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, 2009
[ ] Transition Report under Section 13 or 15(d) of the Exchange Act for the
Transition Period from ________ to ___________
Commission File Number: 333-123611
FUTURA PICTURES, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 56-2495218
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17337 Ventura Boulevard, Suite 305
Encino, California 91316
Issuer's Telephone Number: (818) 784-0040
(Address and phone number of principal executive offices)
Check 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]
The Registrant has 1,599,750 shares of Common stock, par value
$.0001 per share issued and outstanding as of September 30, 2009.
1
INDEX TO QUARTERLY REPORT
-------------------------
ON FORM 10-Q
------------
PART I FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements (Unaudited) 3
Condensed Balance Sheets
August 31, 2009 and February 28, 2009 4
Condensed Statements of Operations
For the Three- and Six-Month Periods
Ended August 31, 2009 and 2008 5
Condensed Statements of Stockholders' Deficit
For the Six Months Ended August 31, 2009 6
Condensed Statements of Cash Flows
For the Six Months Ended August 31, 2009
and 2008 8
Notes to Financial Statements 10
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 20
PART II OTHER INFORMATION
Item 1. Legal Proceedings 21
Item 2. Changes in Securities and Use of Proceeds 21
Item 3. Defaults upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 5. Other Information 21
Item 6. Exhibits 21
Signatures 22
2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
(Financial Statements Commence on Following Page)
3
FUTURA PICTURES, INC.
CONDENSED BALANCE SHEETS
August 31,
----------
2009 February 28,
---- ------------
(Unaudited) 2009
----------- ----
ASSETS
Cash $ - $ 2,672
Prepaid expenses 219 -
Inventories 4,956 5,000
------------ ------------
TOTAL ASSETS $ 5,175 $ 7,672
============ ============
LIABILITIES
Bank overdraft $ 1,471 $ -
Accrued expenses 3,216 47,188
Accrued interest - related party 2,939 281
Loan payable - related party 77,957 19,457
------------ ------------
TOTAL LIABILITIES 85,583 66,926
STOCKHOLDERS' EQUITY (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 275,940 255,140
Retained Deficit (356,508) (314,554)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (80,408) (59,254)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 5,175 $ 7,672
============ ============
The accompanying notes are an integral part of these financial statements.
4
FUTURA PICTURES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three For the Six
For the Three Months Ended For the Six Months Ended
Months Ended August 31, 2008 Months Ended August 31, 2008
August 31, 2009 (as restated) August 31, 2009 (as restated)
--------------- --------------- --------------- ---------------
REVENUE $ 681 $ - $ 5,141 $ -
COST OF REVENUE 48 - 719 -
--------------- --------------- --------------- ---------------
GROSS PROFIT 633 - 4,422 -
OPERATING EXPENSES
Selling, general and administrative 17,195 15,491 42,918 39,839
Research and development expense - 2,000
--------------- --------------- --------------- ---------------
TOTAL OPERATING EXPENSES 17,195 15,491 (42,918) 41,839
(LOSS) FROM OPERATIONS (16,562) (15,491) (38,496) (41,839)
--------------- --------------- --------------- ---------------
INTEREST EXPENSE 1,513 19 2,658 38
(LOSS) BEFORE INCOME TAXES (18,075) (15,510) (41,154) (41,877)
Income tax expense 800 - 800 800
--------------- --------------- --------------- ---------------
NET (LOSS) $ (18,875) $ (15,510) $ (41,954) $ (42,677)
=============== =============== =============== ===============
NET (LOSS) PER COMMON SHARE
Basic and diluted $ (0.01) $ (0.01) $ (0.03) $ (0.03)
=============== =============== =============== ===============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Basic and diluted 1,599,750 1,599,750 1,599,750 1,595,837
=============== =============== =============== ===============
The accompanying notes are an integral part of these financial statements.
5
FUTURA PICTURES, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE SIX MONTHS ENDED AUGUST 31, 2009
(UNAUDITED)
Common Stock Total
----------------------------- Additional Stockholders'
Shares Amount Paid-in Capital Retained Deficit Equity (Deficit)
-------------- ------------ ---------------- ---------------- ----------------
Balance, March 1, 2009 1,599,750 $ 160 $ 255,140 $ (314,554) $ (59,254)
Contributed services - - 20,800 - 20,800
Net (loss) for the six months
ended August 31, 2009 - - - (41,954) (41,954)
-------------- ------------ ---------------- ---------------- ----------------
Balance, August 31, 2009 1,599,750 $ 160 $ 275,940 $ (356,508) $ (80,408)
============== ============ ================ ================ ================
The accompanying notes are an integral part of these financial statements.
6
FUTURA PICTURES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Six
For the Six Months Ended
Months Ended August 31, 2008
August 31, 2009 (as restated)
--------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (41,954) $ (42,677)
Adjustments to reconcile net (loss) to net cash
(used) by operating activities:
Contributed services 20,800 10,150
Changes in operating assets and liabilities:
Prepaid expenses (219) 1,000
Inventories 44 -
Accrued expenses (41,314) 3,043
Unearned revenue - 25,000
--------------- ---------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (62,643) (3,484)
--------------- ---------------
CASH FLOWS (USED) BY INVESTING ACTIVITIES:
Production in progress - (-)
--------------- ---------------
NET CASH (USED) BY INVESTING ACTIVITIES - -
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft 1,471 -
Proceeds from loan payable - related party 58,500 -
Proceeds from sale of common stock - 12,200
--------------- ---------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 59,971 12,200
--------------- ---------------
NET INCREASE (DECREASE) IN CASH (2,672) 8,716
CASH AT THE BEGINNING OF THE YEAR 2,672 20,823
--------------- ---------------
CASH AT THE END OF THE YEAR $ - $ 29,539
=============== ===============
The accompanying notes are an integral part of these financial statements.
7
FUTURA PICTURES, INC.
CONDENSED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
For the Six
For the Six Months Months Ended
Ended August 31, August 31, 2008
2009 (as restated)
------------------ ----------------
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Interest paid $ - $ -
Taxes paid $ 800 $ 800
The accompanying notes are an integral part of these financial statements.
8
FUTURA PICTURES, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2009
(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 the
distribution directly to the domestic and international home video
markets.
Presentation
------------
The interim financial statements of the Company are condensed and do
not include some of the information necessary to obtain a complete
understanding of the financial data. Management believes that all
adjustments (consisting of only normal recurring adjustments, unless
otherwise noted) necessary for a fair presentation of results have
been included in the unaudited financial statements for the interim
period presented. Operating results for the six months ended August
31, 2009 are not necessarily indicative of the results that may be
expected for the year ended February 28, 2010. Accordingly, your
attention is directed to footnote disclosures found in the February
28, 2009 Annual Report and particularly to Note 1, which includes a
summary of significant accounting policies.
The Company has evaluated subsequent events through October 15, 2009,
the date these condensed financial statements were issued.
Unclassified Balance Sheet
--------------------------
In accordance with the provisions of AICPA Statement of Position 00-2,
"ACCOUNTING BY PRODUCERS OR DISTRIBUTORS OF FILMS", the Company has
elected to present an unclassified balance sheet.
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.
9
Disclosure About Fair Value of Financial Instruments
----------------------------------------------------
The Company estimates that the fair value of all financial instruments
at August 31, 2009 as defined in FASB 107 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.
Revenue Recognition
-------------------
Sales are recognized upon shipment of videos to the customer or upon
website download by the customer. The Company's products may not be
returned by the customer. Accordingly, the Company has made no
provision for returns.
Inventories
-----------
Inventories represent finished DVDs of the program, "The 5
Communication Secrets That Swept Obama to the Presidency", that are
available for sale. They are valued at the lower of cost or market
using the First-In-First-Out method of accounting.
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.
Recent Pronouncements
---------------------
In February 2007, the Financial Accounting Standards Board (the
"FASB") issued Statements of Financial Accounting Standards ("SFAS")
No. 159, "The Fair Value Option for Financial Assets and Financial
Liabilities--Including an amendment of FASB Statement No. 115" (SFAS
159"). SFAS 159 permits entities to choose to measure many financial
instruments and certain other items at fair value. The objective is to
improve financial reporting by providing entities with the opportunity
to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply
complex hedge accounting provisions. This Statement is expected to
expand the use of fair value measurement, which is consistent with the
Board's long-term measurement objectives for accounting for financial
instruments. This Statement is effective as of the beginning of an
entity's first fiscal year that begins after November 15, 2007. Early
adoption is permitted as of the beginning of a fiscal year that begins
on or before November 15, 2007, provided the entity also elects to
apply the provisions of FASB Statement No. 157, Fair Value
Measurements. The Company adopted SFAS No. 159 on March 1, 2008 and
did not elect the fair value option for any existing eligible items.
10
In April 2009, FASB issued FSP No. 115-2 and FAS 124-2, Recognition
and Presentation of Other-Than-Temporary Impairments This FSP amends
the other-than-temporary impairment guidance in U.S. GAAP for debt
securities to make the guidance more operational and to improve the
presentation and disclosure of the other-than-temporary impairments on
debt and equity securities in the financial statements. The FSP is
effective for interim and annual reporting periods ending after June
15, 2009. The Company is currently analyzing the impact this FSP will
have on its financial statements.
In May 2009, the FASB issued SFAS No. 165, "Subsequent Events," which
requires entities to disclose the date through which they have
evaluated subsequent events and whether the date corresponds with the
release of their financial statements. The statement established
general standards of accounting for and disclosure of events that
occur after the balance sheet date but before financial statements are
issued or are available to be issued. SFAS No. 165 is effective for
interim or annual financial periods ending after June 15, 2009, and
shall be applied prospectively. The adoption of SFAS No. 165 did not
have a material impact on the Company's financial statements.
In June 2009, the FASB issued Statement No. 168, The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles ("SFAS 168"). SFAS 168 will become the single
source of authoritative nongovernmental U.S. generally accepted
accounting principles ("GAAP"), superseding existing FASB, American
Institute of Certified Public Accountants ("AICPA"), Emerging Issues
Task Force ("EITF"), and related accounting literature. SFAS 168
reorganizes the thousands of GAAP pronouncements into roughly 90
accounting topics and displays them using a consistent structure. Also
included is relevant Securities and Exchange Commission guidance
organized using the same topical structure in separate sections. SFAS
168 will be effective for financial statements issued for reporting
periods that end after September 15, 2009. This will have an impact on
the Company's financial statements since all future references to
authoritative accounting literature will be references in accordance
with SFAS 168.
Additionally, 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.
11
NOTE 2 SIGNIFICANT UNCERTAINTY REGARDING THE COMPANY'S ABILITY TO CONTINUE
AS A GOING CONCERN AND MANAGEMENT PLANS
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, including its desired marketing and new potential film
screenplays.
NOTE 3 DEVELOPMENT STAGE OPERATIONS
During the six months ended August 31, 2009, the Company began sales
of its DVD, "The 5 Communication Secrets That Swept Obama to the
Presidency". Accordingly, the Company is no longer considered to be in
the Development Stage.
NOTE 4 RELATED PARTY TRANSACTION
Loan Commitment
---------------
The Company's President, Buddy Young, agreed to lend up to $100,000 to
the Company to fund any cash shortfalls through February 28, 2010. The
note bears interest at 8% and is due upon demand, no later than June
30, 2010. The outstanding balance was $77,957 as of August 31, 2009.
NOTE 5 STOCKHOLDERS' DEFICIT
During the six months ended August 31, 2009 and 2008, the Company's
President devoted time to the development process of the Company.
Compensation expense totaling $20,800 has been recorded in each
period. Of this amount, the President was paid $-0- and $10,650 during
the six months ended August 31, 2009 and 2008, respectively. The
President has waived reimbursement of $20,800 and $10,150 during the
six months ended August 31, 2009 and 2008, respectively, and,
accordingly, the amounts have been recorded as a contribution to
capital.
12
NOTE 6 SUBSEQUENT EVENT
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 we are to receive a non-refundable advance of $15,000,
against future royalties paid to us as a result of revenue derived by
Gaiam from the sale of the DVD. We received the $15,000 advance on
September 14, 2009.
13
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.
14
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.
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.
SELECT FINANCIAL INFORMATION
For the Three Months Ended For the Six Months Ended
August 31, 2008 August 31, 2008
August 31, 2009 (as restated) August 31, 2009 (as restated)
Statement of Operations Data
Total Revenue $ 681 $ - $ 5,141 $ -
Cost of Revenue $ 48 $ - $ 719 $ -
Gross Profit $ 633 $ - $ 4,422 $ -
Operating Loss $ (16,562) $ (15,491) $ (38,496) $ (41,839)
Net loss after taxes $ (18,875) $ (15,510) $ (41,954) $ (42,677)
Net loss per share $ (0.01) $ (0.01) $ (0.03) $ (0.03)
Balance Sheet Data
Total assets $ 5,175 $ 29,539 $ 5,175 $ 29,539
Total liabilities $ 85,583 $ 57,749 $ 85,583 $ 57,749
Stockholders' equity (deficit) $ (80,408) $ (28,210) $ (80,408) $ (28,210)
Three-Month Period Ended August 31, 2009 Compared to Three-Month Period Ended
August 31, 2008
General
The Company was incorporated on December 10, 2003. We had no operations
until fiscal 2005. On January 19, 2005 we acquired an option on a screenplay
entitled CASS & KARRI. Additionally, on January 24, 2005 we acquired an option
on a screenplay entitled LIFE-DOT-COM. Both options expired in June 2009.
15
In November 2008, the Company commenced the production of a 47 minute
"self-improvement" 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
via the internet and through distributors specializing in the sale of product to
the educational market, i.e. libraries, universities etc, and will shortly be
available in retail outlets.
Revenues
Our revenues for the three months ended August 31, 2009 were $681. These
revenues were a result of the initial sales of "The 5 Communication Secrets That
Swept Obama To The Presidency" DVD. There were no revenues during the three
months ended August 31, 2008.
The cost of revenues during the three months ended August 31, 2009, was
$48. As there were no revenues during the three months ended August 31, 2008, no
costs were incurred.
Expenses
Selling, general and administrative expenses were $17,195 during the three
months ended August 31, 2009 as compared to $15,491 during the three months
ended August 31, 2008.
Selling and marketing expenses were $1,285 for the three months ended
August 31, 2009 as compared to $ 0 for the three months ended August 31, 2008.
These costs are mainly related to the marketing of "The 5 Communication Secrets
That Swept Obama To The Presidency" DVD.
During the three month period ended August 31, 2009, we incurred a total of
$15,910 in general and administrative expenses. This consisted primarily of
$10,400 of contributed services by our CEO, Buddy Young, and $6,169 of
professional fees incurred for our audited financial statements and related
filings. We valued the contributed services from Buddy Young at $100 per hour.
During the same period in 2008, we incurred a total of $15,491 general and
administrative expenses. This consisted primarily of $5,000 of contributed
services by our CEO, Buddy Young, $5,400 of compensation expense paid to our
CEO, Buddy Young, and $4,331 of professional fees incurred for our audited
financial statements and related filings.
We incurred $1,513 and $19 in interest expense during the three months
ended August 31, 2009 and 2008, respectively. This is related to the interest
charges we incur on our loan from Buddy Young.
16
While we cannot guarantee the level of our expenses in the future, we
anticipate them to increase as we develop new educational/self improvement DVDs.
Six-Month Period Ended August 31, 2009 Compared to Six-Month Period Ended August
31, 2008
Revenues
Our revenues for the six months ended August 31, 2009 were $5,141. These
revenues were a result of the initial sales of "The 5 Communication Secrets That
Swept Obama To The Presidency" DVD. There were no revenues during the six months
ended August 31, 2008.
The cost of revenues during the six months ended August 31, 2009, was $719.
As there were no revenues during the six months ended August 31, 2008, no costs
were incurred.
Expenses
Selling, general and administrative expenses were $42,918 during the six
months ended August 31, 2009 as compared to $39,839 during the six months ended
August 31, 2008.
Selling and marketing expenses were $9,407 for the six months ended August
31, 2009 as compared to $ 0 for the six months ended August 31, 2008. These
costs are mainly related to the marketing of "The 5 Communication Secrets That
Swept Obama To The Presidency" DVD.
During the six month period ended August 31, 2009, we incurred a total of
$33,511 in general and administrative expenses. This consisted primarily of
$20,800 of contributed services by our CEO, Buddy Young, and $12,190 of
professional fees incurred for our audited financial statements and related
filings. We valued the contributed services from Buddy Young at $100 per hour.
During the same period in 2008, we incurred a total of $39,839 general and
administrative expenses. This consisted primarily of $10,150 of contributed
services by our CEO, Buddy Young, $10,650 of compensation expense paid to our
CEO, Buddy Young, and $13,529 of professional fees incurred for our audited
financial statements and related filings.
We incurred $2,658 and $38 in interest expense during the six months ended
August 31, 2009 and 2008, respectively. This is related to the interest charges
we incur on our loan from Buddy Young.
17
Plan of Operation
During the past twelve months we worked on producing a television
documentary under the terms of the agreement signed in December 2007 with the
Hathaway Group. As a result of the termination of that agreement in February
2009, all worked ceased on the documentary. Additionally, we produced an
educational/self-improvement DVD entitled, "The Five Communication Secrets That
Swept Obama to the Presidency." Given our inability to date to raise the
necessary capital to implement our business plan of producing and co-financing
low budget motion pictures, and the current difficulty in raising capital caused
by general market conditions, management has decided to put that element of the
plan on hold, and to focus its efforts during the next 12 months on producing
educational/self-improvement DVDs whose production budgets range between fifty
and one hundred thousand dollars. Additionally, we will work to maximize the
revenue potential of the DVD that we completed during the first quarter of
fiscal 2009, entitled "The Five Communication Secrets That Swept Obama to the
Presidency." There can be no assurance that we will ever be able to raise
sufficient fund to permit us to produce or co-finance low budget motion
pictures.
"The Five Secrets of Communication That Swept Obama to the Presidency," has
generated $5,141 in revenue during the first six months of fiscal 2010. We
anticipate that cash resulting from the further sales and licensing of "The Five
Communication Secrets That Swept Obama to the Presidency." or 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 2010.
On August 12, 2009, we 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 we are to receive a non-refundable advance of $15,000,
against future royalties paid to us as a result of revenue derived by Gaiam from
the sale of the DVD. We received the $15,000 advance on September 14, 2009.
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. Other than Mr. Young, no employee has received cash
compensation from the Company. We have no other full-time or part-time
employees. 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.
18
Liquidity and Capital Resources
We had a cash balance of $0 on August 31, 2009. Other than funds received
from the sale of "The Five Communication Secrets That Swept Obama to the
Presidency,", 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 $100,000 at 8% interest through February 28, 2010. As of August
31, 2009 the balance owing on this agreement is $77,957. Payment of principal
and interest is due on this loan on June 30, 2010.
We believe that revenue derived from the sale of the above mentioned DVD,
and further borrowings from our President will be sufficient to satisfy our
budgeted cash requirements through February 28, 2010.
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 4T. CONTROLS AND PROCEDURES
The principal executive officer and principal financial officer of the
Company, who are the same person ("the Certifying Officer") with the assistance
of advisors, evaluated the effectiveness of the design and operation of the
Company's disclosure controls and procedures (as defined in section
240.13a-14(c) and 240.15d-14(c) under the Exchange Act) within 90 days prior to
the filing of this report. Based upon the evaluation, the Certifying Officer
concludes that the Company's disclosure controls and procedures are not
effective in timely alerting management to material information relative to the
Company which is required to be disclosed in its periodic filings with the SEC.
There were no significant changes in the Company's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the quarter ended August 31, 2009, no matters were submitted to
the Company's security holders.
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.
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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 16, 2009 /s/ Buddy Young
---------------------------------
Buddy Young, President and Chief
Executive Officer
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