, we anticipate them to increase as we develop or acquire new educational/self- improvement and training DVDs.

Six-Month Period Ended August 31, 2013 Compared to Six-Month Period Ended August 31, 2012

Revenues

Our revenues for the six months ended August 31, 2013 were $38,564. Revenues during the six months ended August 31, 2012, were $29,564. Of the $38,564 of revenues a total of $14,134 was the result of the sale of third party videos. The major reason for the increase in revenues is due to one unusually large sale in the amount of $12,226 during the immediately prior quarter ended May 31, 2013.

During the six month period ended August 31, 2013, our revenues were mainly derived from the sale of videos to one customer totaling $16,400, and $12,710 in royalty payments received from international and domestic sub-distributors.

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The cost of revenues during the six months ended August 31, 2013, was $5,065. The cost of revenues during the six months ended August 31, 2012, was $1,942. Cost of revenues is mainly comprised of the cost of videos purchased for resale from other producers. The increase noted is due to more third party video sales during the current period as compared to the prior period.

General and Administrative

To date, our expenses have consisted mainly of selling, general and administrative expenses. The main components being compensation to the Company’s President, Buddy Young, and professional services. Mr. Young has waived reimbursement and his compensation expense has been applied to additional paid-in capital.

During the six months ended August 31, 2013, we incurred a total of $61,547 selling, general and administrative expenses, compared to a total of $67,182 during the six months ended August 31, 2012. This represents a decrease of $5,635. This decrease is mainly due to a reduction of approximately $4,000 in selling and marketing costs.

Interest Expense

We incurred $8,686 and $9,483 in interest expense during the six months ended August 31, 2013 and 2012, respectively. Of this amount, $7,431 and $6,940 is related to the interest charges we incur on our loan from Buddy Young in each period, respectively. The remaining interest expense relates to a company credit card and our line of credit.

Plan of Operation

During the past twelve months we continued to concentrate our efforts on maximizing the revenue potential of the training programs we acquired in January 2011, by expanding our domestic and international distributor network, and to market our most recent productions “The Power of Teamwork, and ” “Chilean Mine Rescue: The Unstoppable Team.” Produced during fiscal 2013 “The Power of Teamwork” is based on the extraordinary elements of teamwork employed by the Navy’s world renowned Blue Angel flight demonstration team. “Chilean Mine Rescue: The Unstoppable Team,” also produced during fiscal 2013, focuses on the resourceful teamwork during the successful Chilean mine rescue. 

Additionally, we are also continuing to license our library of training videos to sub-distributors who utilize new digital distribution platforms such as Learning Management Systems To date, we have licensed our library to EBSCO Publishing and Mastery Technologies. Although we anticipate receiving future royalty revenue from these license agreements, we cannot predict their revenue potential.

We anticipate that during the next 12 months our efforts will consist of: (a) raising funds through a private placement sale of equity, to be used for the purpose of adding to our library of programs, (b) continue to improve the functionality and visibility of our website advancedknowledge.com, (c) as financial resources permit increase revenue by hiring additional commissioned sales personnel, (d) concentrate on the further licensing of our library and (e) develop and produce new product.

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We expect that cash resulting from the further sales and licensing of our existing programs, along with the funds provided to us by our president and principal shareholder, under a promissory note dated February 16, 2005, as amended, will be sufficient to fund our cash requirements to continue our efforts through February 2014.

If during the next twelve months our revenue is insufficient to continue operations, and we are unable to raise funds through the sale of additional equity, or from traditional borrowing sources, we may be required to scale back our planned operations, or be forced to totally abandon our business plan and seek other business opportunities in a related or unrelated industry. Such opportunities may include a reverse merger with a privately held company. The result of which could cause the existing shareholders to be severely diluted.

Employees

Due to our very limited financial resources, the Company’s President, Buddy Young, along with Joseph Adelman, and Mel Powell, our Director of acquisitions, work on a part-time basis. We also have one commissioned sales person. Additionally, we regularly utilize the services of independent firms to handle our accounting and certain administrative matters. If and when our capital resource permits, we will hire full-time professional and administrative employees.

Liquidity and Capital Resources

We had a cash balance of $6,236 on August 31, 2013. Other than funds received from the sale of videos produced by us, videos acquired from Progressive Training in December 2011, and the sale of training programs produced by third parties, at this time, our only other known cash resource comes from an agreement with our President and majority shareholder to fund any shortfall in cash flow up to $225,000 at 8% interest through December 31, 2013. As of August 31, 2013 the balance owing on this agreement is $187,604. Payment of principal and interest is due on this loan on June 30, 2014.

We believe that revenue derived from the sale of the above mentioned programs and further borrowings from our President will be sufficient to satisfy our budgeted cash requirement through February 28, 2014.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Based on the nature of our current operations, we have not identified any issues of market risk at this time.

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ITEM 4. CONTROLS AND PROCEDURES

The Company has adopted and maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), such as this Form 10-Q, is collected, recorded, processed, summarized and reported within the time periods specified in the rules of the Securities and Exchange Commission.  The Company’s disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure.  As required under Rule 13a-15 of the Exchange Act, the Company’s management, including the Chief Executive Officer and Principal Financial Officer, has conducted an evaluation of the effectiveness of disclosure controls and procedures as of the end of the period covered by this report.  

Based upon its current evaluation, the Company has concluded that the Company’s current disclosure controls and procedures are not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15 of the Exchange Act.  The Company’s internal control over financial reporting is designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements.  Management conducted an assessment of the Company’s internal control over financial reporting based on the framework and criteria established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework. Based on the assessment, management concluded that, as of February 28, 2013 the Company’s internal control over financial reporting is not effective. The assessment identified a material weakness in the internal control over financial reporting resulting from the Company not having adequate resources to employ sufficient personnel to provide adequate segregation of duties and have personnel knowledgeable in accounting and reporting.

The Company’s management, including its Chief Executive Officer and Principal Financial Officer, does not expect that the Company’s disclosure controls and procedures and its internal control processes will prevent all error and all fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of error or fraud, if any, within the Company have been detected.  These inherent limitations include the realities that judgments in decision-making can be faulty, and that the breakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.  The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.  Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.  However, these inherent limitations are known features of the financial reporting process.  Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

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Changes in Internal Control

There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended August 31, 2013, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

This quarterly report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission, which permanently exempt smaller reporting companies. 

PART II

OTHER INFORMATION

ITEM 1.          LEGAL PROCEEDINGS   None.

ITEM 1A      RISK FACTORS

This Item is not applicable because we are a "smaller reporting company," as defined by applicable SEC regulation.

ITEM 2.         UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDSNone.

ITEM 3.          DEFAULTS UPON SENIOR SECURITIES     None.

ITEM 4.         MINE SAFETY DISCLOSURES Non Applicable

ITEM 5.         OTHER INFORMATION     None.

ITEM 6.         EXHIBITS

31.1 Certification of CEO Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FUTURA PICTURES, INC.
	(Registrant)
Dated: October 8, 2013	/s/ Buddy Young
	Buddy Young, President and Chief
	Executive Officer

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