Imk (IMKG) 10-Q 2015 Q3 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 November 30, 2014

[   ] 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 312

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 definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [_]	Accelerated filer [_]
Non-accelerated filer [_]	Smaller reporting company [X]

Check whether the issuer is a “shell company” as defined in Rule 12b-2 of the Securities Exchange Act of 1934. Yes [_] No [X]

As of January 14, 2015 the issuer has 1,599,750 shares of Common stock outstanding

INDEX TO QUARTERLY REPORT

ON FORM 10-Q

		Page
PART 1	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Condensed Balance Sheets
	November 30, 2014 and February 28, 2014	5
	Condensed Statements of Operations
	For the Three and Nine Month Periods Ended November 30, 2014 and 2013	6
	Condensed Statements of Stockholders’ Deficit
	For the Nine Months Ended November 30, 2014	7
	Condensed Statements of Cash Flows
	For the Nine Months Ended November 30, 2014 and 2013	8
	Notes to Condensed Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 4.	Controls and Procedures	19
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3.	Defaults upon Senior Securities	21
Item 4.	Mine Safety Disclosures	21
Item 5.	Other Information	21
Item 6.	Exhibits	21
Signatures		22

FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

(Financial Statements Commence on Following Page)

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FUTURA PICTURES, INC.

INDEX TO FINANCIAL STATEMENTS

(UNAUDITED)

	Page
Condensed Balance Sheets as of November 30, 2014 and February 28, 2014	5
Condensed Statements of Operations for the Three and Nine Months Ended November 30, 2014 and 2013	6
Condensed Statement of Stockholders’ Deficit for the Nine Months Ended November 30, 2014	7
Condensed Statements of Cash Flows for the Nine Months Ended November 30, 2014 and 2013	8
Condensed Notes to Financial Statements – November 30, 2014	9

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FUTURA PICTURES, INC.

CONDENSED BALANCE SHEETS

(UNAUDITED)

	November 30, 2014			February 28, 2014
ASSETS
Cash	$	33		$	6,855
Accounts receivable, net		5,778			4,867
TOTAL ASSETS	$	5,811		$	11,722
LIABILITIES
Accrued expenses	$	34,157		$	25,616
Unearned revenue		1,300			1,300
Accrued interest – related party		60,306			47,575
Loan payable – related party		226,754			192,604
TOTAL LIABILITIES		322,517			267,095
STOCKHOLDERS’ DEFICIT
Common stock, par value $0.0001 per share, Authorized – 100,000,000 shares, Issued and outstanding – 1,599,750 shares		160			160
Additional paid-in capital		475,104			421,804
Accumulated deficit		(791,970	)		(677,337	)
TOTAL STOCKHOLDERS’ DEFICIT		(316,706	)		(255,373	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	5,811		$	11,722

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

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FUTURA PICTURES, INC.

CONDENSED STATEMENTS OF OPERATIONS

FOR THE THREE ANDNINE MONTHS ENDEDNOVEMBER 30,

(UNAUDITED)

	For the Three Months Ended November 30, 2014			For the Three Months Ended November 30, 2013			For theNine Months Ended November 30, 2014			For theNine Months Ended November 30, 2013
REVENUE	$	14,935		$	9,723		$	37,362		$	48,287
COST OF REVENUE		636			1,711			1,190			6,776
GROSS PROFIT		14,299			8,012			36,172			41,511
OPERATING EXPENSES
Selling, general and administrative		57,027			28,916			139,185			90,463
TOTAL OPERATING EXPENSES		57,027			28,916			139,185			90,463
LOSS FROM OPERATIONS		(42,728	)		(20,904	)		(103,013	)		(48,952	)
OTHER (EXPENSE)
Other income		-			-			2,857			-
Interest expense		(4,906	)		(4,143	)		(13,677	)		(12,828	)
TOTAL OTHER (EXPENSE)		(4,906	)		(4,143	)		(10,820	)		(12,828	)
LOSS BEFORE INCOME TAXES		(47,634	)		(25,047	)		(113,833	)		(61,780	)
Income tax expense		-			-			800			800
NET LOSS	$	(47,634	)	$	(25,047	)	$	(114,633	)	$	(62,580	)
NET LOSS PER COMMON SHARE
Basic and diluted	$	(0.03	)	$	(0.02	)	$	(0.07	)	$	(0.04	)
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 condensed financial statements.  

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FUTURA PICTURES, INC.

CONDENSED STATEMENT OF STOCKHOLDERS’ DEFICIT

FOR THENINE MONTHS ENDEDNOVEMBER 30, 2014

(UNAUDITED)

	Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Capital		Deficit			Equity (Deficit)
Balance, March 1, 2014		1,599,750	$	160	$	421,804	$	(677,337	)	$	(255,373	)
Contributed services		-		-		53,300		-			53,300
Net loss for the nine months ended November 30, 2014		-		-		-		(114,633	)		(114,633	)
Balance, November 30, 2014		1,599,750	$	160	$	475,104	$	(791,970	)	$	(316,706	)

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

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FUTURA PICTURES, INC.

CONDENSED STATEMENTS OF CASH FLOWS

FOR THENINE MONTHS ENDEDNOVEMBER 30,

(UNAUDITED)

	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(114,633	)	$	(62,580	)
Adjustments to reconcile net loss to net cash (used) provided by operating activities:
Contributed services		53,300			47,400
Bad debt expense		1,928			-
Changes in operating assets and liabilities:
Accounts receivable		(2,839	)		55
Prepaid expenses		-			(370	)
Accrued expenses		21,272			8,935
NET CASH USED BY OPERATING ACTIVITIES		(40,972	)		(6,560	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loan payable – related party		38,500			9,250
Repayment of loan payable – related party		(4,350	)		(8,000	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		34,150			1,250
NET (DECREASE) IN CASH		(6,822	)		(5,310	)
CASH AT THE BEGINNING OF THE PERIOD		6,855			5,972
CASH AT THE END OF THE PERIOD	$	33		$	662
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid	$	946		$	1,656
Taxes paid	$	800		$	800

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

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FUTURA PICTURES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

NOVEMBER 30, 2014

(UNAUDITED)

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 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, the Company 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 condensed balance sheet.

The accompanying condensed financial statements have been prepared without audit and reflect all adjustments, consisting of normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of financial position and the results of operations for the interim periods.These interim financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended February 28, 2014, included in the Company’s annual report on Form 10-K filed on May 29, 2014 with the SEC.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and the disclosure of contingent assets and liabilities. These estimates and assumptions are based on the Company's historical results as well as management's future expectations. The Company's actual results could vary materially from management's estimates and assumptions. Additionally, interim results may not be indicative of the Company’s results for future interim periods, or the Company’s annual results.  

Disclosure About Fair Value of Financial Instruments

The Company estimates that the fair value of all financial instruments at November 30, 2014 and 2013 do not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying condensed balance sheets. 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.

Concentrations and Credit Risk

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

Two customers represented approximately 35% (11% and 24%) of total gross accounts receivable as of November 30, 2014.  Four customers represented approximately 63% (10%, 13%, 16% and 24%) of total gross accounts receivable as of February 28, 2014.  

Three customers in the nine months ended November 30, 2014 represented approximately 45% (11%, 16% and 18%) of total revenues for that period.  One customer in the nine months ended November 30, 2013 represented approximately 34% of total revenues for that period. Three customers in the three months ended November 30, 2014 represented approximately 53% (10%, 19% and 24%) of total revenues for that period.  Five customers in the three months ended November 30, 2013 represented approximately 71% (11%, 13%, 14%, 16%, and 17%) of total revenues for that period.

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No other individual customer represented greater than 10% of total revenues in the nine and three months ended November 30, 2014 or 2013. No other individual customer balance represented more than 10% of the total gross accounts receivable at November 30, 2014 or February 28, 2014.

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.

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 $8,880 and $6,952 is recorded as of November 30, 2014 and February 28, 2014, respectively. The Company does not require collateral to support its accounts receivables nor does it accrue interest thereon.

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 as of the nine months ended November 30, 2014 and 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.

In assessing the recoverability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon generation of future taxable income during the periods in which temporary differences such as loss carry-forwards and tax credits become deductible. Management considers projected future taxable income and tax planning strategies in making this assessment and ensuring that the deferred tax asset valuation allowance is adjusted as appropriate.

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Recent Pronouncements 

In August 2014, the Financial Accounting Standards Board issued Accounting Standards Update ASU No. 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”), which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures.  ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early application is permitted.  The adoption of ASU 2014-15 is not expected to have a material effect on our condensed financial statements or disclosures.

In November 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-17, Business Combinations (Topic 805): Pushdown Accounting. This ASU provides companies with the option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. The election to apply pushdown accounting can be made either in the period in which the change of control occurred, or in a subsequent period. This ASU is effective as of November 18, 2014. The Company will evaluate this standard in the event of a future business combination.

In December 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-18, Business Combinations (Topic 805): Intangible Assets. This ASU allows companies to no longer recognize or otherwise consider the fair value of customer-related and noncompete agreement intangible assets separately from goodwill. This ASU is effective for transactions that occur in fiscal years beginning after December 15, 2015. The Company will evaluate this standard in the event of a future business combination. 

NOTE 2 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 $317,000. The accompanying condensed 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 condensed 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 more “self-improvement/educational” DVDs, and to expand their library of workforce training programs.

NOTE 3 UNEARNED REVENUE

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 part of Unearned Revenue on the accompanying condensed balance sheets as of November 30, 2014 and February 28, 2014 as there have not been any sales of the DVD reported to the Company.

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 $300,000 to the Company to fund any cash shortfalls through March 31, 2015. The note bears interest at 8% and is due upon demand, no later than June 30, 2015. The outstanding balance was $226,754 and $192,604 as of November 30, 2014 and February 28, 2014 respectively. The related outstanding Accrued Interest balance was $60,306 and $47,575 as of November 30, 2014 and February 28, 2014, respectively.

Effective June 1, 2014, the Board of Directors agreed to a compensation amount of $12,500 per month for the period of June 1 through August 31, 2014, for Mr. Young’s services; the compensation was accrued at the end of each month and will be paid once funds become available. The Company has included these accruals for the prior quarter ended August 31, 2014 in the Loan Payable – related party balance on the accompanying condensed balance sheet as of November 30, 2014. However, in the current quarter ended November 30, 2014, Mr. Young has waived his right to be paid the $12,500 monthly compensation and accordingly the current quarter compensation amount has been recorded as a contribution to capital (Note 5).

NOTE 5 STOCKHOLDERS’ DEFICIT

For the nine months ended November 30, 2014 and 2013, the Company’s President devoted time to the operations of the Company. Beginning in fiscal year 2014, the President devoted more time than in the past to cover certain bookkeeping functions of the Company in order to save costs on outside consultants. As discussed in Note 4, Mr. Young has agreed to waive payment of a portion of the compensation to which he is entitled. The compensation that has been waived is $53,300 and $47,400 for the nine months ended November 30, 2014 and 2013, respectively. Accordingly those amounts have been recorded as a contribution to capital.

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NOTE 6               INCOME TAXES

Deferred Tax Components

Significant components of the Company’s deferred tax assets are as follows at November 30, 2014:

Net operating loss carry-forward	$	62,781
Less valuation allowance		(62,781	)
Net deferred tax assets, November 30, 2014	$	-

Summary of valuation allowance:

Balance March 1, 2014	$	50,631
Additions for the nine months November 30, 2014		12,150
Balance, November 30, 2014	$	62,781

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.

Net Operating Loss

The Company has approximately $320,000 in net operating loss tax carry-forwards, which expire in various years beginning in 2024.

Examination

The Company’s tax returns are open to examination for the prior three years for Federal purposes, and four years for State purposes. The Company recognizes and measures uncertain tax positions using a more-likely-than-not approach. The Company had no material uncertain tax positions at November 30, 2014.

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

You should read this section together with our condensed 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-Q, 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 affected by a number of factors, which include, but are not limited to the following: economic and business conditions specific to the 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.

Going Concern

The accompanying condensed 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 condensed 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, including its desired marketing and new potential film screenplays.

General

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.

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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. During the third quarter of fiscal 2014, we produced another meeting opener entitled, Diana Nyad: the Power of Persistence. Using Ms. Nyad’s quotes and photos, this four minute meeting opener relates the incredible persistence in achieving her goal of swimming from Cuba to Florida. If funds are available we plan to produce another meeting opener during the fourth quarter of fiscal 2015.

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 condensed 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 condensed financial statements. These are important accounting policies that require management's most difficult, subjective judgment.

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.

Value of Stock Issued for Services. The Company periodically issues shares of its common stock in exchange for, or in settlement of, services. Management values the shares issued in such transactions at either the then market value of the Company’s 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.

Three-Month Period Ended November 30, 2014 Compared to Three-Month Period Ended November 30, 2013

REVENUES

Our revenues for the three months ended November 30, 2014 were $14,935. Revenues for the three months ended November 30, 2013 were $9,723. The increase in total revenues was the result of increased royalties received from international sales of our videos. Due to our very limited financial resources we are unable to hire sales personnel at this time. Our revenues are mainly dependent on sub distributors selling our programs.

During the three month period ended November 30, 2014, approximately 68% of our revenues were derived from the royalties received from international sales of our videos.

The cost of revenues during the three months ended November 30, 2014, were $636. The cost of revenues during the three months ended November 30, 2013, were $1,711. Cost of revenues is mainly comprised of the cost of videos purchased for resale from other producers.

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SELLING, GENERAL AND ADMINISTRATIVE

To date, our expenses have consisted mainly of selling, general and administrative expenses. The main components of the selling, general and administrative expenses consist of compensation to the Company’s President, Buddy Young, and for professional services rendered to the Company. Mr. Young has waived reimbursement and his compensation expense has been applied to additional paid-in capital. During the three months ended November 30, 2014, the Company recognized $37,500 of contributed services by Buddy Young, and $6,870 of professional fees incurred for the Company’s audited financial statements and related filings. During the same period in 2013, we incurred a total of $15,800 of contributed services by Mr. Young, and $7,185 of professional fees incurred for our audited financial statements and related filings.

When comparing the three months ended November 30, 2014 to November 30, 2013, selling, general and administrative expenses increased from $28,916 to $57,027. The main reason for the increase of $28,111 was due to the increased compensation to Mr. Young as well as one-time legal fees in the amount of $7,600.

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

INTEREST EXPENSE

We incurred $4,906 and $4,143 in interest expense during the three months ended November 30, 2014 and 2013, respectively. Of this amount, $4,517 and $3,742 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.

Nine-Month Period Ended November 30, 2014 Compared to Nine-Month Period Ended November 30, 2013

REVENUES

Our revenues for the nine months ended November 30, 2014 were $37,362. Revenues during the nine months ended November 30, 2013 were $48,287. The major reason for the decrease in revenues is due to the aging of our library, as well as the fact that there were less third party video sales in the current period as compared to the prior period.

During the nine month period ended November 30, 2014, approximately 65% of our revenues were derived from the royalties received from international sales of our videos.

The cost of revenues during the nine months ended November 30, 2014, was $1,190. The cost of revenues during the nine months ended November 30, 2013, were $6,776. Cost of revenues is mainly comprised of the cost of videos purchased for resale from other producers. The decrease noted is due to less third party video sales during the current period as compared to the prior period.

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SELLING, GENERAL AND ADMINISTRATIVE

To date, our expenses have consisted mainly of selling, general and administrative expenses. The main components of the selling, general and administrative expenses consist of compensation to the Company’s President, Buddy Young, and for professional services rendered to the Company. With the exception of the quarter ended August 31, 2014, Mr. Young waived reimbursement and his compensation expense has been applied to additional paid-in capital.

During the nine months ended November 30, 2014, the Company recognized $90,800 of compensation expense for Buddy Young, and $21,520 of professional fees incurred for the Company’s audited financial statements and related filings. During the same period in 2013, we incurred a total of $47,400 of contributed services by Mr. Young, and $20,516 of professional fees incurred for our audited financial statements and related filings.

During the nine months ended November 30, 2014, we incurred a total of $139,185 selling, general and administrative expenses, compared to a total of $90,463 during the nine months ended November 30, 2013. This represents an increase of $48,722. This increase is mainly due to the increased compensation to Buddy Young.

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

INTEREST EXPENSE

We incurred $13,677 and $12,828 in interest expense during the nine months ended November 30, 2014 and 2013, respectively. Of this amount, $12,731 and $11,172 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.

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. During fiscal 2014, we produced and commenced distribution of 2 four minute inspirational meeting openers entitled “Fall Seven Times, Stand Up Eight,” and Diana Nyad: The Power of Persistence. “Fall Seven Times, Stand Up Eight,” uses quotes, pictures and video clips of world renowned personalities including: Winston Churchill, Steve Jobs, Oprah Winfrey and Michael Jordan. “Diana Nyad: The Power of Persistence,” demonstrates the incredible persistence in achieving her goal of swimming from Cuba to Florida.

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.

The training of employees by many organizations has dramatically changed from the traditional method of group training using DVDs in a classroom setting, to individual training using computer based training courses.

While we will continue to market our existing DVD library, as a result of the above referenced trend we plan to convert and adapt many of our programs to computer based learning courses. Additionally, our efforts will continue to 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.

Employees

Due to our very limited financial resources, the Company’s President, Buddy Young, along with Mel Powell, our Director of acquisitions, work on a part-time basis. 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.

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LIQUIDITY AND CAPITAL RESOURCES

We had a cash balance of $33 on November 30, 2014. 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 $300,000 at 8% interest through March 31, 2015. As of November 30, 2014 the balance owing on this agreement is $226,754. Related Accrued Interest as of November 30, 2014 is $60,306. Payment of principal and interest is due on this loan on June 30, 2015.

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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 June 30, 2015.

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.

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, 2014 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.

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The Company’s management, including its Chief Executive Officer and Chief 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 errors 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.

 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 November 30, 2014, 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. 

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PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS     None.

ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS     None.

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: January 14, 2015	/s/ Buddy Young
	Buddy Young, President and Chief Executive Officer

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