UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2013

[ ] 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 96,137,376 outstanding shares as of March 31, 2013.

ODYSSEY PICTURES CORPORATION

Part I - FINANCIAL INFORMATION

Item 1.	Financial Statements-unaudited
	Balance Sheets as of March 31, 2013 and June 30, 2012	F-1
	Statements of Operations for the Three Month Periods Ended March 31, 2013 and 2012 and Statement of Operations for the Nine Month Periods Ended March 31, 2013 and 2012	F-2
	Statements of Cash Flows for the Nine Month Periods Ended March 31, 2013 and 2012	F-3
	Statement of Stockholders’ Deficiency for the period ended March 31, 2013	F-4
	Notes to Interim Financial Statements	F-5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
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.	Other Information	6
Item 5.	Exhibits	6

Signatures		7

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements

Odyssey Pictures Corporation

Consolidated Balance Sheet

(unaudited)

	March 31, 2013			June 30, 2012
Assets

Current Assets
Cash & cash equivalent’s	$	2,421		$	356
Accounts receivable		143,847			134,852
Prepaid expenses		13,693			1,492
Total current assets		159,961			136,700

Property & equipment (net)		5,458			7,858
Capitalized production costs		1,329,132			1,068,974
Other		2,578			2,578

Total assets	$	1,497,129		$	1,216,110

Liabilities and Stockholders’ Deficiency

Current Liabilities:
Accounts payable	$	343,221		$	223,177
Accounts payable-related parties		77,741			80,190
Accrued interest		459,372			412,739
Other accrued expenses		1,054,663			1,145,306
Legal settlements & judgments		152,009			149,993
Current debt obligations due within one year		747,422			449,246
Liability to issue common stock		125,000			125,000
Related party debt due within one year		876,226			0
Convertible debt derivative liability		0			186,670
Total current liabilities		3,835,654			2,772,321

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 96,137,376 issued & outstanding		961,374			773,166
Additional paid in capital		39,686,575			39,677,292
Unamortized deferred compensation		(85,472	)		(133,520	)
Accumulated deficit		(43,120,627	)		(42,812,025	)
Total Stockholders’ Deficiency		(2,558,150	)		(2,495,087	)

Total Liabilities and Stockholders’ Deficiency	$	1,497,129		$	1,216,110

See notes to unaudited interim financial statements.

F-1

Odyssey Pictures Corporation

Consolidated Statement of Operations

(unaudited)

	Quarter Ended March 31,						Nine Months Ended March 31,
	2013			2012			2013			2012

Net Sales of services	$	117,813		$	395,400		$	492,280		$	1,094,200
Costs Applicable to Sales & Revenue		66,847			121,400			211,047			355,400

Gross Profit		50,966			274,000			281,233			738,800

Selling, General & Administrative Expenses		170,677			176,300			536,315			596,900
Settlements, net		(1,090	)		900			(635	)		1,100
Derivative valuation charges		0			19,400			0			81,300
Total Operating Expenses		169,587			196,600			535,680			679,300
Income (Loss) Before Other Income & Income Taxes		(118,621	)		77,400			(254,447	)		59,500

Other Income (Expense)
Excess carrying value of renegotiated payables		(550	)		0			6,196			0
Interest (Expense)		(9,245	)		(9,000	)		(60,351	)		(50,400	)
Income (Loss) from continuing operation before income taxes		(128,416	)		68,400			(308,602	)		9,100
Income Taxes		0			0			0			0
Earnings (Loss) from continuing operations		(128,416	)		68,400			(308,602	)		9,100
Net Income (Loss) to Odyssey	$	(128,416	)	$	68,400		$	(308,602	)	$	9,100

Basic and Diluted Net Income Per Common Share		Nil			Nil			Nil			Nil
Weighted Average Common Shares Outstanding (Basic)		85,422,889			73,953,086			79,979,238			73,215,615

See notes to unaudited interim financial statements.

F-2

Odyssey Pictures Corporation

Consolidated Statement of Cash Flows

(unaudited)

	Nine Months Ended March 31,
	2013			2012

Cash Flows from Operating Activities:
Net Loss	$	(308,602	)	$	9,100
Adjustments required to reconcile net loss to cash flows from operating activities:
Excess carrying value of renegotiated payables		6,196			0
Amortization of deferred compensation		48,048			48,100
Depreciation & impairment		2,400			1,400
Expenses paid by the issuance of common stock		0			(125,000	)
Change in value of derivatives		0			81,200
Changes in Operating Assets & Liabilities:
Accounts Receivable		(111,746	)		(95,500	)
Prepaid expenses		73,002			18,600
Decrease in deferred income		16,016			(106,300	)
Decrease in payables to affiliates		14,551			(52,000	)
Accounts Payable & Other		233,811			467,000
Net cash generated by operating activities		(26,324	)		246,600

Cash Flows from Investing Activities:
Investment in production inventory		(259,611	)		(455,100	)
Purchase of fixed assets		0			(6,600	)
Net cash used by investing activities		(259,611	)		(461,700	)

Cash Flows from Financing Activities:
Loan proceeds		315,000			335,500
Payments made on long term debt		(13,000	)		(3,000	)
Payments made on settlements & judgments		(14,000	)		0
Net cash used by financing activities		288,000			332,500

Net Change In Cash		2,065			117,400
Cash-Beginning		356			6,500
Cash-Ending	$	2,421		$	123,900

See notes to unaudited interim financial statements.

F-3

Odyssey Pictures Corporation

Consolidated Statement of Stockholders’ Deficiency

(unaudited)

	Stockholders’ Deficiency
	Common Stock
	Shares		Common Stock Amount		Additional Paid-In Capital		Accumulated Deficit			Deferred Compensation			Total
Balance at June 30, 2012		77,316,582	$	773,166	$	39,677,292	$	(42,812,025	)	$	(133,520	)		(2,495,087	)
Stock issued upon conversion of debt		18,820,794		188,208		9,283								197,491
Amortization of deferred compensation											48,048			48,048
Net Loss								(308,602	)					(308,602	)
Balance at March 31, 2013		96,137,376	$	961,374	$	39,686,575	$	(43,120,627	)	$	(85,472	)		(2,558,150	)

See notes to unaudited interim financial statements.

F-4

ODYSSEY PICTURES CORP

Notes To UNAUDITED CONSOLIDATED INTERIM Financial Statements

march 31, 2013

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 nine-month periods ended March 31, 2013 and 2012. 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.

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 approximately $48,000 for the nine-month periods ended March 31, 2013 and 2012 based on the requisite service period for unvested options as of that date as well as options granted during the period. As of March 31, 2013, there was approximately $85,470 of unrecognized compensation cost related to non-vested options. The Company expects to recognize the cost over a weighted average period of 1.04 years.

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 $187,366 at March 31, 2013. We also owe $755,251 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.

Conversion of debt to Common Stock:

In February and March, 2013, $58,900 of debt and $10,820 of accrued interest was converted to 18,820,794 shares of common stock. At the time of conversion the debt was carried as a derivative with a fair value of $186,671.

Subsequent Events:

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 nine months ended March 31, 2013 and 2012

The Company had revenues for the nine months ended March 31, 2013 of $492,280 down from $1,094,200 for the same period ended March 31, 2012. During the period, the Company derived revenues from the sale of branding and image design products and media placement 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 $536,315 for the nine months ended March 31, 2013, down from $596,900 for the comparable period in 2012 associated primarily with the decrease in gross revenues.

As of March 31, 2013, the Company had no agreements with sub-distributors relating to distribution commitments or guarantees that had not been recognized in the statement of operations.

Results of Operations for the Three months ended March 31, 2013 and 2012

Net sales of services for the three months ended March 31, 2013 and 2012 were $117,813 and $395,400, respectively, a decrease of $277,589 or 70.2%. Cost applicable to sales and revenue decreased $54,553 (44.9%) to $66,687 for the three months ended March 31, 2013 from $54,553 reported for the comparable period in the prior year. The decrease in revenue of $277,589 partially offset by the $54,553 decrease in cost applicable to sales and revenue resulted in a $223,034 decrease in gross profit for the three months ended March 31, 2013, when compared with the three month period ended March 31, 2012.

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 decreased $5,623 to $170,677 for the three months ended March 31, 2013 from $176,300 reported for the same period in the prior year.

For the three months ended March 31, 2013 the Company reported a net loss of $118,621 compared to a profit of $77,400 the previous year, a decrease in net earnings of $196,021. This decrease in net loss is attributable to a $277,587 decrease in gross revenue.

As of March 31, 2013, 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 nine months ended March 31, 2013 and 2012 was $(26,324) and $246,600 respectively. At March 31, 2013 and June 30, 2012, the Company reported a cash and cash equivalents balance of $2,421 and $356, respectively. Shown below is a summary of the cash flows for the nine month periods ended March 31, 2013 and 2012.

	Nine Months Ended
	March 31,
	2013			2012
Cash provided by (used for) operating activities	$	(26,324	)	$	246,600
Cash flows used for investing activities		(259,611	)		(461,700	)
Cash flows provided by financing activities		288,000			332,500
Net increase (decrease) in cash		2,065			117,400
Cash, beginning of period		356			6,500
Cash, end of period	$	2,421		$	123,900

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

In July 2012 we issued a promissory note with a face amount of $100,000 which matures September 30, 2013. As security for the note, the holder was granted an assignment and transfer of right. A summary of those rights 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 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 March 31, 2013.

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

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on this Evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our Disclosure Controls were not effective as of the end of the period covered by this report.

The limited size of the company including a limited staff makes it extremely difficult to segregate duties in a way that will allow disclosure controls and procedures to be implemented in an effective way. The company has recently hired a Chief Operating Officer and will continue to rely on contract and external professionals to assist in various tasks for disclosure. To the extent that the Company is able to add other executives and professional staff with increased business, it will continue its efforts to create an effective system of disclosure controls and procedures.

a)		The Company lacks the financial infrastructure to account for complex transactions which may result in a greater than normal risk that material errors may occur in the financial statements and not be detected timely.

b)		The Company currently relies upon independent financial reporting consultants for review of critical accounting areas and disclosures and material non-standard transactions.

c)		Lack of sufficient segregation of duties. Specifically, this material weakness is such that management must rely primarily on detective controls and controls could be strengthened by adding preventative controls to properly safeguard company assets.

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

Watson, Farley and Williams v. Odyssey Pictures Corp., Gold Leaf Pictures, Belgium, Johan Schotte, Chardonnay Enterprise Ltd, and A Hero From Zero N.V. Complaint filed April 30, 2001, New York Supreme Court, New York County, for balance owing for services rendered from the period beginning 1997 through to April of 2001 to all named defendants. Odyssey has answered this complaint, although it was not notified until August 10, 2001 denying its position in the named defendants. Odyssey contends that it did, in fact, pay any and all outstanding related legal bills related to the Plaintiff’s corporate involvement. Odyssey offered a settlement in 2002, however, no response has been made from the Plaintiff on this matter as of the close of business on March 31, 2013.

On June 30, 2006 the Company entered into a settlement agreement with ThorFilms, LLC. as to claims of each whereby the Company agreed to make payment of $100,000 to ThorFilms, LLC prior to December 30, 2006. In the reported period, the Company has entered into subsequent negotiations in this matter. Is has made some initial payments toward the settlement of this claim which it expects to conclude in the coming fiscal year.

The Company is subject to other legal proceedings that arise in the ordinary course of its business and from prior management activities. Other than as previously disclosed, 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 the Company’s Equity Securities during the nine months ended March 31, 2013.

ITEM 3.

Defaults Upon Senior Securities

None

ITEM 4.

Other Information

None

ITEM 5.

Exhibits

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

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

* Filed Herewith.

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

May 20, 2013

ODYSSEY PICTURES CORP 10-Q