SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2012

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From_______ to _______

0-18954

Commission file number

ODYSSEY PICTURES CORPORATION

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

Nevada		95-4269048
(State of incorporation)		(IRS Employer Identification Number)

2321 Coit Rd. Suite E, Plano, TX 75075

(Address of principal executive office)

(972) 867-0055

(Issuer’s telephone number)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to the filing requirement for at least the past 90 days. Yes [X] No [ ]

Indicate 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 (§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 [ ]

Large accelerated filer [ ] Accelerated filer [ ]

Non-accelerated filer (Do not check if a smaller reporting company)[ ] Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Stock, par value $.01 per share 77,316,582 outstanding shares as of December 31, 2012.

ODYSSEY PICTURES CORPORATION

Part I - FINANCIAL INFORMATION

Item 1.	Financial Statements-unaudited	F-1
	Balance Sheets as of December 31, 2012 and June 30, 2011	F-1
	Statements of Operations for the Three Month Periods Ended December 31, 2011 and 2012 and Statement of Operations for the Six Month Periods Ended December 31, 2011 and 2012	F-2
	Statements of Cash Flows for the Six Month Periods Ended December 31, 2011 and 2012	F-3
	Notes to Interim Financial Statements	F-4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	5
Item 4.	Controls and Procedures	5

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	6
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	6
Item 3.	Defaults Upon Senior Securities	6
Item 4.	Submission of Matters to a Vote of Security Holders.	6
Item 5.	Other Information	6
Item 6.	Exhibits	6

Signatures		7

Item 1. Financial Statements:

Odyssey Pictures Corporation
Consolidated Balance Sheet
(unaudited)

Assets	December 31, 2012			June 30, 2012

Current Assets
Cash & cash equivalent’s	$	1,619		$	356
Accounts receivable		133,443			134,852
Prepaid expenses		136,540			1,492
Total current assets		271,602			136,700

Property & equipment (net)		6,258			7,858
Capitalized production costs		1,257,215			1,068,974
Other		2,578			2,578

Total assets	$	1,537,653		$	1,216,110

Liabilities and Stockholders’ Deficiency

Current Liabilities:
Accounts payable	$	249,447		$	223,177
Accounts payable-related parties		78,291			80,190
Accrued interest		459,947			412,739
Other accrued expenses		1,131,255			1,145,305
Legal settlements & judgments		157,009			149,993
Current debt obligations due within one year		560,246			449,246
Debt obligations		149,176			0
Liability to issue common stock		125,000			125,000
Related party debt due within one year		876,226			0
Convertible debt derivative liability		186,670			186,670
Total current liabilities		3,973,267			2,772,320

Related parties		109,625			828,876
Reserve for loss contingencies		110,000			110,000

Stockholders’ Deficiency:
common stock-110,000,000 authorized $0.01 par value 77,316,582 issued & outstanding		773,166			773,166
Additional paid in capital		39,677,293			39,677,293
Unamortized deferred compensation		(101,488	)		(133,520	)
Accumulated deficit		(43,004,210	)		(42,812,025	)
Total Stockholders’ Deficiency		(2,655,239	)		(2,495,086	)

Total Liabilities and Stockholders’ Deficiency	$	1,537,653		$	1,216,110

See notes to unaudited interim financial statements.

F-1

Odyssey Pictures Corporation

Consolidated Statement of Operations

(unaudited)

	Quarter Ended Dec 31,						Six Months Ended Dec 31,
	2012			2011			2012			2011

Net Sales of services	$	189,085		$	450,400		$	374,467		$	698,800
Costs Applicable to Sales & Revenue		65,910			103,900			144,200			234,000

Gross Profit		123,175			346,500			230,267			464,800

Selling, General & Administrative Expenses		214,614			209,400			377,638			420,600
Settlements, net		0			0			455			200
Derivative valuation charges		0			61,900			0			61,900
Total Operating Expenses		214,614			271,300			378,093			482,700
Income (Loss) Before Other Income & Income Taxes		(91,439	)		75,200			(147,826	)		(17,900	)

Other Income (Expense)
Excess carrying value of renegotiated payables		0			0			6,746			0
Interest (Expense)		(11,245	)		(32,400	)		(51,106	)		(41,400	)
Income (Loss) from continuing operation before income taxes		(102,684	)		42,800			(192,186	)		(59,300	)
Income Taxes		0			0			0			0
Earnings (Loss) from continuing operations		(102,684	)		42,800			(192,186	)		(59,300	)
Net Income (Loss) to Odyssey	$	(102,684	)	$	42,800		$	(192,186	)	$	(59,300	)

Basic and Diluted Net Income Per Common Share		Nil			Nil			Nil			Nil
Weighted Average Common Shares Outstanding (Basic)		77,316,582			72,850,888			77,316,582			72,850,888

See notes to unaudited interim financial statements.

F-2

Odyssey Pictures Corporation

Consolidated Statement of Cash Flows

(unaudited)

	Six Months Ended Dec 31,
	2012			2011

Cash Flows from Operating Activities:
Net Loss	$	(192,186	)	$	(59,300	)
Adjustments required to reconcile net loss to cash flows from operating activities:
Amortization of deferred compensation		32,032			32,000
Depreciation & impairment		1,600			900
Change in value of derivatives		0			61,900
Changes in Operating Assets & Liabilities:
Accounts Receivable		(101,286	)		(22,100	)
Prepaid expenses		(49,845	)		9,900
Decrease in deferred income		16,016			(42,700	)
Decrease in payables to affiliates		15,101			(58,000	)
Accounts Payable & Other		212,580			283,000
Net cash generated by operating activities		(65,988	)		205,600

Cash Flows from Investing Activities:
Investment in production inventory		(187,749	)		(274,000	)
Purchase of fixed assets		0			(6,600	)
Net cash used by investing activities		(187,749	)		(280,600	)

Cash Flows from Financing Activities:
Loan proceeds		277,000			85,500
Payments made on long term debt		(13,000	)		(3,000	)
Payments made on settlements & judgments		(9,000	)		0
Net cash used by financing activities		255,000			82,500

Net Change In Cash		1,263			7,500
Cash-Beginning		356			6,500
Cash-Ending	$	1,619		$	14,000

See notes to unaudited interim financial statements.

F-3

ODYSSEY PICTURES CORP

Notes To UNAUDITED CONSOLIDATED INTERIM Financial Statements

december 31, 2012

1.	Basis of Presentation

The Consolidated Financial Statements presented herein have been prepared by us in accordance with the accounting policies described in our June 30, 2012 Annual Report on Form 10-K and should be read in conjunction with the notes to financial statements which appear in that report.

The preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on going basis, we evaluate our estimates, including those related to intangible assets, income taxes, insurance obligations and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other resources. Actual results may differ from these estimates under different assumptions or conditions.

In the opinion of management, the information furnished in this Form 10-Q reflects all adjustments necessary for a fair statement of the financial position and results of operations and cash flows as of and for the three and six-month periods ended December 31, 2012 and 2011. All such adjustments are of a normal recurring nature. The Financial Statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include some information and notes necessary to conform to annual reporting requirements.

2.	Earnings/Loss Per Share

Basic earnings per share is computed by dividing income available to common shareholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) for the period. Diluted earnings per share assume that any dilutive convertible securities outstanding were converted, with related preferred stock dividend requirements and outstanding common shares adjusted accordingly. It also assumes that outstanding common shares were increased by shares issuable upon exercise of those stock options for which market price exceeds the exercise price, less shares which could have been purchased by us with the related proceeds. In periods of losses, diluted loss per share is computed on the same basis as basic loss per share as the inclusion of any other potential shares outstanding would be anti-dilutive.

3.	Equity Based Compensation

Effective January 1, 2011 and retroactive to January 1, 2010, the Company granted John Foster option to purchase 4 million shares of common stock. The compensation cost that has been charged against income for options was $32,032 for the six-month periods ended December 31, 2012 and 2011 based on the requisite service period for unvested options as of that date as well as options granted during the period. As of December 31, 2012, there was approximately $101,500 of unrecognized compensation cost related to non-vested options. The Company expects to recognize the cost over a weighted average period of 1.29 years.

4.	Related Party Transactions not Disclosed Elsewhere:

Due Related Parties: Amounts due related parties consist of corporate operating expenses, production related advances, and advances paid by affiliates. Such items totaled $187,916 at December 31, 2012. We also owe $843,251 in accrued compensation to John Foster, our current CEO.

In June, 2011 we became sole member and manager of FilmZone, LLC and agreed to repay distributions received from FilmZone in excess of our allocable portion of 2011 profits. The total due under this agreement is $876,226 and is recorded as a note payable to related parties. The note accrues interest at 3% and is due in full by June 30, 2013.

In January, 2011 the company executed a long term employment agreement with Mr. Foster. The term of the agreement is four years beginning retroactively at January 1, 2010 and requires an annual salary of $250,000 throughout its term. In addition to the salary component the agreement entitles Mr. Foster to receive 5 million shares of common stock immediately and 4 million options vesting in equal annual amounts at the successive anniversary dates of the agreement. Odyssey remains obligated to issue an additional 1.67 million shares to Mr. Foster and has accrued the $125,000 fair value of these additional shares as a current liability. The new agreement continues in effect until January 1, 2014.

F-4

5.	New Notes and Loans Payable:

Other Notes:

In July, 2012 we issued a promissory note. The face value and cash proceeds of the note were $100,000 and matures September 30, 2013. As security for the note, the holder was granted an Assignment and Transfer of Rights. A summary of rights so assigned and transferred is as follows:

●

An interest in commissions earned from distribution of film rentals and licensing derived from all products Odyssey exploits and earns in the ordinary course of operating its business (“Revenue Interest”). The interest extends for a period of ten (10) years from the date of the Agreement unless sooner terminated by mutual agreement between the parties. At the end of the ten years, the parties may elect to renew this term for an additional ten years unless otherwise negotiated. The Revenue Interest by Lender shall be equal to ten percent (10%) of the net collected and earned commissions that Borrower receives. The “Revenue Interest” is payable within 30 days of receipt by Borrower.

●

Gross Profit revenues collected from Borrower during the period ending upon the Maturity Date or any extension thereof, as repayment of the Note, unless extended by Lender.

●

Payment of minimum revenues totaling $40,000 over and above the Principal Balance from Borrower on or before the Maturity Date, or any extension thereof, unless extended by Lender.

The note contains customary negative covenants for loans of this type subject to the approval of the lender, including limitations on the Company’s ability to incur indebtedness, issue securities, make loans and investments, make capital expenditures in excess of $2 million, dispose of assets and enter into mergers and acquisition transactions.

An additional note was entered into with this party for $100,000, October 22, 2012 payable with interest at the rate of 10% per annum from projects in production by the company. The note caries a due date of December 31, 2012 and continues with similar negative covenants.

6.	Subsequent Events:

On February 14, 2013 Asher Enterprises, the holder of convertible notes previously entered into and disclosed elected to exercise conversion rights thereunder converting all or a portion the promissory notes into 2,891,429 shares, 3,571,429 shares and 3,571,429 shares respectively of the Company’s common stock.

F-5

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis is intended as a review of significant factors affecting our financial condition and results of operations for the periods indicated. The discussion should be read in conjunction with our consolidated financial statements and the notes presented herein. In addition to historical information, the following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from those anticipated in these forward-looking statements as a result of certain factors discussed in this Form 10-Q.

Overview and Financial Condition

During all periods included in this Quarterly Report, the Company has maintained consistent operations. As of the date of this report, the Company has had limited ongoing operations catering to a single client with services consisting of: creating brand marketing, web site design and development services, Internet broadcast development specialized graphics and online business presentation services to Company’s client and a limited numbers of its companies. These projects are managed by the Company and are completed using principally third party contract services. The revenue derived from these services has assisted the company with capital to pay legal fees to settle claims and expenditures to maintain the Company in compliance with Securities and Exchange Commission regulations such as accounting and auditing and other costs related to financial disclosure obligations.

Results of Operations for the six months ended December 31, 2011 and 2012

The Company had revenues for the six months ended December 31, 2012 of $374,467 down from $698,800 for the period ended December 31, 2011. During the six months ended December 31, 2012, the Company derived revenues from the sale of branding and image design products and fees due for media production services. The Company has traditionally derived revenues from license renewals and residual payments received, the timing of which are typically paid at the discretion of the counter party and are outside the control of the Company.

Amortizable capitalized film costs related to revenues on licensees and the receipt of payments on residuals have been fully amortized or impaired in prior periods. We expense all current costs as incurred.

Selling, general and administrative expenses decreased to $377,638 for the six month period ended December 31, 2012, down from $420,600 for the comparable period in 2011.

Results of Operations for the Three months ended December 31, 2011 and 2012

Net sales of services for the three months ended December 31, 2012 and 2011 were $189,085 and $450,400, respectively, a decrease of $291,315 or 58% due to the conclusion of a single branding and services agreement. Cost applicable to sales and revenue decreased $37,990 (63.5%) to $65,910 for the three months ended December 31, 2012 from $103,900 reported for the comparable period in the prior year. The decrease in revenue of $291,315, partially offset by the $37,990 decrease in cost applicable to sales and revenue resulted in a $223,325 decrease in gross profit for the three months ended December 31, 2012, when compared with the three month period ended December 31, 2011.

Amortizable capitalized film inventory costs related to revenues on licensees and the receipt of payments on residuals have been fully amortized or impaired in prior periods. We expense all current costs as incurred. Selling, general and administrative expenses and other operating expenses increased $5,214 (2.4%) to $214,614 for the three months ended December 31, 2012 from $209,400 reported for the same period in the prior year.

In 2011 we wrote off certain accounts payable in which no attempts at collection had been made or which we had determined were barred from collection by the Texas and New York statute of limitations. We also negotiated revised amounts and terms on a trade payable and two judgments. A summary of the amounts recognized as income from the discharge of debt is as follows:

	2011
Excess carrying value of settled obligations	$	(8,081	)
Related accrued interest		192,000
Obligations deemed barred by statute of limitations		244,498
Write down of excess accrued interest		287,398
	$	715,815

For the three months ended December 31, 2012 the Company reported a net loss of $102,684 compared to a profit of $42,800 the previous year, a decrease in net earnings of $145,484 This decrease in net loss is attributable to a $261,315 decrease in gross revenue.

As of June 30, 2012, the Company had no agreements with sub-distributors relating to distribution commitments or guarantees that had not been recognized in the statement of operations.

Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated material revenues and sufficient revenues may not be forthcoming. Accordingly, we must raise cash from sources other than operations.

There is substantial doubt about the company’s ability to continue as an ongoing business due to a continued working capital deficiency as substantiated by the financial statements in this report. It should be noted that this working capital deficiency is 50% comprised of debt to related parties. Whereas the Company has been consistently profitable with positive cash flows during these past nine fiscal quarters, and we continue to expand into other markets, we cannot guarantee or ensure present activity as a future trend. Should the Company experience an interruption in the current services that it provides its captive client, or our market activity does not result in expanded revenue resources, we would be required to seek alternative financing and raise additional funds to finance operations in order to remain a going concern. If this were the case, we might not be able to timely and effectively receive positive response to new capital needs and, if we do, we are not assured that the terms of any financing would be affordable or advantageous to continued operations.

To offset this uncertain element, the company has recently embarked on new avenues of business in building strategic relationships with other successful sales agencies, production companies and prospective clients. If we were required to afford operations and accommodate our working capital deficiency without the necessary timeliness or our proposed business elements in place, we would be unable to assert that our current cash and cash equivalents would be sufficient and, as a result, there would be substantial doubt as to our ability to continue as a going concern.

Liquidity and Capital Resources

Net cash used for and provided by operating activities for the six months ended December 31, 2012 and 2011 was $(65,988) and $205,600 respectively. At December 31, 2012 and June 30, 2012, the Company reported a cash and cash equivalents balance of $1,619 and $356, respectively. Shown below is a summary of the cash flows for the six month periods ended December 31, 2012 and 2011.

	Six Months Ended December 31,
	2012			2011
Cash provided by (used for) operating activities	$	(65,988	)	$	205,600
Cash flows used for investing activities		(187,749	)		(280,600	)
Cash flows provided by financing activities		255,000			82,500
Net increase (decrease) in cash		1,263			7,500
Cash, beginning of period		356			6,500
Cash, end of period	$	1,619		$	14,000

The Company continues to fund operation through revenues, trade payables, the issuance of stock and the proceeds of short term borrowings.

●

Gross Profit revenues collected from Borrower during the period ending upon the Maturity Date or any extension thereof, as repayment of the Note, unless extended by Lender.

●

Payment of minimum revenues totaling $40,000 over and above the Principal Balance from Borrower on or before the Maturity Date, or any extension thereof, unless extended by Lender.

An additional note was entered into with Mr. Turpin for $100,000, October 22, 2012 payable with interest at the rate of 10% per annum from projects in production by the company. The note caries a due date of 12-31-2012 and continues with similar negative covenants.

Our access to capital resources is limited to obtaining small loans with short term maturities and to use the value of our common stock as currency to settle existing obligations in such situation where the stock is acceptable by the counter party.

Commitments and Capital Expenditures

The Company had no material commitments for capital expenditures as of June 30, 2012.

Off-Balance Sheet Arrangements

Odyssey does not have any relationships with entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet financial arrangements.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Not required for smaller reporting companies.

ITEM 4. Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by our company is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. John Foster, our Chief Executive Officer and our Principal Accounting Officer, is responsible for establishing and maintaining disclosure controls and procedures for our company.

Our management has evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2012 (under the supervision and with the participation of the Chief Executive Officer and the Principal Accounting Officer), pursuant to Rule13a-15(b) promulgated under the Exchange Act. As part of such evaluation, management considered the matters discussed below relating to internal control over financial reporting. Based on this evaluation, our Company’s Chief Executive Officer and Principal Accounting Officer have concluded that our Company’s disclosure controls and procedures were not effective as of December 31, 2012 due to the lack of sufficient personnel to assure segregation of duties and lack of a GAAP accounting professional on staff. Management with the assistance of its Securities Counsel will closely monitor all future filings to ensure completeness of all company filings.

The term “internal control over financial reporting” is defined as a process designed by, or under the supervision of, the registrant’s principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

●

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant;

●

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and

●

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the registrant’s assets that could have a material effect on the financial statements.

Changes in Internal Controls

We have also evaluated our internal control for financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of their last evaluation.

PART II - OTHER INFORMATION

ITEM 1.

Legal Proceedings

There was no activity regarding any legal proceedings involving the Company during the reported period.

The Company is subject to other legal proceedings that arise in the ordinary course of its business and from prior management activities. Other than that as disclosed above, in the opinion of present management, the aggregate liability, if any, with respect to these other actions will not materially adversely affect our financial position, results of operations or cash flows.

ITEM 1A.

Risk Factors

Not required for smaller reporting companies.

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

There were no sales of equity securities by the company completed during the six months ended December 31, 2012.

ITEM 3.		Defaults Upon Senior Securities

		None

ITEM 4.

Submission of Matters to a Vote of Security Holders.

No matters were submitted to security holders for a vote during the six months ending December 31, 2012.

ITEM 5.		Other Information

		None.

ITEM 6.

Exhibits

a)		Exhibits

31.1		Section 302 Certification By Chief Executive Officer and Principal Financial Officer
32.1		Section 906 Certification of Principal Executive Officer and Principal Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ODYSSEY PICTURES CORPORATION

/s/ John W. Foster
John W. Foster
Chairman and CEO

ODYSSEY PICTURES CORP 10-Q