SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K/A


(Mark One)

/x/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934
                      For the fiscal year ended June 30, 2002


/ /     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 No.


                          ODYSSEY PICTURES CORPORATION
                          ----------------------------
             (Exact name of registrant as specified in its charter)


          Nevada                                                  95-4269048
          ------                                                  ----------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)


              16910 Dallas Parkway, Suite 104, Dallas, Texas 75248
           ----------------------------------------------------------
                    (Address of principal executive offices)


Registrant's telephone number, including area code:   (972) 818-7990

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  Common Stock,
                                                             $.01 par value

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 such  filing
requirements for the past 90 days. Yes [ X ] No [ ]

Indicate  by check  mark if there  is no  disclosure  of  delinquent  filers  in
response to Item 405 of  Regulation  S-B is not  contained in this form,  and no
disclosure  will  be  contained,  to the  best  of  Registrant's  knowledge,  in
definitive proxy or information statements incorporated by reference in Part III
of this form 10-K/A or any amendment to this Form 10-K/A. [ ]

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant as of June 30, 2002 was  approximately  $8,469,736 (based on the mean
between  the  closing  bid and asked  prices of the Common  Stock on such date),
which value,  solely for the purposes of this calculation,  excludes shares held
by Registrant's  officers and directors.  Such exclusion  should not be deemed a
determination by Registrant that all such  individuals are, in fact,  affiliates
of the Registrant.

As of June 30, 2002 there were outstanding 30,392,039 shares of Odyssey Pictures
Corporation's common stock, par value $.01 per share (the "Common Stock").


<PAGE>
                          ODYSSEY PICTURES CORPORATION
                      Form 10-K/A Report for the Fiscal Year
                               Ended June 30, 2002

TABLE OF CONTENTS

PART I

Item 1.  Business............................................................ 2
Item 2.  Properties..........................................................11
Item 3.  Legal Proceedings...................................................12
Item 4.  Submission of Matters to a Vote of Security Holders.................15

PART II

Item 5.  Market for Registrant's Common Stock and Related
           Stockholder Matters...............................................16
Item 6.  Selected Financial Data.............................................16
Item 7.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations...............................16
Item 8.  Financial Statements and Supplementary Data.........................18
Item 9.  Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure...............................19

PART III

Item 10. Directors and Executive Officers of the Registrant..................19
Item 11. Executive Compensation..............................................20
Item 12. Security Ownership of Certain Beneficial Owners and Management......22
Item 13. Certain Relationships and Related Transactions......................23
Item 14. Controls & Procedures...............................................24

PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K.....25



<PAGE>
                                     PART I

Item 1. Business

(a) General Development of Business

Odyssey  Pictures  Corporation  ("Odyssey" or the "Company"),  formerly known as
Communications and Entertainment Corp., was formed in December 1989 as a holding
company.  At such time, the Company had no material  assets.  In September 1990,
Double Helix Films, Inc.  ("Double Helix"),  a producer of low budget films, and
Odyssey  Entertainment Ltd. ("OEL"), an international film distribution company,
were merged with  wholly-owned  subsidiaries  of the  Company  (the  "Mergers").
Subsequent  to the Mergers,  each of Double Helix and OEL became a  wholly-owned
subsidiary  of the  Company.  In June 1991,  the Company  sold Double  Helix and
thereafter  began to focus on the  distribution  of motion  pictures in overseas
markets as its primary business.

A change in the entire Board of Directors of the Company (the "Board")  occurred
on April 12, 1995  pursuant to the terms of a Settlement  Agreement  dated as of
March 31, 1995 (the "Settlement  Agreement"),  by and among Robert Hesse,  Shane
O'Neil,  Lawrence I.  Schneider,  Henry N.  Schneider,  Robert E.  Miller,  Jr.,
Russell T. Stern, Jr. (collectively,  a group of shareholders  originally formed
to effect a change in  management  control of the Company and known as the "CECO
Shareholders  Committee"),  the Company,  OEL, Global Intellicom,  Inc., each of
Jerry Silva,  Robert  Ferraro,  N. Norman  Muller,  Thomas W. Smith and David A.
Mortman  (constituting  all the  directors  of the  Company  at the  time of the
execution of the Settlement  Agreement and hereinafter  referred to collectively
as the "Former Directors"), and others.

As  contemplated  by the  Settlement  Agreement,  on April 11, 1995,  the Former
Directors increased the size of the Board from five to six directors and elected
Henry N. Schneider, a designee of the CECO Shareholders Committee a new director
effective  upon the  closing of the  Settlement  Agreement.  The  closing of the
Settlement  Agreement  occurred  on April 12,  1995 and,  upon the  closing  the
resignations of the Former Directors became  effective.  After the closing Henry
N. Schneider,  as sole remaining  director of the Company,  elected  Lawrence I.
Schneider,  Russell T. Stern,  Jr., Patrick J. Haynes,  III and Robert E. Miller
Jr.  as  new  directors  of the  Company.  In  addition  to  the  change  in the
composition of the Board, the Settlement  Agreement  provided for the settlement
of all  outstanding  litigation  between the  Company and the CECO  Shareholders
Committee.  The CECO  Shareholders  Committee  disbanded upon the closing of the
Settlement Agreement. Effective September 8, 1995, each of Messrs. Haynes, Stern
and Henry N. Schneider resigned as directors of the Company and were replaced by
Stephen R.  Greenwald and Ira N. Smith,  each of whom was appointed to the Board
and, together with Lawrence Schneider, elected to executive management positions
to operate the business and affairs of the Company on a day-to-day basis.

On March 6, 1996, the Company declared a reverse  one-for-six stock split of its
Common Stock (the "Reverse Split"),  effective March 18, 1996. All share Odyssey
Pictures  Corporation amounts and per share prices reflected in this Report have
been adjusted to give effect to the Reverse Split.

Mr. Schneider resigned his executive position in September,  1997, and in March,
1998,  the Board of Directors  appointed  Mr. Johan  Schotte as Chief  Executive
Officer and Chairman of the Board of the Company.  At the same time,  Mr. Pierre
Koshakji was appointed to the Board and elected as President of the Company. Mr.
Johan Schotte expanded the Board to include additional independent directors and
Messrs.  Greenwald  and Smith  agreed to  terminate  their  existing  employment
agreements in exchange for revised  employment  and  consulting  agreements.  In
connection with the change in management,  an affiliate of Mr. Schotte purchased
convertible  deferred  compensation notes from former management and converted a
portion of these notes into  667,648  shares of the  Company's  common  stock in
April,  1998.  The balance of these notes were  converted into 176,050 shares of
common stock in October, 1998.

                                       2
<PAGE>

During the early  1990s,  the  Company  developed  an  excellent  reputation  in
overseas markets for the distribution of quality motion picture entertainment, a
reputation which the Company's management believes it continues to enjoy despite
its recent  difficulties.  However, due to the changes in management control and
disruptions in the continuity of the Company's  business following the change in
control in 1995, the Company was unable to sustain any substantial activities in
the international  distribution of motion pictures.

Under the  leadership of Mr.  Schotte,  the Company sought to  re-establish  its
position as a significant distributor of quality motion pictures by establishing
relationships  and strategic  alliances with  independent and major film studios
along with successful  writers,  directors and producers.  The Company also made
efforts to establish a permanent presence in Europe through select joint-venture
partners.  In August of 1998, the Company  purchased the assets of  Sweden-based
Kimon  Mediaright  KB  ("Kimon"),  consisting  of a film library with  worldwide
and/or  Scandinavian  distribution  rights and Scandinavian  video  distribution
rights to certain Hallmark Entertainment products.

While  continuing to develop and  re-establish  the Company's film  distribution
business,  management's  objective was to aggressively  build a diverse,  global
media company  independent in ownership from the major film and music companies.
Management  also  sought to  establish  a group of  domestic  and  international
companies  providing both content and distribution in film,  music,  publishing,
sports,  merchandising  and other multimedia  outlets.  See "Business  Narrative
Description  of Business - Business  Strategy."  On July 6th of 2001,  the Board
voted on the  assignment  of Mr.  Foster  to CEO and  Chairman  of the  Board of
Odyssey Pictures  Corporation.  Mr. Schotte resigned as CEO and Chairman and was
appointed the position of Executive Vice Chairman on the Board.  This change was
due to the  approved  transition  by the Board for the further  growth  plans of
Odyssey.  On  December 7, 2001  Pierre  Koshakji  resigned as director to pursue
other interests. Mr. Koshakji is still involved with E3 Corporation in which the
Company owns an interest.  Mr. Koshakji is owed $202,500 in past compensation as
well as  reimbursement  for some business  expenses and  outstanding  loans.  On
December 9, 2001 Mr.  Schotte  resigned  from the board of directors to focus on
the Company's two related  entities and other  interests.  Mr.  Schotte lives in
Luxembourg and was the managing director of the Company's 99% subsidiary that is
headquartered  there,  Odyssey  Ventures  Online  Holding,  S.A.  He is also the
controlling  shareholder and director general of Media Trust,  S.A. of which the
Company owns 18%.  Recently the company  held a  shareholders'  election for the
removal of its three  directors,  which  included  Media  Trust,  SA The Company
demanded  documentation of disbursements and expenses previously reported in the
accounts of the Company.  The Company  pursued the control of the subsidiary and
settlement  of all  accounts is presently  underway.  The Company has offset all
undocumented  expenses from prior management contracts and the resulting amounts
were booked as expense or loss  accordingly18.  While the Company  expects  full
recovery,  a reserve  for losses has been taken  since the  Company  has adopted
Statement of Financial  Accounting  Standards No, 5 (SFAS 5), and,  since a loss
contingency may exist in this matter.

On  January  3, 2002,  at a  regularly  scheduled  board  meeting,  the board of
directors  voted  unanimously to elect Peter Bucher and Kjell Larsson to replace
vacant  positions  made  available  by the  resignation  of Mr.  Schotte and Mr.
Koshakji. Mr. Bucher is a consultant in finance and resides in Germany. Prior to
forming  his  company,  Dival AG, he has a career in  banking  including  Deputy
Administrator with Schaffhaus Canton Bank and the Swiss Banking Association. Mr.
Larsson  resides in Florida and owns  1,868,055  shares of Odyssey  through Kemp
Entertainment,  a  company  he  formed  with his wife in  1999.  Larsson  formed
TigerNet  Order,  Inc. a web  consulting  and marketing  company  through a Kemp
subsidiary and he now serves as its President.  TigerNetorder also has a Swedish
subsidiary providing similar services.  Prior to moving to Florida he formed one
of the first video retail chains in Sweden and later became President of Scanbox
AB.

                                       3
<PAGE>

In  January  the  Company  hired C. F. K.  (Frank)  Cole as the Chief  Financial
Officer and also installed him as corporate secretary. Mr. Cole had been serving
in a  consulting  capacity  for the company  for  several  months and has been a
venture  capitalist and consultant for the last ten years.  Prior to forming his
own investment company Mr. Cole was CFO of a Dallas based holding company in the
commercial  real  estate  business.  He also served as  President  of two of its
subsidiaries  involved in the property and asset management  business.  Mr. Cole
has a career in banking  and  corporate  financial  consulting  with some of the
largest  US  companies  involved  in those  industries.  Mr.  Cole has  one-year
contract  with the Company with  ninety-day  notification  clause.  Mr. Cole has
elected not to continue as CFO due to personal reasons.

(b)  Financial Information About Industry Segments.

Since the sale of its Double  Helix  subsidiary  in 1991,  the  Company has been
engaged in only one  industry  segment and line of business,  the  international
distribution  of motion  pictures.  In  addition,  in 1999 and 2000 the  company
acquired interests in other technology  segments of the communications  industry
and, more  specifically,  formed a subsidiary  (wholly owned)  entitled  Odyssey
Ventures Online Holding S.A., in Luxembourg. See "Selected Financial Data."

(c)  Narrative Description of Business Foreign Sales and Distribution Operations

General.

The foreign  distribution  of films  involves  two  principal  activities  - the
acquisition  of rights from the licensor or the seller,  usually the producer or
writer  of  the  film,  and  the  licensing  of  the   distribution   rights  to
subdistributors  in foreign  markets.  In general,  the rights obtained from the
producer relate to all media, including theatrical  distribution,  video and all
forms of television.  In some cases, the licensing of rights to  subdistributors
may exclude certain territories and/or media.

It is unlikely that  subdistributors  would bypass the Company and deal directly
with the licensors of film rights.  Historically,  independent licensors of film
rights  prefer to deal with a single  sales  agent/distributor  rather than deal
with  various  subdistributors  in  foreign  markets.  Consequently,  even  if a
particular  subdistributor  attempted to perform the function of the Company, it
is  unlikely  that the  film's  licensor  would be  willing  to deal  with  such
subdistributor due to detailed servicing requirements. Furthermore, with respect
to  any   particular   film,  the  Company   typically   enters  into  exclusive
distributorship arrangements,  thereby precluding others from competing with the
Company  with  respect to that film.  Moreover,  in certain  circumstances,  the
Company may also provide a financing function for the production of a film which
a  subdistributor   would  generally  be  unable  to  provide.   See  "Terms  of
Distribution Agreements."
                                       4
<PAGE>

Terms of Distribution Agreements.

Foreign  distribution is generally  handled by a distributor such as the Company
which  coordinates  worldwide sales in all territories and media.  Overseas film
sales companies rely on local  subdistributors  to physically deliver the motion
picture and  related  marketing  materials  and to collect  revenues  from local
exhibitors and other local distributors of the film. Typically,  the territorial
rights  for a  specific  medium  such as  television  exhibition  are sold for a
"cycle" of  approximately  seven years,  after which the rights become available
for additional cycles. The film distribution business breaks down into two broad
categories:

1.   Sales Agency  Representation.  As a sales agent, the Company  undertakes to
     represent  and  license  a motion  picture  in all  markets  and media on a
     best-efforts basis, with no guarantees or advances,  for a fee ranging from
     15% to 25%, and typically for a term ranging from seven to fifteen years.

2.   Distribution. As a distributor, the Company may provide the producer of the
     film a guarantee of a portion of the budget of the project.  This guarantee
     may be in the form of a bank commitment to the producer, secured by license
     agreements with foreign licensees, which is used by the producer to finance
     the production.  Typically,  a distributor would receive a distribution fee
     ranging from 25% to 35% over a term ranging from 15 years to perpetuity. In
     addition,  the distributor may negotiate,  or otherwise  acquire,  a profit
     participation in the film project.

Once the rights to a picture are obtained  (either as sales agent or distributor
with  minimum  guarantee),  the  Company  then  seeks to  license  its rights to
subdistributors  in the  territories  for  which  it has  acquired  distribution
rights.  In general,  the grant of rights to the  subdistributors  includes  all
media   other  than   satellite,   although   satellite   is  included  in  some
subdistributors'  territories.  The  subdistributor in each territory  generally
pays for its distribution rights with a down payment at the time the contract is
executed   with  the   balance   due  upon   delivery  of  the  picture  to  the
subdistributor.  (Delivery  occurs upon the  Company's  acceptance of the master
negative  and  its  obtaining   access  to  certain  items   necessary  for  the
distribution of the film). In some instances,  the subdistributors'  obligations
for the  payment due on  delivery  are  secured by a letter of credit.  Although
there are a number of markets each quarter,  major sales take place primarily at
three film markets:

     1)   "MIF" in Cannes, France each May;
     2)   "MIFED" in Milan, Italy each October; and,
     3)   "AFM" in Los Angeles each February.

In  general,  after  financing  (if any) is  repaid,  the  Company  applies  the
distribution receipts from its subdistributors in the following manner:

     1)   First to the payment of commissions due to the Company,
     2)   Then second to the recovery of certain distribution expenses,
     3)   Then to the  reimbursement of the Company for its minimum guarantee or
          advance, if any,
     4)   Then finally to the producer.

Additional  distribution  receipts,  if any,  are shared by the  Company and the
producer  according to the percentages  negotiated in the agreement  between the
Company and the producer.

                                       5
<PAGE>

Independent Film Production and Product Acquisition

Film distribution  companies such as the Company primarily represent independent
producers of motion pictures (rather than motion picture studios) in all related
markets  and all  media,  including  theatrical  release,  television  and  home
video/DVD distribution, and cable or satellite-distributed media. Producers seek
to be  independent  producers  of  motion  pictures  for a variety  of  reasons,
including greater creative control of a project and potentially a greater profit
participation  through the retention of the copyright or the ability to sell the
film directly in particular  markets.  Often, young, new directors and producers
have no choice  but to  independently  produce  their  projects,  and the motion
picture  industry has a long history of  "breakthrough"  films produced at a low
cost  by  first-time   producers  and  directors  which   subsequently   achieve
considerable revenues. The Company has generally obtained its product from among
these independently produced films rather than from major motion picture studios
which  typically have their own in-house  distribution  networks.  Nevertheless,
from time to time,  the  Company has entered  into  "split  rights",  or shared,
arrangements with studios to represent a film in certain markets.

The Company's  management  seeks to identify  attractive  projects very early in
their development,  either through  relationships with producers,  directors and
agents or other known suppliers of product, or through industry announcements of
new productions. In addition, the Company attends independent festivals and film
markets,  such as the Sundance  Film  Festival,  The New York  Independent  Film
Festival and the Cannes Film Festival, in order to locate new product.

Business Strategy

The Company's  strategy is to capitalize on the reputation and the experience of
its management team to package, produce and distribute independent feature films
and expand  its  growth  and  infrastructure  through  acquiring  other  related
entities,  also utilizing the industry to obtain certain financing for projects.
The  execution of the  Company's  strategy  comes from  operating  the following
activities  within  each  service it  provides  which,  in turn,  will  generate
revenues from both fees and commissions.

1)   Packaging - The Company  expects to become  involved  with  packaging  (the
     process by which one  undertakes  a particular  film project in  screenplay
     form and  assembles  cast,  crew,  financing,  introduces  banks  and other
     institutions to the "package"  (either for the company or for the producer)
     and may establish  partnerships from contributing buyers in order to secure
     the  distribution  and market position for the film, if actually  produced.
     For this activity,  the company shall receive a percentage of the budget of
     the film and perhaps an equity interest as well.
2)   Produce - For film projects in script form that may be acquired exclusively
     for the  company,  a separate  schedule is  provided  which will enable the
     packaging  on an "in  house"  basis.  That is,  to hire  all crew  members,
     contract a director, and assemble all necessary elements for production and
     financing of the proposed project.  The Company, in this case, is also able
     to partner with other production teams or distribution  companies for added
     security  and in  reducing  risk in order for the  project  to have  market
     interest  early on. The Company shall retain  percentages  of the budget as
     well as receive fees as a producer  and shall also control a major  portion
     of the equity  resulting in an increased chance for higher revenue portions
     from sales in the world and US markets.
3)   Distribute  - The  Company  plans to acquire a certain  number of films per
     year as well as  assemble a  distribution  package for other films that are
     completed.  This will generate commission revenues from sales and marketing
     income for which the Company can achieve its buyers' interest.
4)   Related Entities - From time to time, the Company may be asked to engage in
     financing and/or distribution  activities for companies that could fill the
     need for  continued  product.  If conditions  were of a financially  secure
     nature, management would attempt to acquire or otherwise partner with these
     potential  target  companies in order to expand its base and diversity as a
     supplier.
5)   Industry  Financing  -  Certain  arrangements  will be sought  whereby  the
     markets can provide  financing in advance for feature film  product.  It is
     the  Company's  intention to seek  alternate  methods of this  "off-balance
     sheet" financing in order to secure more product under its control.

                                       6
<PAGE>

Strategic Objectives

The above  strategies  are  selected out of  necessity  in the  operations  of a
business  such as Odyssey.  Certain  revenue  periods are  realized at different
times.  By  accommodating  the above  mentioned  strategies,  the  Company  will
recognize revenues at different points of the processing.  This will create more
opportunity  for  revenues  to the  Company  and not  just  focus on one area of
revenue as  historically  produced.  Management  must select from the  following
areas of daily management to accomplish this strategy:

-    Follow  similar  guidelines  from other  companies  that have  proven  this
     process   to  be   fruitful   and   incorporate   them  into   management's
     infrastructure;

-    Properly  capitalize  the  Company  for  its  basic  costs  of  seeing  the
     implementation begun and make sales contacts regularly;

-    Begin the various stages of strategy in order to create a small, but secure
     level of income in each area;

-    Enhance the Company relationships with its investors and investment bankers
     to focus on their participation as income and Company performance improves.

-    Seek assistance  from outside sources on shared  management of libraries of
     films or  limited  exposure  on new  product to key  selected  buyers for a
     reduced commission in order to attract producers and new projects.

-    Avoid risk-oriented  projects and acquisitions with long startup periods to
     revenue.

-    Maintain a budget for operations  and fixed  overheads as well as utilizing
     revenues  from  sales  to  finance   future   marketing  and   distribution
     activities.

Subsidiary Operations

During the year 2000 and into 2001,  Odyssey has  completed the  acquisition  of
Filmzone.com,  an  informational  entertainment  resource  site which  presently
serves the public for retrieval of current film information. The acquisition was
added as a subsequent part of the earlier announced Kimon  acquisition.  Odyssey
plans on  renovating  the site to serve the buyer markets in order to access the
films it acquires.  The site will offer  pricing and a high grade of  technology
where the viewer can access the commercials, trailers and artwork as well as the
territories open for sale.

During the first part of 2001,  along with the assistance of the Kimon Group and
Filmzone.com,  Odyssey  has  developed  its  web-site  which will  announce  its
activities and news, as well as its new films coming out in the future.  The web
site  address is noted as  "Odysseypix.com"  and is expected to be "live" in the
latter part of 2001.

In March of 2000,  the Company formed  Odyssey  Ventures  Online Holding S.A., a
Luxembourg corporation ("OVO"), for the purpose of making investments in various
technology-related entities. OVO's original strategy was to invest and co-invest
with venture  capital  investment and management  groups,  with the intention of
developing  products and services related to digital  commerce,  content and the
distribution thereof.

                                       7
<PAGE>

During the course of the fourth quarter of the fiscal year ending June 30, 2001,
management determined that the maintenance and costs of overseeing the assets of
OVO,  with the long term benefits in  technology  business  having to be revised
significantly, require a change in the earlier plans to pursue added investments
in related  technological  ("Tech")  companies.  Recent  down-grades  of outside
investments have affected the growth plans of many companies.  The fact that the
Company  has had  numerous  difficulties  in securing  its long term  investment
capital and has had little or no  financial  activity,  the  prospects of future
investments  and growth plans of subsidiary  operations  have been  discontinued
although  efforts are  maintained  to recover  values and perhaps trade in other
capacities, which are and remain options from the former management. Odyssey has
sought  recoupment of the value of these assets perhaps through a profitable (or
redeemable)  transaction  form  former  associates  of  the  Company.  It is the
intention of the Company to seek another  buyer within the year and perhaps make
a sale of the assets,  or liquidate  the assets of the  subsidiary in an orderly
manner.  In the case of the latter,  the Company has made a reserve and has made
significant  write-downs of its valuation.  A determination  will be made during
the year if no buyer or alternative manner of selling the assets is found.

Since the  formation of OVO in March,  2000,  the Company has made the following
investments:  (i)an  investment  of  $500,000  for a 6.25%  equity  interest  in
PurchasePooling.com,  Inc., a web-based demand aggregating  service developed to
enable government entities and businesses to realize significant cost savings by
combining their purchasing power on large-ticket  capital equipment,  as well as
other  goods and  services;  (ii) an  investment  of  $136,668  for a 25% equity
interest in  Webtelemarketing.com,  an  Internet-based  company  specializing in
online  recruiting  by linking  the supply  and demand  sides of the  employment
industry;  (iii)an  investment  of $25,000 for a 1% equity  interest in Exchange
Enterprises,  Inc., a privately-held company that has developed a patent-pending
internet  cash card that allows  consumers  to purchase  products  and  services
online without the use of credit cards or bank accounts. An interest in Purchase
Pooling  was  acquired  in  February  of 2000.  In  September  of  2000,  OVO (a
subsidiary of the Company) through a common relationship within the two entities
of Purchase Pooling and Edge Technologies, (EDGE is a major investor in Purchase
Pooling)  determined  that it would be  profitable  to acquire,  through a stock
swap,  264,000  shares in Edge  Technology.  This  resulted in a 30%  ($150,000)
devaluation of the Purchase Pooling investment and a $150,000 basis for the Edge
investment. This "dollar for dollar" transaction resulted in no gain or loss was
reported in the issuance of the shares from Edge.  This  transaction was treated
only as an extension of investments into other  technology-related  entities and
that  management  at the  time  determined  that it  would  be best to  exercise
diversity in investments when it was limited on capital.

Development In April,  1999,  the Company  purchased an option with the right of
first  refusal to be the exclusive  worldwide  distributor  of a motion  picture
entitled  "HARA." The film is an  action-packed  semi-biographical  martial arts
love story. Prior management owned an indirect 50% equity interest,  through its
affiliated companies, in Red Sun Productions, Inc., the rights holder of "HARA".
In April of 2000, the Company made a refundable  advance of $60,000  towards the
acquisition  of the  exclusive  rights  to  exploit  the  film  worldwide,  when
completed.  This advance was made with the  intention  of producing  the project
into a feature  length  movie  based upon the  prospects  of new  financing  for
productions  becoming  available.  As of June 30, 2001,  the  financing  has not
become available and the project remains in script form, but is registered as an
asset of the  Company  under  the  classification  of  "deposits".  It was prior
management's  intention,  at the time,  to package and finance the film project.
During the course of the next year, there was a transition in management and, as
well, a significant  change in the economics of film financing.  It became known
that the prior management did not have the financing available for this project.
New  management  determined  that it could not sustain the risks  involved  with
financing  such a project  and,  requested  that the  deposit be  returned.  New
management  has  experience in the industry  risks and further  determined  that
future  financing  may not become  available  for this  project  for a number of
reasons;  some being the fact that the  script  itself  would  need  substantial
expense in rewrites and would need to re-evaluated  at a later date;  there will
be no assurance that this  particular  genre of story will be marketable at that
time in the future;  unknown  elements  may exist on the actual claim of rights,

                                       8
<PAGE>

the Company could not determine a true cost for a completed product.  Therefore,
there would be no revenue results from which the Company could rely upon without
spending more funds.  Management  may decide to abandon the project  altogether.
Under the latest  accounting  guides as issued under Statement of Position (SOP)
00-2, which presents new accounting,  reporting, and disclosure requirements for
the motion picture industry,  if it is determined that a property in development
will be  disposed  of,  the entity  should  recognize  a loss on these  costs by
charging them to the current  period income  statement.  The Company did issue a
demand for the return of the deposit and a reserve will be made for the prospect
of a loss against receiving the deposit in return.

Library Films

In  August,  1998,  the  Company  completed  the  acquisition  of the  assets of
Sweden-based  Kimon,  valued at $4,500,000,  in exchange for 4,500,000 shares of
the Company's subordinated convertible Preferred Stock, Series B, having a value
for  conversion  purposes of $1.00 per share.  Kimon had the right to convert to
Odyssey  common  stock  between  June  30,  2000  and  December  31,  2000  on a
dollar-for-dollar  basis based on the price of the Company's common stock at the
time of  conversion.  Kimon  assets  purchased  consist of a film  library  with
worldwide  and/or  Scandinavian   distribution  rights  and  Scandinavian  video
distribution rights to certain Hallmark Entertainment products. The Kimon Assets
are  part  of a  negative  pledge  covenant  of the  Senior  Secured  Bond  (see
"Financing").

In connection with the change of control in March, 1998, the Company acquired an
18% equity interest in each of two corporations  affiliated with Mr. Schotte, 1)
E3 Sports New  Mexico,  Inc.  which is the owner of the  Albuquerque  Geckos,  a
second division professional soccer team in New Mexico (subsequently transferred
to  Sacramento),  and the other of which is a consulting  company in  Luxembourg
("Media  Trust").  The Company issued one-year notes in the aggregate  amount of
$450,000  in  consideration  of the  purchase of the equity  interests  in these
companies.  (In June, 1999, the Company  satisfied  $135,000 of these notes, and
the accrued  interest  thereon of $27,225,  by the issuance of 348,721 shares of
the Company's  restricted common stock valued at $.465 per share). The Company's
equity interest in the entity which owns the  professional  soccer team has been
diluted by half, or to 9%, as a result of a capital  increase/call  in which the
Company did not participate.  The company that owns the soccer team has declared
bankruptcy  and the  assets  of E3 Sports  are  stock  and a note in a  bankrupt
company.  Pursuant to this occurance Odyssey has reserved all of this investment
as a loss. Media Trust S.A. is a Luxembourg  business entity and the Company has
made demand for financial information on the investment.  A reserve has been set
for this  investment due to the lack of financial  reporting since the inception
of the investment.  The Company has obtained legal representation in Brussels on
this matter.

Sales of Library Films

On  January  2,  1996,  the  Company  entered  into an  agreement  with  Regency
International Pictures,  B.V. ("Regency"),  the Company's joint venture partner,
to sell the Company's  interest in the related joint  ventures  through which it
held  approximately 50% ownership  interests in four theatrical motion pictures,
entitled  "Switch",  "Q & A,"  "Guilty  by  Suspicion"  and "This  Boy's  Life".
Pursuant to the  agreement  with  Regency,  the Company  received  $1,000,000 on
January 23, 1996 and $500,000 on February  14, 1996,  in exchange for all of the
Company's interests in the joint ventures.  In addition,  the Company retained a
contingent  interest  in  certain  receivables,  not to exceed  $212,500,  and a
contingent interest in future revenues from the pictures.

                                       9
<PAGE>

On August 29, 1996,  the Company  entered into an agreement  with Kinnevik Media
Properties, Ltd. ("Kinnevik"),  pursuant to which the Company agreed to grant to
Kinnevik  subdistribution  rights in, and to sell to Kinnevik other distribution
rights to,  certain films in the Company's  film library.  In exchange for these
rights, the Company received a total cash  consideration of $1,075,000,  payable
$500,000 on closing,  $275,000 six months after closing,  and $300,000  eighteen
months after closing.  In addition,  the Company  retained a continuing right to
receive  revenues  from  certain  films,  valued by  management  at a minimum of
approximately $150,000. As part of the transaction,  the Company granted 100,000
stock options to Kinnevik, exercisable over a three year period at the bid price
of the  Company's  common  stock in  effect  on  August  5,  1996  ($.625).  The
transaction with Kinnevik closed on October 7, 1996.

Recent Financings

In August,  1998, three  unaffiliated  investors loaned 4,000,000 Belgian Francs
(approximately $100,000) and receivedone year convertible notes with interest at
10% per annum (the notes are convertible at a 15% discount to the market price).
The notes have been extended  through to September 30, 2001 In September 1998 an
unaffiliated  third party loaned $25,000 to the Company and received a six-month
note  with  interest  at 10% per  annum.  Thereafter,  the  lender  agreed  to a
six-month extension on the note (through September, 1999) in consideration of an
increase in the interest rate on the loan to 12% per annum,  and the issuance of
12,500 common stock purchase  warrants at $1.00 per share,  exercisable  through
the year 2004.

In December 1998, (i) an unaffiliated  party purchased  625,000 common shares at
$.30  per  share  for  a  total   purchase   price  of  $187,500  (see  "Certain
Relationships  and  Related  Transactions");  and (ii)  counsel  to the  Company
converted  $40,000 of accrued legal fees into 100,000  shares of common stock of
the Company.

During the period between April, 1999 and September, 1999, the Company completed
four private placements to offshore investors,  the first of which was completed
for  575,000  shares  of  common  stock at a  purchase  price of $.30 per  share
(resulting in gross  proceeds to the Company of $172,500),  and the latter three
of which were completed for an aggregate of 1,600,000  shares of common stock at
a purchase  of $.40 per share  (resulting  in gross  proceeds  to the Company of
$400,000).

In August, 1999, three unaffiliated investors renewed loans of 4,000,000 Belgian
Francs  (approximately  $100,000) and received one year  convertible  notes with
interest at 10% per annum (the notes are  convertible  at a 15%  discount to the
market  price).  The notes have been  extended  through to  September  30, 2001.
During the  period  between  September,  1999 and  October,  2000,  the  Company
completed two series of private placements to offshore  investors,  the first of
which was  completed  for an aggregate of 3,000,000  shares of common stock at a
purchase price of $.40 per share  (resulting in gross proceeds to the Company of
$1,200,000),  and the second of which was  completed for an aggregate of 960,000
shares of common  stock at a  purchase  price of $1.00 per share  (resulting  in
gross proceeds to the Company of $960,000).

In August,  2000, two unaffiliated  investors  loaned  4,000,000  Belgian Francs
(approximately  $100,000) and received one year convertible  notes with interest
at 10% per annum  (the notes are  convertible  at a 15%  discount  to the market
price).  The notes have been extended  through to September 30, 2001. Two of the
Belgian Franc loans have been repaid and the others have agreed to renewals with
a fixed amount of shares for possible conversion.

                                       10
<PAGE>

Competition

The entertainment industry generally,  and the film industry in particular,  are
highly competitive.  The Company's  competition includes the smaller independent
producers as well as motion picture studios.  Many of the Company's  competitors
have financial and other  resources which are  significantly  greater than those
available to the Company.

Operations

The  Company's  operations  have  been  greatly  reduced  as  a  result  of  the
restructuring of the Company by new management.  The Company's  principal office
is located in Dallas,  Texas (see  "Properties")  and, as of June 30, 2002,  the
Company had five full-time employees, consisting of Mr. John Foster, the CEO and
President  of the  Company,  Mr.  Frank  Cole,  along with three  administrative
assistants in the Dallas office.

Tax Loss Carryforward

The  Company  is  entitled  to  the  benefits  of  certain  net  operating  loss
carryforwards  to reduce its tax  liability.  The  utilization by the Company of
such tax loss  carryforwards  is  limited  under  applicable  provisions  of the
Internal  Revenue  Code of 1986,  as  amended,  and the  applicable  regulations
promulgated   thereunder.   As  of  June  30,  2002,  there  were  approximately
$35,700,287 in net operating loss  carryforwards  remaining to be used to reduce
tax liability.  The utilization of approximately $4.9 million of these losses in
future periods will be limited to approximately $350,000 per year.

Item 2. Properties

The Company  presently  conducts its operations out of leased  premises at 16910
Dallas Parkway,  Dallas,  Texas,  consisting of approximately 2,500 square feet.
The  premises  are  presently  being made  available  to the  Company  through a
sublease  agreement  with JL Media  Services  LLC,  an  affiliated  party to Mr.
Foster. Rent expense for each of the fiscal years is as follows:

June 30, 2002 - $40,936
June 30, 2001 - $34,094
June 30, 2000 - $17,649
June 30, 1999 - $84,939



                                       11
<PAGE>

Item 3. Legal Proceedings

On or about May 15,  1995,  Credit  Lyonnais  Bank  Nederland  N.V.  and Cinecom
Entertainment  Group, Inc. filed a Complaint in the Superior Court for the State
of California,  County of Los Angeles,  captioned Credit Lyonnais Bank Nederland
N.V. and Cinecom  Entertainment  Group, Inc. v. Odyssey  Distributors,  Ltd. and
Does 1 through 100 (No. BC 127790). They allege that Odyssey Distributors,  Ltd.
(a  subsidiary  of the Company)  collected  but failed to remit to them assigned
distribution proceeds in the amount of $566,283.33 from the foreign distribution
of "Aunt Julia and the  Scriptwriter"  and "The Handmaid's  Tale." The Complaint
alleges  claims for breach of contract and breach of fiduciary  duty and demands
damages in excess of  $566,283,  attorney's  fees,  an  accounting,  a temporary
restraining order and a preliminary  injunction.  In June 1995, the Court denied
plaintiffs an attachment and stayed the action pending  arbitration in New York.
In September,  1996, the Court dismissed the Complaint.  In December,  1996, the
Company  settled the  outstanding  litigation  with Generale  Bank  ("Generale")
(formerly   known  as  Credit   Lyonnais  Bank   Nederland   N.V.)  and  Cinecom
Entertainment  Group Inc.  Pursuant  to the  settlement  agreement,  the Company
agreed to pay to Generale  the sum of $275,000  in  complete  settlement  of the
claim,  payable $25,000 upon execution of the settlement  agreement,  $25,000 on
each of June 30 and December 31 in the years 1997,  1998 and 1999,  and $100,000
on June 30,  2000.  The Company  and  Generale  later  agreed upon a new payment
schedule as follows:  $25,000 on or before  October 15, 1997 (payment was made);
$30,000 on each of April 15, 1998,  June 30, 1998,  December 31, 1998,  June 30,
1999,  and December 31, 1999;  and $100,000 on June 30, 2000.  The Company is in
default of this payment  schedule.  The  consequences of not curing a default is
the entry of a confession  of judgment  already  executed by the Company for the
amount of $275,000. This confession of Judgment is against Odyssey Distributors,
Ltd., a wholly owned but non-operating, non-active subsidiary of the Company.

In August 1995, G.P. Productions,  Inc. ("GP") and Greenwich Subject Films, Inc.
("Greenwich") commenced an action entitled G.P. Productions,  Inc. and Greenwich
Studios,  Inc. v. Double Helix Films,  Inc.,  Communications  and Entertainment,
Inc.,  Krishna  Shaw,  Gerald  Muller  and Norman  Muller in the  United  States
District Court, Southern District of Florida (Case No. 95-1188).  Mr. Muller has
demanded  that the Company  indemnify  him against any  expenses,  judgments and
amounts paid in settlement of the action.  The Company  contends that, by virtue
of Mr.  Muller's  breaches of fiduciary duty and violation of his obligations to
the Company,  it is not required to provide  indemnification.  GP and  Greenwich
allege that they are the exclusive  owners of the films "The Gallery" and "South
Beach".  They assert  claims for  copyright  infringement,  unfair  competition,
breach  of  contract,  accounting,   conversion,  civil  theft,  conspiracy  and
fraudulent  conveyance.  The  Complaint  demands  a  recall  of  the  films,  an
attachment,  preliminary and permanent  injunctive  relief,  an accounting,  and
unspecified  compensatory,  punitive and treble damages. The Company's motion to
transfer  venue of the action was granted in  November,  1995,  and the case was
transferred to the United States District Court for the Southern District of New
York.  There has been no activity in this matter  since the transfer of venue in
1995.

                                       12
<PAGE>

In October,  1995,  Canon  Financial  Services filed a Complaint in the Superior
Court of New Jersey entitled Canon Financial  Services,  Inc. v.  Communications
and  Entertainment  Corp.  The plaintiff is claiming that it is due  $47,499.83,
plus damages,  pursuant to a lease agreement. The Company has filed an Answer in
this action and plaintiff's  motion for summary  judgment has been denied by the
Court. No trial date has yet been set in this matter. In December,  1995, Robert
F.  Ferraro,  a former  director of the Company,  brought an action  against the
Company in the  Supreme  Court of the State of New York,  New York  County.  The
action was brought on a promissory  note in the amount of $25,000 and  plaintiff
obtained a judgment on a summary  judgment  motion.  The  plaintiff  has not yet
moved to enforce the judgment and the Company is  considering  whether or not it
has a claim for indemnification  against prior management in connection with the
issuance of the note.  The judgment,  in the  meantime,  has been assigned to an
outside collection agency who has been in contact with Management of Odyssey and
Odyssey has made payments in keeping the matter from accelerating.

In March, 1996, an action was filed against the Company in Los Angeles Municipal
Court by Judy  Hart,  in which  the  plaintiff  claims  that she is due  $17,920
pursuant to a  promissory  note.  The Company  has filed a  cross-claim  seeking
offsets  against the amount due and other  damages.  On May 21,  1998, a default
judgment  was  entered  on  behalf  of  plaintiff  in  the  amount  of  $22,261.
Subsequently,  plaintiff  filed a motion to include  attorneys fees and costs in
the  aggregate  amount of  approximately  $17,000.  The Company is attempting to
reach a settlement  with plaintiff.  As of this year,  there has been no contact
with the plaintiff and no indication of any activity.

In March,  1996, a class action complaint was filed against the Company entitled
Dennis  Blewitt v. Norman  Muller,  Jerry Minsky,  Dorian  Industries,  Inc. and
Communications and Entertainment Corp. The complaint seeks damages in connection
with the Company's  treatment in its financial  statements of the disposition of
its  subsidiary,  Double Helix Films,  Inc. in June,  1991. The complaint  seeks
unspecified  damages  on  behalf  of all  persons  who  purchased  shares of the
Company's  common  stock from and after June,  1992. A second  action,  alleging
substantially  similar  grounds,  was filed in December 1996 in Federal Court in
the United States District Court for the Southern  District of California  under
the caption  heading "Diane  Pfannebecker v. Norman Muller,  Communications  and
Entertainment  Corp., Jay Behling,  Jeffrey S. Konvitz,  Tom Smith, Jerry Silva,
David  Mortman,  Price  Waterhouse & Co.,  Todman & Co.,  and Renato  Tomacruz."
Following  the filing of the second  action,  the first action was  dismissed by
stipulation  in May 1997. The Company filed a motion to dismiss the complaint in
the second  action and after a hearing  on the motion in July,  1997,  the Court
dismissed  the  federal  securities  law  claims  as  being  time-barred  by the
applicable statute of limitations, and dismissed the state securities law claims
for lack of subject  matter  jurisdiction.  The lower court's  dismissal of this
action  was  upheld  on appeal by the Ninth  Circuit.  The case was  refiled  in
California  state court in August 1998. The Court granted motions to dismiss two
of the complaints filed by the Plaintiff, whereupon a third complaint was filed.
More recently,  a fourth amended complaint has been filed adding claims that the
defendants,  including  the  Company,  violated  provisions  of  the  California
Securities  Laws.  There  was no trial  date set in this  matter.  In a  related
action,  Thomas  Smith and Norman  Muller,  former  directors of the Company and
co-defendants in the Pfannebecker matter, filed an action against the Company in
the Los  Angeles  Superior  Court  seeking  indemnification  from the Company in
connection  with their status as  defendants  in the  Pfannebecker  matter.  The
Company  intends to defend  this action on the grounds  that  Messrs.  Smith and
Muller committed  wrongful acts as directors of the Company and failed to comply
with  various  fiduciary  obligations  to the  Company.  The  Company has met on
several  occasions,  through its legal  counsel,  to discuss and answer  certain
attempts  at  settlement.  Due to the  nature  and  complications  of this suit,
matters have generally  been very slow to receive  response to. In June of 2002,
the  Plaintiff,  along with the  defendants  and Odyssey's  Counsel,  attended a
hearing on the merits of the Class  Action  Status.  The judge ruled in favor of
the  defendants  in that there were no grounds to continue  this case as a class
action.  Subsequently,  Odyssey  was able to receive a  dismissal  of this case.
Odyssey,  at the same time, entered into settlement  discussions with respect to
any claims of  indemnification.  As for Mr.  Muller and Mr.  Smith,  the company
intends to  further  clarify  its stand on its  position  within the  company as
earlier noted. Should settlement discussion fail, and the Company is not able to
provide an amicable solution to this matter of indemnification and reimbursement
of expense (claimed to be in excess of $350,000) or if Odyssey shall not be able
or lose its defense against Mr. Muller and Mr. Smith, then the result could be a
entry of  judgment in the favor of Mr.  Muller and Mr.  Smith.  A  judgment,  if
awarded,  would contain all rights and remedies available to the judgment holder
The Screen  Actors Guild  ("SAG") has also asserted that there are amounts owing
to several actors arising out of "Down Range." In September,  1999, SAG obtained
an arbitration award against Down Range for a total amount of $96,183, inclusive
of salaries to the actors,  pension and health contributions and late fees. Down
Range was also ordered to pay $200 to the arbitrator.  Additionally,  there were
two actors,  Corbin Bernsen and Jeff Fahey, who had pay-or-play  contracts.  The
outcome of these contracts and the actors' claims have not been resolved.  There
has been no activity on this  matter from any source or other  assertions  as of
the close of business on June 30, 2002.

                                       13
<PAGE>

Mr. Ian Jessel entered into a three year employment  agreement with the Company,
commencing  November  9, 1998 and  continuing  through  November  9,  2001.  Mr.
Jessel's  responsibilities included management of the Company's Motion Picture &
Television  Division.  Mr  Jessel's  compensation  was  set at a rate  equal  to
$300,000  per annum for the first year,  $350,000 per annum for the second year,
and $400,000 per annum for the third year.  The  agreement  also  provided for a
yearly bonus based upon the net profits of the film division and the Company.

The Company  paid the sum of $50,000 to Mr.  Jessel in fiscal 1999 and  deferred
payment of the balance of the compensation due to him. In June, 1999, Mr. Jessel
notified the Company that he was suspending  services to the Company for failure
to pay his compensation on a timely basis. The Company believes it was justified
in deferring certain payments due to Mr. Jessel.  Mr. Jessel commenced an action
against the Company in November, 1999 in the Los Angeles Superior Court, seeking
the salary and other  benefits he claims he is entitled to under his  three-year
employment  agreement.  The Company  intends to vigorously  defend the action on
several  grounds,  including Mr. Jessel's  breach of his  obligations  under the
agreement.  Discovery  was  ongoing in this  matter and a trial date was set for
April 30, 2001.  Amounts that could have been due to Mr. Jessel were reserved in
accrued wages as a contingent amount. In December of 2000,  management requested
mediation  talks to begin and had made efforts to settle the ongoing  litigation
matters.  A  settlement  had been  reached and had been voted as accepted by the
Board.  All  settlement  discussion and offers have been reserved and are within
the reserved  amount(s).  As of June 30, 2002, the company had made  significant
payments  towards the balance of the settlement.  Subsequently,  the company and
Mr. Jessel have made an arrangement for repayment of the balance of this debt.

Although a payment schedule has not been determined until the Company can, or is
able to,  adhere to one,  the  parties  have  been  working  amicably  to afford
payments on an "as available"  basis and, from time to time, have issued certain
reports and updates in order to maintain constant contact with Mr. Jessel on the
activities within the Company. There is and remains a risk, however, that if the
sum total of the payment is not paid or satisfied, or becomes significantly past
due and if Mr. Jessel may cease to  coordinate  with the Company (or vice versa)
then  there  could be  enforcement  of an allowed  judgment.  The amount of this
judgment could in excess of $375,000 plus interest accrued.  If such enforcement
would be acted upon, then all rights and remedies  afforded to a judgment holder
shall become effective and expose Odyssey to the collection of said judgment. In
this case, the Company would face significant expense in attempting to defend or
protect  the  judgment  from  being  filed and such an  instance  would  require
substantial  management  time and cash from  operations to  accommodate  such an
action.

Dennis Morgan  commenced an action against the Company in December,  1999 in the
Los Angeles Superior Court alleging that he was promised a position as head of a
music division to be established by the Company and that such oral agreement was
intended to be  confirmed in writing but never was. Mr.  Morgan  brought  claims
against the Company and others for the  purported  breach of an oral  agreement,
purported breach of an implied agreement, fraud and fraudulent conveyances.  The
Company   has  served   written   discovery   and  is  awaiting   responses   to
interrogatories and the production of documents. The Company contends that there
was no  employment  relationship  with,  nor any  monetary  commitments  to, Mr.
Morgan, and that it committed no breach or wrongdoing. A trial; date was set for
this matter. The parties began discussing settlement terms in order to alleviate
the  costs of  ongoing  litigation.  As of the end of June,  2001,  the  Company
entered  into  preliminary   settlement  and  expects  satisfy  any  outstanding
complaints.  The company has made  payments  towards this  settlement  and shall
continue to pay on a promissory note basis. As of June 30, 2002, the company had
made payments towards the balance of the settlement.  Subsequently,  the company
and Mr. Morgan have made a payment arrangement,  which involves a period of time
in  structured  payments.  Although a payment  schedule has not been  determined
until the Company  can,  or is able to,  adhere to one,  the  parties  have been
working amicably to afford payments on an "as available" basis and, from time to
time,  have issued  certain  reports  and updates in order to maintain  constant
contact  with Mr.  Morgan on the  activities  within the  Company.  There is and
remains a risk,  however,  that if the sum total of the  payment  is not paid or
satisfied,  or  becomes  significantly  past due and if Mr.  Morgan may cease to
coordinate  with the Company (or vice versa) then there could be  enforcement of
an allowed  judgment.  The amount of this  judgment  could in excess of $175,000
plus interest accrued.  If such enforcement would be acted upon, then all rights
and remedies  afforded to a judgment  holder shall become  effective  and expose
Odyssey to the collection of said judgment. In this case, the Company would face
significant  expense in  attempting to defend or protect the judgment from being
filed and such an instance would require  substantial  management  time and cash
from operations to accommodate such an action.

                                       14
<PAGE>

A Lawsuit  was filed in the State of New York  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.  The complaint  states a balance owing for
services  rendered from the period  beginning 1997 through to April of 2000. The
notice of complaint  was received on August 10, 2001.  Odyssey has answered this
complaint 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 has offered a settlement on behalf of
the remaining  defendants.  No response has been made from the Plaintiff on this
matter as of the close of business on June 30, 2002.

There is a pending  litigation  from  another law firm in Los  Angeles,  Arter &
Hadden LLP,  which is from  representation  in the above suits prior to specific
counsel moving to another firm, which is currently  representing the Company. It
is the  Company's  intention  to pay or  settle  this  amount  as and when it is
economically feasible to do so. The amount due is $30,000.

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 4.  Submission  of Matters to a Vote of Security  Holders.

No  matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of the fiscal year covered by this Report.

Changes in Securities and Use of Proceeds.

In  March of 2001 the  Board  of  Directors  approved  a $5  million  US  dollar
denominated  Senior  Secured  debt issue (the  "Senior  Debt") with  convertible
rights  to  common  stock at  maturity  and in  certain  circumstances  (such as
bankruptcy  and/or financial  defaults on other significant  debt).  Reserves of
shares for the  potential  conversion  have been made.  The Senior Debt requires
that the company not pledge any  significant  assets and gives the bondholders a
pledge on the "Kimon  Library"  assets.  The Senior Debt  carries an 8% interest
rate and matures on April 15,  2006.  The Senior Debt is not  registered  in the
United States and is only available to non-US citizens. The Trustee received the
first  subscription  on August 29, 2001 for $160,000.  The funds after financing
expenses of $14,364 were used to pay off two loans of 4 million francs (previous
paragraph) and some rent expenses of an office recently closed in Luxembourg.  A
previous  officer  used the  remaining  funds for claimed  expenses.  Odyssey is
pursuing additional subscriptions.

Defaults Upon Senior Securities

An interest  payment  due on April 12, 2002 was made by a third party  therefore
the Senior Secured Bond is in compliance with its requirements. The company does
not have sufficient cash to make its next  semi-annual  payment and,  therefore,
risks the Bond being placed in default.

                                       15
<PAGE>
                                     PART II

Item 5. Market for Registrant's Common Stock and Related Stockholder Matters.

The following table sets forth the range of high and low bid information for the
Common  Stock of the  Company as  reported  by the  Nasdaq  Stock  Market,  Inc.
("Nasdaq") on a quarterly  basis for each of the two preceding  fiscal years. On
May 1, 1996,  Nasdaq  notified  the Company that its shares of Common Stock were
being deleted from Nasdaq's SmallCap Market,  effective May 2, 1996, because the
Company  did not  maintain a combined  capital  and  surplus of  $1,000,000,  as
required  by Section  1(c)(3) of  Schedule D of the NASD  By-Laws.  Since May 2,
1996, the Company's shares have traded in the over-the-counter market on the OTC
Bulletin Board. The Company's Common Stock trades under the symbol OPIX.

No dividends  have been declared or paid with respect to the Common  Stock.  The
bid quotations represent inter-dealer prices and do not include retail mark-ups,
mark-downs or commissions and may not necessarily represent actual transactions.

Common Stock
                                    Fiscal 2000      High      Low
                                    -----------      ----      ---
                                    First Quarter    $ .69    $.49
                                    Second Quarter   1.11      .45
                                    Third Quarter    1.19      .75
                                    Fourth Quarter   1.55      .94

                                    Fiscal 2001      High      Low
                                    -----------      ----      ---
                                    First Quarter    $1.52   $1.09
                                    Second Quarter   1.38      .50
                                    Third Quarter    1.00      .34
                                    Fourth Quarter    .45      .33

                                    Fiscal 2002      High      Low
                                    -----------      ----      ---
                                    First Quarter    $ .38    $.15
                                    Second Quarter    .34      .10
                                    Third Quarter     .61      .31
                                    Fourth Quarter    .47      .12

As of June 30,  2002,  there were  approximately  13,833  record  holders of the
Company's  Common  Stock.  This  includes   approximately  20  identified  stock
brokerage firms which  typically hold stock for multiple  customers in their own
or "street"  name.  Confidentiality  laws do not allow the Company to inquire on
actual numbers of customers held by these firms.

Item 6. Selected Financial Data (in thousands, except per share data).

The following  table sets forth the selected  financial data for the Company and
should be read in conjunction  with the  Consolidated  Financial  Statements and
Notes  thereto,  and with  Management's  Discussion  and  Analysis of  Financial
Condition and Results of Operations which appear elsewhere in this report.
<TABLE>

For the Years Ended June 30,
----------------------------
<CAPTION>
                                                                       2002     2001      2000     1999
                                                                       ----     ----      ----     ----
<S>                                                                  <C>       <C>       <C>       <C>
Income Statement Data
Revenues                                                               $ 167     $ 4     $ 146    $ 288
Income(loss) from continuing operations                                 (542) (1,449)   (1,208)  (1,388)
Income(loss) from discontinued operations                             (1,378)     --        --       --
Net income (loss)                                                     (1,920) (1,449)   (1,208)  (1,388)
Per Share Data*
Income(loss) from continuing operations                                (.024)   (.08)     (.09)    (.22)
Income(loss) from discontinued operations                              (.066)     --        --       --
Net income (loss)                                                       (.09)   (.08)     (.09)    (.22)
Cash dividends -- -- -- --
Weighted average shares                                               22,540  17,214    13,103    6,459
Balance Sheet Data
Film costs                                                             3,638   3,923     4,095    4,378
Total assets                                                           4,921   5,796     5,936    5,439
Indebtedness                                                           3,725   3,743     2,869    1,192
Shareholders' equity                                                   1,196   2,053     3,067    2,161
</TABLE>

NOTE: Per share data and weighted average shares for all periods have been
restated to reflect the effect of a one-for-six reverse stock split in March
1996.

                                       16
<PAGE>

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation.

Results of Operations

Years Ended June 30, 2002, 2001 and 2000

Net loss for the year  ended  June 30,  2002 was due mainly to the fact that the
Company  did not  release  any  new  films  nor  receive  any  income  from  its
investments  through its  subsidiary,  and the Company wrote down  significantly
most of its  investments  in and to affiliated  entities from prior  activities.
This activity is the result of  management's  change in the operations to form a
more cohesive selling group and in determining the true valuations  according to
the revenue sources that we are attempting to generate as an overall Company and
"focused  industry"  guideline.  In the past, the Company was fairly extended in
areas that were not necessarily its expertise and current  management has sought
to engage a more traditional approach to the markets of selling,  broadcast, and
relying on its content, rather than outside investments, to coordinate its sales
efforts.

Revenues  for the  twelve  months  ended June 30,  2002  increased  to  $168,615
compared to $3,706 for the twelve  months  ended June 30, 2001 and  $146,485 for
the period  ending June 30, 2000.  Primarily,  this was the first results of the
selling  and  licensing  of its  library  of films and in  reviving  some of its
contacts from the prior activity of distribution.  The latter part of this year,
the Company had several new films ready to be made available for delivery during
the first two  quarters of the new year.  These new films came from  independent
sources with which the Company and new management had made  arrangements,  in an
effort to acquire or license newer productions for possible recognition into the
Company's  markets.  In addition,  the company is in post production for several
more film projects recently  acquired.  The Company has an advantage,  through a
captive  vendor,  (JL  Media  Services  LLC) to allow  for the  post  production
services to be used as a method of  acquiring  films for no money as an advance.
The Company  uses the services of the vendor to afford the  completion  of films
that  may  need  completion  work  in  exchange  for the  international  (or all
worldwide)  rights in selling  the  product  for a fee.  This  increase  is also
related  to  activities  with the film  library  as well as new  marketing  from
present  management,  specifically,  the attendance at new festivals and markets
and  the   additional   tools   of   promoting   through   its   internet   site
(www.odysseypix.com).

Costs related to the revenues  decreased to $106,050 for the twelve months ended
June 30, 2002 as compared to $152,953 for the twelve  months ended June 30, 2001
and $140,580 for the same period ending Jun 30, 2000.

The  relative  decrease  costs are  primarily  related  to  reclassification  of
depreciation costs associated with the earlier  acquisition of the Kimon library
and Hallmark film assets.  In the past, and after the transaction with Kimon was
completed,  all depreciation  costs were listed under "Cost of Goods".  This was
recorded  properly  if there  was  revenue  to be  recognized  along  with  such
depreciation  treatment.  According to the latest  account  rules as governed in
revenue  recognition  and costs  related  thereof,  Assets are  depreciated,  as
opposed to  expensed,  if they are  expected to generate  value over a period of
more  than one year.  The fact that  there was less  revenue  than  expected  or
calculated or no revenue  recognized from the Kimon assets after  purchase,  the
transaction as a whole, would be treated more as an inventory item and therefore
resulted in a  depreciation,  which should be recorded  within  operations as an
expense  rather than a cost item.  Additionally,  the  acquisition  of the Kimon
asset  resulted  in the  acquisition  of  Filmzone.com,  (a domain  name for the
web-site which will add to the Company's efforts in selling and marketing) which
also is a  depreciation  item to be included in expense.  Although  this did not
materially affect the overall asset of the Kimon Library, a re-evaluation  could
occur and in the event that there is  substantial  concern  over the  ability to
generate revenue from this asset, further write-downs may occur.

Selling,  general and administrative  expenses decreased by $128,218 to $604,526
for  the  twelve-month  period  ended  June  30,  2002  from $  732,744  for the
comparable period ending June 30, 2001. For the period ending June 30, 2000, the
same  expenses  were  1,136,617.  This  decrease is  primarily  due to corporate
overheads being reduced in outside areas. More particularly,  the company ceased
its off-shore  office lease and the travel related  thereto as well as no longer
having an additional officer expense.  Since the change in management control in
July of 2001, new management has undertaken several steps to reverse unfavorable
results.  The company developed a  recapitalization  program with members of its
board and also received  assistance from current  shareholders.  The Company was
able  to  acquire  several  feature  film  products  and  has  entered  into  an
arrangement  with selling  agencies to assist in its  marketing  efforts for the
international territories.  In addition, the company has developed relationships
whereby it will be able to add to sales efforts in the North American markets of
Video  and DVD  sales on a direct  basis.  The  Company  has  also  engaged  new
managerial staff to further assist in its future performance.

                                       17
<PAGE>
Liquidity and Capital Resources

The Company's  continued  existence is dependent upon its ability to resolve its
liquidity  problems.  The company must achieve and sustain a profitable level of
operations  with  positive  cash  flows and must  continue  to obtain  financing
adequate  to meet  its  ongoing  operation  requirements.  These  factors  raise
substantial doubt about the Company's ability to continue as a going concern.

At June 30, 2002,  the Company held  approximately  $3,675 of cash.  In the past
fiscal  year,  management  has  taken  steps  to fund the  Company's  operations
primarily through private placements of the Company's common stock with offshore
investors.  The Company also received financial support from another company (JL
Media  Services  LLC, an affiliate  of an officer) in offsets to  overheads  and
interim  loans,  which are  secured by the  Company's  assets.  The  Company has
received  commitments  from other  outside and  offshore  investment  groups and
individuals  who will  assist in the  financial  support  for  growth and in its
efforts to regain market  awareness.  The Company has made progress in obtaining
additional  funds,  but does have a significant  requirement for further outside
funds in order to retire its debts and potential contingencies as noted earlier.
The Company faces a very  difficult  avenue on acquiring  additional  funds at a
time  when it is also  attempting  to gain  revenue  from its  present  and past
assets. In addition, economic conditions in the overall entertainment markets in
which the Company is exposed to (the Independent  Markets)  involve  significant
issues  that  create  added  timing to get to market,  preparation  of  product,
acceptance by International  and Domestic buyers,  and timely payment form those
buyers.  It is uncertain the economy's  recovery from the downturn that began in
calendar  2001 and the demand for our services and product will result in "ready
cash" being  available in the future.  Without added  financing  through  equity
and/or debt, the Company is at risk in maintaining  its day-to-day  existence as
well as affording its plans for market entry of its product and timely delivery.
There can be no assurance that we would be able to obtain financing or that such
financing would be available on terms acceptable to us.

The following  table  reflects the Company's  near and long term  obligations as
reflected  on the  balance  sheet and other  amounts  for which the  company may
become obligated (off-balance sheet)
<TABLE>
<CAPTION>
                               TABLE OF CONTRACTUAL OBLIGATIONS AND DISCLOSURE
<S>                                 <C>             <C>             <C>           <C>           <C>
------------------------------------ ------------- ---------------- --------------- ---------- ----------
        Account Description             Total        Less than 1      1-3 Years     3-5 Years    More
                                                        Year                                    than 5
------------------------------------ ------------- ---------------- --------------- ---------- ----------
Structured Payment Obligations         732,299         90,000          642,299          -          -
Leased Equipment / Purchases             -0-              -               -             -          -
Secured and Affiliate Obligations      427,871         160,000         267,871          -          -
Obligations to Leased Premises         122,400            -            122,400          -          -
MG Obligations                         230,584            -            230,584          -          -
Notes and Loan Obligations            1,051,713       1,051,713           -             -          -
Accrued Salaries and Contract
 Obligations                           405,080         405,080            -             -          -
Other Term Liabilities Reflected
 on the Balance Sheet                  329,140            -            329,140          -          -
Other Contingencies Not Reflected
 on the Balance Sheet                  250,000         250,000            -             -          -
------------------------------------ ------------- ---------------- --------------- ---------- ----------
</TABLE>
During the period between April, 1999 and September, 1999, the Company completed
four private placements to offshore investors,  the first of which was completed
for  575,000  shares  of  common  stock at a  purchase  price of $.30 per  share
(resulting in gross  proceeds to the Company of $172,500),  and the latter three
of which were completed for an aggregate of 1,600,000  shares of common stock at
a purchase  of $.40 per share  (resulting  in gross  proceeds  to the Company of
$400,000).

During the  period  between  September,  1999 and  October,  2000,  the  Company
completed two series of private placements to offshore  investors,  the first of
which was  completed  for an aggregate of 3,000,000  shares of common stock at a
purchase price of 40 cents per share (resulting in gross proceeds to the Company
of  $1,200,000),  and the  second of which was  completed  for an  aggregate  of
960,000 shares of common stock at a purchase price of $1.00 per share (resulting
in gross proceeds to the Company of $960,000).

During the period between October,  2001 and June 2002, the Company  completed a
series of private placements to both offshore and US investors. These placements
netted  capital to the  company in the  amount of  $916,000  at a range of share
pricing from 25 to 07 cents per share.

Item 8. Financial Statements and Supplementary Data.

The  response  to this Item is  submitted  as a separate  section of this report
commencing on page F-1.
                                       18
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

Reference is made to the  Company's  Reports on Form 8-K,  dated  September  24,
1997,  and February 13, 1998,  with respect to a change in  accountants  for the
Company.

There have been no  changes to the  accountants  of the  company  for the period
ended June 30, 2002. The board of the company did elect an audit  committee,  as
required  under  the  new  standard,  and  has  elected  to  maintain  the  same
relationship  as in the past.  The new standard was adopted on April 1, 2002 and
did not have a significant effect on the Company.

                                    PART III

Item 10. Directors and Executive Officers of the Registrant.

The directors and executive officers of the Company are as follows:

Name                  Age  Position
----                  ---  --------
John W. Foster        49   Director, Chairman of the Board and CEO/President
Patrick Speeckaert    55   Director, Compensation Committee, Audit committee
Jean-Marie Carrara    44   Director
Peter Bucher          60   Director
Kjell Larsson         50   Director, Compensation Committee, Audit Committee

Set forth below is information  regarding the business experience of the current
Directors and executive officers of the Company.

John  Foster  has  been  an   independent   financial   consultant  and  analyst
specializing in turnaround  situations and management  restructuring in specific
industries  including the  entertainment  and  communications  industry.  He has
extensive background in information systems and data processing, and worked as a
consultant  and investment  advisor in  determining  strategies of financing and
(i)nvestments  in  motion  picture  projects  for  investors,  distributors  and
producers.

Mr. Foster served as interim President of the Company from January, 2000 through
June 2000, and was formally  working in the position of President from July 2000
to June 2001.  His  contract  was  extended  through  2002,  and he is currently
serving as Chairman,  President and CEO of the Company effective July 1, 2001 to
present.  Patrick  Speeckaert  for more than the past seven  years has served as
Managing  Director of Morrow & Co., Inc. in New York City. Morrow & Co., Inc. is
a leading  company  specializing  in advising  international  corporations  with
respect to issues  involving  corporate  governance,  shareholder  relations and
solicitations.  Jean-Marie Carrara is an international  corporate strategist and
technology  consultant.  His areas of expertise  include  management of decision
information and data transmission  safety and expertise in various  technologies
in the telecommunications, textiles and recycling industries. Mr. Carrara serves
as an expert to the International  Chamber of Commerce and continues to publish,
teach,  and  lecture at the  university  level in France.  He holds a  doctorate
degree in pharmacy,  advanced  degrees in biology,  biochemistry and hematology,
and advanced degrees in management and finance.

Mr. Peter Bucher is an independent  corporate  investment advisor and consultant
based in  Switzerland.  His career in banking  since the early  1960's  includes
relationships with the Swiss Banking Association.  He is currently active in his
community as political  leader and maintains his business in investment  banking
on a full time basis.

Mr. Kjell  Larsson is based in Florida  where he is President of  TigerNetOrder,
Inc., an Internet  facilitator and service  company  specializing in E-Trade and
Web Stores.  He has been  involved  with the film industry for over twenty years
and has produced  and sold in all facets of the film  business.  Mr.  Larsson is
also a shareholder of Odyssey Pictures through his company,  Kemp Entertainment.
Meetings and Committees of the Board of Directors

For the fiscal  year  ended June 30,  2002,  there  were seven  meetings  and/or
written  consents in lieu of meetings of the Board of  Directors.  All Directors
attended or consented to in excess of 75% of the meetings  (and consents in lieu
of  meetings) of the Board of  Directors  during said fiscal year.  The Board of
Directors does presently have,  audit and compensation  committees,  as recently
required.

                                       19
<PAGE>

Compliance  with Section  16(a) of the  Securities  Exchange Act of 1934 Section
16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's
officers and directors,  and persons who own more than 10% of a registered class
of the Company's equity securities,  to file reports of ownership and changes in
ownership  with the  Securities  and  Exchange  Commission  (the  "Commission").
Officers,  directors  and  greater  than 10%  stockholders  are  required by the
Commission's regulations to furnish the Company with copies of all section 16(a)
forms they file.  To the  Company's  knowledge,  based solely on a review of the
copies of reports furnished to the Company during the fiscal year ended June 30,
2002,  the  Company's  officers,  directors  and greater  than 10%  stockholders
complied  with all filing  requirements  under section 16(a) except that Messrs.
Carrara and Foster did not file Form 3 Reports.

Item 11. Executive Compensation.

The following table sets forth, for the fiscal years indicated, all compensation
awarded to, earned by or paid to the chief executive officer of the Company, the
four most highly  compensated  executive officers who were executive officers as
of June 30, 2002,  and other  significant  employees  for whom  inclusion in the
following  table would be required but for the fact that such employees were not
executive  officers  of the  Company at the end of the most  recently  completed
fiscal year: Summary Compensation Table
Summary Compensation Table
<TABLE>
<CAPTION>


                           Annual Compensation
                           ----------------------------------------      Long-Term Securities
Name and         Fiscal               Other             Annual            Underlying All Other
Position          Year               Salary       Bonus Compensation    Options  Compensation
                  -------- ---- ------ ----- ------------ ------- ------------
<S>               <C>     <C>    <C>    <C>   <C>        <C>      <c>

John Foster       2002 168,000      --      --                --                --
President /CEO    2001 156,000      --      --                --                --
                  2000  49,250      --      --                --                12,312
</TABLE>


Options/Stock Appreciation Rights

The following table provides information with respect to stock options and stock
appreciation  rights ("SARs") granted to the named executive officers during the
fiscal year ended June 30, 2001.

Individual Grants(1)
----------------------------------------
% of Total
Number of Options Potential Realized Value at
Securities Granted to Exercise Assumed Annual Rates of
Underlying Employees Price Stock Price Appreciation
Options in Fiscal Per Expiration For Option Terms
Granted Year Share Date 5% 10%
------- ---- ----- ---- -- ---
None
Aggregated Option/SAR Exercises and Fiscal Year-End Options/SAR Value Table
Note: No bonus has been paid or distributed in the past four quarters.



                                       20
<PAGE>
Director Compensation

The Company does not have any standard  arrangements pursuant to which directors
of the  Company  are  compensated  for  services  provided  as a  director.  All
directors  are entitled to  reimbursement  for expenses  reasonably  incurred in
attending  Board of Directors'  meetings.  In the period ending 2000, each Board
Member  received  2000  shares  of  Common  Stock  in  consideration  for  their
participation.  There  have  been no other  distributions  of Stock to the Board
Members as of the end of June 30,  2001 and the  period  ending  June 30,  2002.

Compensation   Agreements,   Termination  of  Employment  and  Change-in-Control
Arrangements.

In March,  1998,  Mr.  Stephen  Greenwald  stepped down as CEO of the Company in
connection  with a change in  management  control of the Company.  In connection
with such change of management, Mr. Greenwald terminated his existing employment
agreement and entered into a new compensation  arrangement with the Company. Mr.
Greenwald  agreed to serve as managing  director of the Company through December
31, 1999,  and was to receive the sum of $130,000  during such period in varying
monthly  payments.  In addition,  in  consideration  of terminating his existing
employment agreement,  Mr. Greenwald was to receive an additional $130,000, also
payable in varying  monthly  amounts during the two-year  period ending December
31,  1999.  In  September,  1999,  Mr.  Greenwald  resigned as a Director of the
Company to pursue  other  interests.  He also  agreed to settle all  outstanding
payments due to him under his employment agreement,  and to resign as a Managing
Director of the Company,  in consideration of receiving a settlement  payment of
$100,000, together with 200,000 shares of restricted common stock.

In  connection  with the change in  management  control of the Company in March,
1998,  Mr. Ira Smith,  a former  officer and  director  of the Company  (through
S.F.H.  Associates,  Inc.),  agreed  to serve in a  consulting  capacity  to the
Company for the period from March,  1998 through December 31, 1999.  Pursuant to
such  consulting  agreement,  Mr.  Smith's  consulting  company was  entitled to
receive the sum of $160,000  during such  period,  payable at the rate of $8,000
per month,  commencing May, 1998. In addition,  in  consideration of terminating
his then existing employment  agreement with the Company, Mr. Smith was entitled
to receive an additional $100,000, payable in varying monthly amounts during the
term of the consulting  agreement.  Following a default by the Company under the
consulting  agreement,  Mr. Smith agreed to terminate his  consulting  agreement
with the Company in consideration of receiving a settlement payment of $100,000,
together with 200,000 shares of restricted  common stock. In connection with the
change of control in the Company in March,  1998,  Johan Schotte  entered into a
two-year employment agreement with the Company, commencing as of January 1, 1998
and continuing  through December 31, 1999. Mr. Schotte's  compensation was fixed
at $150,000  per year during such  period.  Mr.  Koshakji  also  entered  into a
two-year  employment  agreement  with the  Company at the rate of  $150,000  per
annum.  The agreement with Mr. Schotte was extended for an additional  period of
one year at the rate of $250,000 per year, and the agreement  with Mr.  Koshakji
was extended  for a period of six months at the rate of $5,000 per month.  As of
June 30, 2000, a substantial  portion of the compensation  due to Messrs.  Smith
and Koshakji under their respective  agreements was past due for the period from
January 1, 1998  through  the fiscal  year ended  June 30,  2000.  Mr.  Koshakji
resigned his position as President of the Company on September 30, 2000.

In  connection  with the  change of  management,  an  affiliate  of Mr.  Schotte
purchased  a total of  $230,000  of  deferred  compensation  notes from  Messrs.
Greenwald and Smith, and converted approximately 75% of these notes into 667,648
shares of the Company's common stock in April,  1998. The balance of these notes
were converted into 176,050 shares of common stock in October, 1998.

In  November,  1998,  the  Board of  Directors  of the  Company  authorized  the
following bonus incentive  compensation package for each of Messrs.  Schotte and
Koshakji:
(I)  Warrants:  2% of the Company's total outstanding stock each year, beginning
     with the fiscal year  commencing  July 1, 1998,  and each year  thereafter.
     Warrants  shall be priced at the average  bid price for the 10  consecutive
     trading days  preceding the issue date each year,  and  exercisable  at any
     time  following  the issue date.  Messrs.  Schotte and  Koshakji  were each
     issued 103,385 warrants as of July 1, 1998 at an exercise price of $.74 per
     share.  Messrs.  Schotte and Koshakji  each waived their right to receive a
     warrant bonus for the fiscal year commencing July 1, 1999.
(II) Performance Bonus: Each year beginning with the fiscal year ending June 30,
     1999, and each year thereafter, if the Company's gross revenues increase by
     20% or more over the gross revenues of the preceding  year, the performance
     bonus shall be the greater of either 1% of the revenue differential or 2.5%
     of the EBITDA. No performance bonuses have been awarded under this plan.
(III)Market Cap Bonus: At the end of each fiscal year, beginning with the fiscal
     year  commencing  July 1,  1998,  if the  Company's  market  capitalization
     increases  from the preceding  year based on the average  closing price for
     the 30 previous  consecutive trading days, the market  capitalization bonus
     shall  equal 1% of the  differential.  Messrs.  Schotte and  Koshakji  each
     waived  their  right to  receive a market  cap bonus for the  fiscal  years
     commencing July 1, 1999 and July 1, 2000.

                                       21
<PAGE>

John Foster  served as interim  President  of the  Company  from  January,  2000
through  June,  2000 at the rate of $9,850  per month.  In July 2000,  he became
President of the Company and agreed to a one-year  extension of his agreement at
the rate of $12,000  per  month,  plus  allowances.  There was no stock or stock
incentive  arrangement  included.  In July of  2001,  Mr.  Foster  continued  as
President  and was  voted as  Chairman  and CEO by the  Board of  Directors.  He
received a pay  increase  to $14,000  per month and his  contract  was  extended
through  December 31, 2002. Most of Mr. Foster's  accumulated and accrued salary
has gone  unpaid and  remains as a payable by the  Company as of the end of June
30, 2002.

Compensation Committee Report and Compensation Committee Interlocks and Insider
Participation

Executive  officer  compensation is determined by the entire Board of Directors.
Subsequent  to the  period  ending  June 30,  2002,  the Board had  appointed  a
separate   compensation   committee  to   determine  or  set  future   executive
compensation.  The Board's executive  compensation policy is intended to attract
and retain key  executives,  compensate  them at appropriate  levels and provide
them with both cash and equity incentives to enhance the Company's value for all
of its stockholders.


Item 12. Security Ownership of Certain Beneficial Owners and Management.

The following table sets forth information concerning ownership of common stock,
as of  September  25,  2000,  by each  person  known  by the  Company  to be the
beneficial  owner  of more  than  5% of the  common  stock,  each  director  and
executive officer, and by all directors and executive officers of the Company as
a group.

--------------------------------------------------------------------------------
Name of           Status            Shares                    Percentage of
Beneficial Owner                    Beneficially Owned        Class
================================================================================
Patrick Speeckaert         Director         2,000             Less than 1%
John Foster                Director,        2,000             Less than 1%
President/CEO
Jean-Marie Carrara         Director         2,000             Less than 1%
Kjell Larsson              Director         1,868,055         6.6%
Peter Bucher               Director         -0-               -0-
--------------------------------------------------------------------------------
All Executive Officers
& Directors As
A Group (5 Persons)                         1,874,055         6.8%
================================================================================



                                       22
<PAGE>

Item 13. Certain Relationships, Related and Subsequent Transactions.

In September 2002, the Emerging  Issues Task Force ("EITF")  reached a consensus
on Issue 02-15,  which addressed the accounting for convertible  debt for equity
exchanges.  The EITF concluded that transactions where equity is used as payment
for  debt  conversions  should  be  accounted  for  as  induced  conversions  in
accordance  with SFAS 84. SFAS 84 requires a non-cash charge to earnings for the
implied value of an inducement to convert from convertible debt to common equity
securities  of the issuer.  The  accounting is to be applied  prospectively  for
convertible  debt for equity  exchanges  completed after September 11, 2002, the
date of the EITF's  consensus.  We have  applied  the  provisions  of SFAS 84 to
convertible  debt for equity exchanges  transaction  completed during the fourth
quarter,  and all  transactions  have been expensed  properly,  with no material
changes from prior reporting periods.

In April,  1997,  Robert E. Miller,  Jr.(who  resigned as a Director  during the
fiscal  year ended June 30,  2000) made a loan to the  Company in the amounts of
$25,000.  The loan was payable on demand,  accrued interest at the rate of 9.25%
per annum, and was secured by a collateral  assignment of the Company's $300,000
receivable due from Kinnevik.  See  "Business-Sales of Distribution  Rights." In
consideration  of making the loan,  the lender  received a five-year  warrant to
purchase 25,000 shares of common stock of the Company,  exercisable at $1.00 per
share.  Mr. Miller agreed to a rollover of his loan to be paid from the proceeds
of a second Kinnevik receivable due in September,  1998. In consideration of the
rollover,  Mr. Miller received  12,500  warrants,  exercisable  over a five-year
period at $1.00 per share.  Mr.  Miller's  loan was rolled over for a subsequent
six month  period on an  unsecured  basis with  interest  at the rate of 10% per
annum.  Mr. Miller  thereafter  agreed to another  six-month  rollover  (through
September,  1999), in  consideration  of which he received an additional  12,500
warrants  exercisable over a five-year period at $1.00 per share, an increase in
the  interest  rate on his  loan  to 12%  per  annum,  and an  extension  on the
expiration  date of all warrants  issued in connection with his loan to the year
2004.  In December,  1999,  Mr.  Miller  converted  his $25,000 loan into 57,876
shares of common  stock of the Company at a  conversion  price of  approximately
$.43  per  share.  The  "per  share"  price  was  based  upon  a  formula  of  a
predetermined and mutually  agreed-upon  discount to the market and was expensed
in interest during that period, as well as credited from short-term notes during
that same period.  In June, 1998, the Company entered into the following related
party  transactions  with E3 Sports  New  Mexico,  Inc.,  a company  which is an
affiliate  of Mr.  Schotte and Mr.  Koshakji  and in which the  Company  holds a
minority  interest:  (i) the Company  purchased a $25,000  sponsorship  from the
Albuquerque  Geckos,  the professional  soccer team owned by the affiliate;  and
(ii) the Board  authorized  the Company to loan up to $100,000 to the affiliate,
payable no later than July 15, 1999 with  interest at 15% per annum (the loan is
secured by 10,000 shares of E3 Sports new Mexico,  Inc.).  The loan is currently
outstanding.

In July, 1998, the Company entered into the following related party transactions
with Media Trust S.A., a company  which is an  affiliate  of Mr.  Schotte and in
which the Company holds a minority  interest:  (i) the Company  agreed to make a
$2,500  loan to the  affiliate,  payable  in one year with  interest  at 15% per
annum; (ii) the Company engaged the affiliate to introduce prospective investors
to the  company,  in exchange  for which the  affiliate  will receive 10% of any
investments  made in the  Company  by  persons  or  entities  introduced  by the
affiliate,  together with five-year  warrants (100 warrants per $1,000 invested)
at an exercise  price equal to the market  price of the  Company's  stock on the
date of the investment. In connection with convertible loans made to the Company
in 1998 by Belgian investors in the aggregate amount of approximately  $100,000,
and the  purchase of 625,000  shares of common stock of the Company by Lecoutere
Finance,  S.A.  in  December,  1998 (see  below),  a total of  29,540  five-year
warrants have been issued to Media Trust, S.A. with exercise prices ranging from
$.38 per share to $.98 per  share.  The  $2,500  loan to Media  Trust  S.A.  was
outstanding as of June 30, 2001 along with the reconciliation of commissions, if
any,  which may have been due to Media Trust.  As of June 30, 2002,  the company
has offset certain receivables to any outstanding balances,  except for the fact
that there are five  unsecured  promissory  notes that,  although  they are with
individuals directly, have been booked under `notes payable' Media Trust.

                                       23
<PAGE>

During the fiscal  year ended June 30,  2000,  Mr.  Koshakji  loaned the Company
approximately  $2,500,  with such loan  bearing  interest at the rate of 18% per
annum (the same interest rate being charged to Mr. Koshakji for such funds).  In
April,  1999,  the Company  purchased a refundable  option for $60,000 to be the
exclusive worldwide distributor of a motion picture entitled "HARA." The film is
an action  martial arts love story and was expected to start  pre-production  in
January,  2001.  Former  Management  of the Company  owns an indirect 50% equity
interest in Red Sun  Productions,  Inc.,  a production  company,  which owns all
rights to the film  "HARA."  As was  mentioned  ealier  (Subsidiary  Operations,
Development  April 1999).  The  determination of the disposition of this advance
has not been decided upon as of the close of business on June 30, 2002  although
the Company  wishes to seek its refund on any  outstanding  advances in general.
Commencing in January of 2000,  the Company  accrued rent expense at the rate of
$1,000  per month for the use of office  space in  Luxembourg  which is owned by
Media Trust,  S.A, a company  affiliated  with Mr.  Schotte,  the former CEO and
Chairman of the Company. As of June 30, 2002, there are no outstanding  balances
owed in relation to this rent  expense and the company has no further  agreement
for lease of rental space under this former arrangement.

In February,  2000, the maturity date of 500,000 common stock purchase  warrants
held by Lecoutere Finance S.A. (an affiliate of Mr. Schotte) was extended for an
additional  seven-year  period  through  February  25, 2007.  The warrants  were
originally  issued to Mr.  Schotte  and other  investors  in  February,  1997 in
connection  with a capital  investment in the Company of $375,000.  The warrants
were  originally  scheduled to expire on February  25, 2000.  At the time of the
original  investment,  Mr.  Schotte was not  affiliated  with the  Company.  The
warrants will continue to have the same exercise price of $1.06 per share.

In April of 2001, the Company's subsidiary, Odyssey Ventures Online Holding S.A.
formulated a subscription  document in Luxembourg,  specific to non-US investors
in seeking a capital amount totaling 5.0 million US Dollars.  As of the close of
business on June 30, 2001,  there were no  subscribers  or  participants  in the
subscription  document and non were expected to  participate in the near future.
In May of 2001,  management  entered  into  discussion  regarding  the  possible
restructure  of the  present  management  for and in  consideration  of  certain
adjustments to the operational  direction of company.  It is  contemplated  that
certain assets and  liabilities  would be taken over by Mr. Schotte in an effort
to streamline the debts of Odyssey and the directions of its subsidiary, Odyssey
Ventures  Online Holding S.A.  During such a transition,  Mr. Schotte would step
down as an employee of the Corporation to manage the  subsidiary.  The intention
would be to  transact  the  eventual  purchase  or split of the  subsidiary  for
certain  consideration.  Such  a  transaction  would  be  noted  in  forthcoming
quarterly reports, if approved and enacted upon. This transition would place Mr.
Foster in the position of CEO and Chairman of the Board. The Board has scheduled
such a meeting to occur on or before the end of  November  2001.  On July 6th of
2001, the Board voted on the assignment of Mr. Foster to CEO and Chairman of the
Board of Odyssey Pictures Corporation.  Mr. Schotte resigned as CEO and Chairman
and was  appointed the position of Executive  Vice  Chairman on the Board.  This
change was due to the approved  transition  by the Board for the further  growth
plans of Odyssey.

Item 14. Controls and Procedures

An evaluation was performed under the supervision and with the  participation of
our  management,  including  the  chief  executive  officer,  or CEO,  and chief
financial  officer,  or CFO, of the effectiveness of the design and operation of
our disclosure procedures.  Based on that evaluation, our management,  including
the CEO and CFO,  concluded  that our disclosure  controls and  procedures  were
effective as of June 30,  2002.  There have been no  significant  changes in our
internal  control over  financial  reporting  during the 2002 calendar year that
have materially  affected,  or are reasonably likely to materially  affect,  our
internal control over financial reporting.


                                       24
<PAGE>

                                     PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 10-K/A.

(a)(1) The  response  to this  portion  of Item 14 is  submitted  as a  separate
     section of this report commencing on page F-1.

(a)(2) See (a)(1) above.

(a)(3) Exhibits

3.1  Articles of Incorporation, as amended through June 30, 1995  (1)
3.2  Amendments to Articles of Incorporation filed in March and June, 1996 (8)
3.3  Amendment to Articles of Incorporation filed in January, 1997 (9)
3.4  By-laws  (1)
4.1  Indenture  between Odyssey and Continental Stock Transfer and Trust Company
     ("Continental") dated as of July 15, 1987 (1)
4.2  Form of Supplemental Indenture between Continental and the Company  (1)
4.3  Form of Common Stock Certificate  (1)
4.4  Form of options granted of officers, directors and 5% stockholders  (2)
4.5  Form of Warrant issued to purchasers  parties to the 1995 Private Placement
     completed September 30, 1995  (5)
4.6  Form of 12% Unsecured  Promissory Note issued to purchasers  parties to the
     1995 Private Placement completed September 30, 1995   )5)
4.7  Form of Stock Option  Agreement by and between the Company and officers and
     directors of the Company, for stock options issued in April 1995  (5)
4.8  Form of Common  Stock  Purchase  Warrant by and  between  the  Company  and
     officers, directors,  employees and consultants of the Company for warrants
     issued during the fiscal year ended June 30, 1996    (8)
4.9  Common Stock Purchase Warrant, dated March 6, 1996, between the Company and
     G & H Media, Ltd. (assignee of Stephen R. Greenwald) (7)
4.10 Common Stock Purchase Warrant, dated March 6, 1996, between the Company and
     Lawrence I. Schneider   (7)
4.11 Common Stock Purchase Warrant, dated March 6, 1996, between the Company and
     Ira N. Smith   (7)
4.12 Form of Common  Stock  Purchase  Warrant by and  between  the  Company  and
     officers, directors,  employees and consultants of the Company for warrants
     issued during the fiscal year ended June 30, 1997  (9)
4.13 Preferred Stock Certificate, Series A, issued to Kinnevik Media Properties,
     Ltd. in September, 1997  (10)
4.14 Convertible Note issued to Augustine Fund L.P. in July, 1998  (12)
4.15 Preferred Stock Certificate,  Series B, issued to Kimon, Inc. in September,
     1998  (10)
10.01 1989 Long Term Incentive Plan  (1)
10.02 Sub-Lease for office  premises at 16910 Dallas  Parkway, Suite 104, Dallas
      Texas dated February 1, 2001   (8)
10.03 Settlement Agreement and Release between  Paramount  Pictures  Corporation
     and Odyssey Distributors,  Ltd. (a wholly owned subsidiary of the Company),
     and Guarantee agreement of the Company, each dated as of September 26, 1996
      (9)
10.04 Stock  Purchase  Agreement  between the  Company  and  Flanders  Film S.A.
     relating to purchase  of minority  stock  interest in E3 Sports New Mexico,
     Inc. and Media Trust S.A.,  and related  promissory  notes for $135,000 and
     $315,000, dated March 2, 1998   (10)
10.05 Employment Agreement with Johan Schotte, dated March 2, 1998  (10)
10.31 Convertible Note issued to Augustine Fund, L.P. in July, 1998  (12)
10.32 Asset  Purchase  Agreement  between the Company and Kimon  Mediaright KB,a
      Swedish limited partnership, dated July 14, 1998 (10)
10.33 Employment Agreement with Pierre Koshakji, dated March 2, 1998  (11)
10.34 Employment Agreement with Ian Jessel, dated December, 1998  (13)
10.35 Settlement Agreement with Stephen Greenwald, dated September, 1999  (13)
21.1 Subsidiaries of the Registrant  (3)


                                       25
<PAGE>

--------------------------------------------
(1)  Incorporated herein by reference to the Company's Registration Statement on
     Form S-4, File No. 33-34627.
(2)  Incorporated herein by reference to the Company's Registration Statement on
     Form S-1, File No. 33-43371.
(3)  Incorporated  herein by reference to the Company's  Current  Report on Form
     8-K filed April 12, 1995, File No. 0-18954.
(4)  Incorporated  herein by reference to the Company's  Current  Report on Form
     8-K filed August 30, 1995, File No. 0-18954.
(5)  Incorporated  herein by reference to the  Company's  Annual  Report on Form
     10-K for the fiscal year ended June 30, 1995, File No. 0-18954.
(6)  Incorporated  herein by reference to the Company's Quarterly Report on Form
     10-Q for the quarter ended December 31, 1995, File No. 0-18954.
(7)  Incorporated  herein by reference to the Company's Quarterly Report on Form
     10-Q for the quarter ended March 31, 1996, File No. 0-18954.
(8)  Incorporated  herein by reference to the  Company's  Annual  Report on Form
     10-K for the Fiscal Year Ended June 30, 1996, File No. 0-18954.
(9)  Incorporated herein by reference to the Company's Registration Statement on
     Form S-1, File No. 333-20701.
(10) Incorporated  herein by reference to the  Company's  Annual  Report on Form
     10-K for the Fiscal Year Ended June 30, 1997, File No. 0-18954
(11) Incorporated herein by reference to Amendment No. 1 to the Company's Annual
     Report on Form 10-K for the  Fiscal  Year  Ended  June 30,  1997,  File No.
     0-18954
(12) Incorporated  herein by reference to the  Company's  Annual  Report on Form
     10-K for the Fiscal Year Ended June 30, 1998, File No. 0-18954
(13) Incorporated  herein by reference to the  Company's  Annual  Report on Form
     10-K for the Fiscal Year Ended June 30, 1999, File No. 0-18954

     (b)  Reports on Form 8-K

     The  Company  filed no Reports  on Form 8-K during the last  quarter of the
     period covered by this Report.

(c) See (a)(3) above.

(d) None



                                       26
<PAGE>

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                                ODYSSEY PICTURES CORPORATION

Dated:  November 14, 2003                        by: /s/ John W. Foster
                                                ------------------------------
                                                John W. Foster,
                                                President


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
following  persons on behalf of the  Registrant and in the capacities and on the
dates indicated have signed this report below.



/s/ John W. Foster
-------------------------
John W. Foster
CEO, Chairman and President



/s/ Kjell Larsson
------------------------
Kjell Larsson
Director


/s/ Patrick Speeckaert
------------------------
Patrick Speeckaert
Director





                                       27
<PAGE>


Want & Ender CPA, P.C.
386 Park Ave. South Suite 1816
New York, NY. 10016

Report of Independent Accounts

To the board of directors and Shareholders of Odyssey Pictures Corporation

In our  opinion,  the  accompanying  consolidated  balance  sheets  and  related
consolidated  statement of  operations,  shareholders'  equity and of cash flows
present  fairly,  in all respects,  the financial  position of Odyssey  Pictures
Corporation and its subsidiaries at June 30, 2002, 2001 and 2000 and the results
of their  operations  and their cash flows for the period  ended June 30,  2002,
2001 and 2000 in conformity with generally accepted accounting principals. These
financial  statements are the  responsibility of the company's  management;  our
responsibility  is to express an opinion on these financial  statements based on
our  audit.  We  conducted  our audit of these  statements  in  accordance  with
generally  accepted auditing  standards,  which require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement.  An audit includes examining,  on test basis,
evidence  supporting the amounts and  disclosures  in the financial  statements,
assessing the  accounting  principals  used and  significant  estimates  made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe  that our audit  provides a reasonable  basis for the opinion  expressed
above.

The  company  is  a  defendant  in  various  lawsuits.  The  company  has  filed
counteractions  and  preliminary  hearings and discovery  proceedings on several
actions  are in  progress.  The  ultimate  outcome of the  litigation  cannot be
determined at present.  Most liabilities that may result upon  adjudication have
been accrued in the accompanying financial statements.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  note 3 to the
financial statements, the Company has suffered recurring losses from operations,
as a net capital  deficiency and has  insufficient  working  capital to meet its
current  obligations and liquidity  needs. The factors raise  substantial  doubt
about the company's ability to continue as a going concern  managements plans in
regard to these matters are also  described in note 3. The financial  statements
do not  include  any  adjustments  that might  result  from the  outcome of this
uncertainty.

New York City, New York

/s/ Want & Ender, CPA
----------------------------
Want & Ender, CPA, P.C.
November 1, 2002


                                      F-1
<PAGE>
<TABLE>
<CAPTION>


                                       ODYSSEY PICTURES CORPORATION
                                        Consolidated Balance Sheets

                                                                       June 30,     June 30,
                                                                         2002         2001
                                                                     ------------ ------------
<S>                                                                 <C>          <C>
                        Assets:
Cash                                                                   $  3,675       $ 2,163
Accounts receivable, net of allowances
of $58,415 and $0                                                       267,587        87,406
Notes receivable                                                              -       112,682
Advances in Films and Ventures                                           56,900       181,925
Other Assets, Prepaid and Deposits                                      166,500       409,706
                                                                     ------------ ------------
TOTAL CURRENT ASSETS                                                 $  494,662   $   793,882
                                                                     ------------ ------------
Film Properties:
Filmzone, Hallmark and Kimmon Assets                                  4,311,024     4,037,818
Amortization and Depreciation                                          (474,322)     (296,338)
                                                                     ------------ ------------
TOTAL FILM PROPERTIES                                                 3,836,702     3,741,480
                                                                     ------------ ------------
Other Assets:
Production in Progress                                                    4,500             -
Affiliates and Subsidiaries                                             584,916     1,261,833
                                                                     ------------ ------------
TOTAL OTHER ASSETS                                                      589,416     1,261,833
                                                                     ------------ ------------
   TOTAL ASSETS                                                     $ 4,920,780   $ 5,797,196
                                                                     ============ ============

                        Liabilities:
Accounts payable                                                        890,037       665,420
Structured Payments and Other Payables                                  503,910       482,563
Accrued Interest Accumulated                                            228,021       226,414
Deposits and Other                                                      235,584       250,000
Other Accrued Liabilities and Reserves                                  360,733       511,460
                                                                     ------------ ------------
TOTAL CURRENT LIABILITIES                                             2,218,286     2,135,857

Other Liabilities:
Short Term Loans                                                         45,000       200,000
Other Notes Payable                                                   1,118,851       805,674
Contract Liabilities                                                    343,151       600,044
Long Term Debt                                                                -             -
                                                                     ------------ ------------
TOTAL OTHER LIABILITIES                                               1,507,002     1,605,718
                                                                     ------------ ------------
    TOTAL LIABILITIES                                               $ 3,725,287   $ 3,741,578
                                                                     ============ ============

                       Shareholders' Equity:
Preferred stock, par value $.10                                               -             -
  Authorized - 10,000,000 shares
Preferred stock, Series B, par value $.10                                     -             -
  Authorized - 10,000,000 shares

Common stock, par value $.01;
 Authorized - 40,000,000 shares
 Issued and outstanding (net of treasury shares)-
 28,033,705; 21,174,340                                                 298,038       211,743
Accumulated deficit                                                 (33,760,164)  (32,332,011)
Capital in excess of par value                                       36,597,743    35,624,038
Current net income                                                   (1,920,123)   (1,448,150)
                                                                     ------------ ------------
Total shareholders' equity (deficit)                                  1,195,494     2,055,620
                                                                     ------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)                $ 4,920,781   $ 5,797,196
                                                                     ============ ============

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

                                               F-2
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                               Odyssey Pictures Corporation
                          Consolidated Statements of Operations
                               For the fiscal year ending
                               6/30/2002 and Two Years Prior
                                                                2002           2001         2000
                                                              ------------ ------------ ------------
<S>                                                            <C>        <C>          <C>
Revenue                                                       $ 168,615      $ 3,706     $ 146,485

Expenses
Costs related to revenues                                       106,050      152,953       140,580
Officers salaries and expense                                   271,839      156,763       559,250
Selling, general and
administrative expenses                                         332,687      555,981       667,367
                                                              ------------ ------------ ------------
                                                                710,576      885,697     1,277,197
                                                              ------------ ------------ ------------
Operating income (loss)                                        (541,961)    (881,990)   (1,130,712)
Other income (expenses)
Litigation settlements and legal fees                          (126,789)    (471,236)           --
Reserves for losses on investments                             (709,222)          --            --
Financing fees                                                 (384,127)     (38,148)           --
Interest income 138                                                           12,001        25,944
Interest expense                                               (158,070)     (68,776)     (103,063)
Foreign Currency translations                                       (92)          --            --
                                                              ------------ ------------ ------------
Income (loss) from operations
before provision for income taxes                            (1,920,123)  (1,448,150)   (1,207,831)
Provision / Benefit for income taxes                                 --           --            --
NET INCOME (LOSS)                                          $ (1,920,123) $(1,448,150)  $(1,207,831)
                                                              ============ ============ ============
Basic income (loss) per share                                     (0.09)       (0.08)        (0.11)
Weighted average common
shares outstanding                                           22,540,417   17,213,988    11,093,198
                                                              ============ ============ ============
Diluted income (loss) per share                                   (0.09)       (0.08)        (0.11)
Weighted average common
shares outstanding                                           22,540,417   17,213,988    11,093,198
                                                              ============ ============ ============

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

                                                 F-3
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                    Consolidated Statements of Cash Flows
                        For the Fiscal Year Ending 6/30/200220 and Two Years Prior

                                                                           For the Years Ended June 30,
                                                                           2002         2001         2000
                                                                       -----------  -----------   -----------
<S>                                                                    <C>         <C>           <C>

Cash Flows From Operating Activities:
Net income (loss)                                                      $(1,920,123) $(1,448,758) $(1,207,831)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Amortization of film costs                                                 102,695      107,664      303,388
Additions to film costs                                                    182,814           --       30,583
Other depreciation and amortization                                         75,000       27,080           --
Issuance of shares of common stock in consideration
for services rendered                                                      144,000           --           --
Changes in assets and liabilities:
Accounts receivable, net                                                  (184,681)     116,627       25,101
Notes receivable and advances                                              112,682      119,449
Prepaid expenses and other                                                 (12,500)      40,200       70,000
Accounts payable and accrued expenses                                       (7,999)     400,448      (13,967)
Structured payments and accrued management contracts                      (103,658)    (631,002)     678,123
Accrued interest                                                             1,607      (63,217)
                                                                       -----------  -----------   -----------
Net cash used in operating activities                                   (1,610,163)  (1,387,740)     (58,371)
                                                                       -----------  -----------   -----------
Cash Flows From Investing Activities:
Acquisition of fixed assets and interim investments                        (19,419)         --      (544,500)
Subsidiary Activity (including reserves for losses)                        601,917     (179,668)
                                                                       -----------  -----------   -----------
Net cash used in investing activities                                      582,498     (179,668)    (544,500)
                                                                       -----------  -----------   -----------
Cash Flows From Financing Activities:
Net proceeds from private placement sale of common stock
(excluding stock issued for services)                                      916,000      405,000    1,153,490
Net proceeds/payments - notes and loans payable                            113,177    1,133,356     (524,120)
                                                                       -----------  -----------   -----------
Net cash provided by financing activities                                1,029,177    1,538,356      629,370
                                                                       -----------  -----------   -----------
Net increase (decrease) in cash                                              1,512      (29,052)      26,499
Cash at beginning of period                                                  2,162       31,214        4,715
                                                                       -----------  -----------   -----------
Cash at end of period                                                      $ 3,675     $  2,162     $  31,214
                                                                       ===========  ===========   ===========

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

                                                   F-4
</TABLE>

<PAGE>
<PAGE>
<TABLE>
                                                                ODYSSEY PICTURES CORPORATION
                                             Consolidated Statements Of Changes in Shareholders' Equity (Deficit)
                                                   for the Fiscal Year Ending June 30, 2000, 2001, 2002
<CAPTION>
<S>                                     <C>          <C>        <C>           <C>         <C>            <C>           <c>
                                    Preferred Stock    Preferred Stock
                                       Series A           Series B          Common Stock                                   Total
                                                                                              Capital in               Shareholders'
                                                                                               Excess of    Accumulated    Equity
                                     Shares    Amount   Shares   Amount      Shares   Amount   Par Value      Deficit     (Deficit)
                                    --------  ------- --------- --------   --------- -------- -----------   ------------ -----------
Balances - June 30, 2000                  -        -  4,500,000 $450,000  13,691,646 $131,034 $34,820,443  $(32,334,302) $3,067,175
                                    --------  ------- --------- -------- ----------- -------- ------------ ------------- -----------
Issuance of shares of common stock                   (4,500,000)(450,000)  4,101,239   41,012     408,988
     to equity investors                                                   3,969,673   39,697     394,607                   434,304
Net loss                                                                                                     (1,448,150) (1,448,150)
                                    --------  ------- --------- -------- ----------- -------- ------------ ------------- -----------
Balances - June 30, 2001                  -        -          -        -  21,762,558 $211,743 $35,624,038  $(33,782,452) $2,053,329
                                    --------  ------- --------- -------- ----------- -------- ------------ ------------- -----------
Issuance of shares in consideration
     for financial services rendered                                         690,000    6,900     137,100                   144,000

Issuance of shares of common stock
     to equity investors                                                   7,939,481   79,395     836,605         2,899     918,899
Net loss                                                                                                    ( 1,920,123) (1,920,123)
                                    -------- -------- --------- -------- ----------- -------- ------------ ------------- -----------
Balance - June 30, 2002                   -        -         -        -   30,392,039 $298,038 $36,597,743  $(35,700,284) $1,195,497
                                    ======== ======== ========= ======== =========== ======== ============ ============= ===========





                       The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>

                                                          F-5


ODYSSEY PICTURES CORPORATION

Notes to Consolidated Financial Statements:

All  schedules  have been  omitted  because  the  requested  information  is not
required,  or,  because the  information  required is included in the  financial
statements or notes thereto.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern. Continuation of the Company as a going
concern is dependent upon whether the Company will be able to raise enough funds
for its  operations.  If the  Company  is  unable  to obtain  new  funding,  the
company's  operations may be materially  affected.  The  accompanying  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.

     Summary of  Significant Accounting Policies:

a.   Risks and Uncertainties:  As is inherent in the Company's  business,  there
     are many  and  varying  risks  and  uncertainties.  This is  including  the
     Company's limited abilities to generate profitability over the past several
     years,  its  unproven  business  model and the many  changes that have been
     experienced  in the foreign  markets (as to buying and  government  imposed
     limitations,  along with the  changes in foreign  demand for the  company's
     product),  the  Company has to depend on various  alternatives  that may be
     presently  unknown in nature.  The  Company's  success will depend upon the
     resurgence  of the  independent  product,  its ability to expand into other
     areas of distribution (such an CD recordings,  DVD's and Video markets) and
     other methods of broadcast (such as Cable,  secure internet access,  direct
     satellite  transmission)  and  whatever  may  be  or  become  available  to
     independents during the course of future business.

b.   Reclassifications: Certain items in the 2001 financial statements have been
     reclassified to conform to the 2002 presentation.

c.   The application of the following accounting  policies,  which are important
     to our financial position and results of operations,  requires  significant
     judgments and estimates on the part of management.  For a summary of all of
     our accounting policies, including the accounting policies discussed below,
     see note 2 to our audited consolidated financial statements.

d.   Generally  Accepted  Accounting  Principles.   Our  consolidated  financial
     statements have been prepared in accordance with GAAP.

e.   Accounting for Motion Pictures and Television  Programs.  In June 2000, the
     Accounting  Standards  Executive  Committee  of the  American  Institute of
     Certified Public  Accountants issued Statement of Position 00-2 "Accounting
     by Producers or Distributors of Films" ("SoP 00-2").  SoP 00-2  establishes
     new accounting standards for producers or distributors of films,  including
     changes in revenue recognition, capitalization and amortization of costs of
     acquiring  films and television  programs and  accounting for  exploitation
     costs, including advertising and marketing expenses.


a) Organization  and Nature of Operations:  Odyssey  Pictures  Corporation  (the
"Company")  was  organized  in  December  1989 as a Nevada  corporation.  It was
primarily  structured as a holding company for media activities.  The Company is
currently  engaged in the  international  distribution of motion  pictures,  and
manages certain  investments  through a recently formed subsidiary named Odyssey
Ventures Online Holding S.A., which is based in Luxembourg.

b) Principles of Consolidation:  The consolidated  financial  statements include
the accounts of the Company, its wholly owned subsidiaries and majority owned or
controlled  joint  ventures.  All  significant  intercompany  accounts have been
eliminated.  Certain  reclassifications  have been made to prior year amounts to
conform to the current period presentation and new standards as issued.

c) Revenue Recognition: In June 2000, the American Institute of Certified Public
Accountants  ("AICPA")  issued  Statement  of  Position  00-2,   "Accounting  by
Producers or Distributors of Films" (SoP 00-2), which established new accounting
standards for producers and  distributors of films as well as changes in revenue
recognition  and the methods of accounting for  exploitation  or development and
overhead  costs.  SoP  00-2  requires  that  advertising  costs be  expensed  in
accordance  with SoP 93-7,  "Reporting  on  Advertising  Costs"  while all other
exploitation  costs  are to be  expensed  as  incurred.  Development  costs  for
abandoned  projects  and  indirect  overhead  costs are to be charged to expense
instead  of  being   capitalized  to  film  costs.   The  Company   adopted  the
pronouncement  effective  January 1, 2002 and the effect on net income (loss) of
recognizing these revenues is not material.

                                      F-6
<PAGE>
ODYSSEY PICTURES CORPORATION
Notes to Consolidated Financial Statements:

In December 1999, the  Securities and Exchange  Commission  ("SEC") issued Staff
Accounting  Bulletin 101,  Revenue  Recognition  in Financial  Statements  ("SAB
101"),  which  summarized  the SEC staff's view in applying  generally  accepted
accounting  principles  to revenue  recognition  in  financial  statements.  The
Company  has  reviewed  its revenue  recognition  policies  and revised  them to
conform  to  SAB  101,   specifically   with  respect  to   distributor-for-hire
arrangements.  Accordingly,  there were no restatements to be effected and there
is no material change in the statements herein.

Revenues from foreign  theatrical,  home video,  television  and pay  television
licensing  contracts are recognized when the film is available for exhibition by
the licensee and when certain other  conditions are met.  Revenues from domestic
theatrical  distribution  of films are  recognized  as the films are  exhibited.
Virtually  all of the  Company's  revenues  for the period  ended June 30, 2002,
2001, and 2000, were from foreign  distribution rights and continuing  ancillary
revenues,  such  as  foreign  income  from  soundtracks  or  other  revenue  not
previously accounted for (known as "residuals") relating thereto.

Revenue is recognized in accordance  with the provisions of SoP-002 and SAB 101.
The Company  licenses  certain film rights  through  international  distribution
agreements  either on a direct  commission basis or that may require the payment
of minimum  license fees known as "Minimum  Guarantees"  ("MG's").  The MG's are
typically  payable on delivery and  acceptance by the Company of the  respective
completed  film and these MG's may be subject to further  increase  based on the
actual  distribution  results in the respective  territory.  Minimum  Guarantees
related  to  contracts  which  contain  hold-back   provisions   precluding  the
distributor  from exploiting  secondary  markets until certain time periods have
lapsed are allocated  across those  markets and  recognized as revenue when each
hold-back  provision expires.  As of the close of business in June 30, 2002, the
Company  had  no  films  in  distribution  that  require  an MG  nor  were  in a
"hold-back" restriction.

Revenue  allocated to the primary market,  usually the theatrical  market (which
the Company is rarely  involved  with), is recognized as revenue on the date the
completed  film is  available  for  exploitation  in the related  territory  and
certain other conditions of sale have been met pursuant to criteria specified by
SoP-002.

Cash payments, advances or other fees are recorded as and when collected, unless
all the conditions of revenue  recognition have not been met. In the case of the
latter, revenues are recorded as deferred revenue until all conditions are met.

d) Film Costs:

Film costs include (1) development  cost, (2) cost of production,  (3)investment
in distribution rights, and (4) marketing and distribution expenses.  Film costs
are amortized,  subject to the adoption of the new accounting standards as noted
herein,  and  estimated  residual and  participation  costs are  accrued,  on an
individual  film basis in the ratio that the current  year's gross film revenues
bear to  management's  estimate of total  ultimate  gross film revenues from all
sources.  Film costs are stated at the lower of cost or estimated net realizable
value on an individual film basis. Ultimate revenue and cost forecasts for films
are  periodically  reviewed by management and revised when warranted by changing
conditions. When estimates of total revenues and costs indicate that a film will
result  in an  ultimate  loss,  additional  amortization  is  provided  to fully
recognize such loss.

Revenue from the sale or licensing of motion pictures and television programs is
recognized upon meeting all recognition  requirements of SoP 00-2.  Revenue from
the  theatrical  release  of  motion  pictures  is  recognized  at the  time  of
exhibition based on the company's participation in box office receipts.  Revenue
from the sale of DVDs in the retail  market,  net of an allowance  for estimated
returns,  is  recognized  on the latter of shipment  to the  customer or "street
date" (when it is  available  for sale by the retail  marketer).  Under  revenue
sharing  arrangements,  rental  revenue is  recognized  when we are  entitled to
receipts and such receipts are  determinable.  Revenues from television,  cable,
pay-per-view  or other  transmitted  broadcast  methods are recognized  when the
motion  picture or  television  program is available to that  respective  market
(through  licensees) for such  broadcast.  For television  licenses that include
separate or restricted  availability (sometimes referred to as "windows") during
a given license period,  revenue is allocated over the "window" period.  Revenue
from sales of  international  territories is recognized when the feature film or
television  program is  available to the  distributor  for  exploitation  and no
special conditions for delivery exist. Under most sales contracts,  full payment
is required upon  delivery.  For contracts  that provide for rights to exploit a
program on multiple media (e.g. theatrical,  video, television) with a fee for a
single  motion  picture or television  program where the contract  specifies the
permissible  timing of release to various  media,  the fee is  allocated  to the
various media based on management's assessment of the relative fair value of the
rights to exploit  each media and is  recognized  as the  program is released to
each media. For  multiple-title  contracts with a fee, the fee is allocated on a
title-by-title  basis,  based on  management's  assessment  of the relative fair
value of each title.  As of June 30,  2002,  the  Company had no  multiple-title
contracts in the markets.
                                      F-7
<PAGE>
ODYSSEY PICTURES CORPORATION
Notes to Consolidated Financial Statements:

According to the new standards,  the following  changes in accounting  have been
adopted:

*    Advertising  and marketing  costs,  which were  previously  capitalized  to
     investment  in films  and  television  programs  on the  balance  sheet and
     amortized using the individual film forecast  method,  are now expensed the
     first time the advertising takes place.
*    The  capitalization of production costs is limited to revenue that has been
     contracted  for in the  applicable  markets until such time as the criteria
     for  recognizing  revenues  are  met.  Note,  this  is also  applicable  to
     secondary markets,  or reissue of product (after original license contracts
     have expired).

Revenue  recognized  from ancillary  markets is recorded at the time of receipt,
and it is not  traditionally  included  within the  estimates of revenue with a
particular  project's  primary  release,  and may not  ever  become  a  realized
revenue,  or the  Company  did not have  those  rights  to  exploit  within  its
distribution network.

e) Investments:  Investments consist of shares of common stock of four privately
held  corporations.  Two  are  corporations  controlled  by a  previous  CEO and
Chairman,  Johan Schotte,  where the Company has an 18% ("minority")  ownership.
The Company wrote down 63% of the investment due to its internal  evaluation and
the prospect of its eventual realization of any distributable profit or revenues
being doubtful as to the value as presented  (see "Related  Party  Transactions,
Item 13"). The Company has a 99% ownership in a venture capital company that has
equity  investments in four other  companies,  one being publicly  traded.  This
investment  is accounted  for using the cost method.  According to the Company's
recently adopted  Statement of Financial  Accounting  Standards No. 94 (SFAS 94)
wherein the Company is required to report consolidated  financial statements for
majority-owned  subsidiaries in order to eliminate  off-balance  sheet financing
activities,  the  Company  has  elected  to  continue  its  cost  method  due to
exceptions (as defined within the guidelines of SFAS 94) as follows:

1)   The Company considers this investment to be a non-consolidation event.
2)   The  subsidiary is a non-active  and  non-participating  entity in the same
     business as the Company.
3)   A serious doubt as to the realization of the investment(s)  made exists. In
     this case, a significant write-down of the assets has been made.
4)   There are no adjustments to be made to reflect  subsequent  changes in fair
     market value.
5)   The Company  expects to regain  control of the assets (as noted herein) and
     liquidate them for its recorded value.

The fourth is an  investment  in Filmzone  that is  accounted  as  inventory  in
progress  after the Company  acquired the  remaining  50% in February of 2002 by
completing its  acquisition  agreement (as dated August 7, 2000) with cash. This
investment  is accounted  for using the cost method since it was the purchase of
an  Internet  Domain  and not an  operating  entity.  There was no effect on the
amortization  schedules as the remaining funds were booked as a payable item and
therefore, were already booked at the time of the transaction.

f) Earnings  (Loss) Per  Share:Earnings  (loss) per share are computed using the
weighted  average  number of common  shares  outstanding  during the  respective
periods.

g) Use of Estimates:  The preparation of financial statements in accordance with
generally accepted  accounting  principles requires management to make estimates
and  assumptions  that affect the reported  amounts and disclosures in financial
statements. Actual results could differ from those estimates.

h) Fair  Value of  Financial  Instruments:  The  carrying  value of cash,  notes
receivable  and notes and loans payable  approximates  fair value because of the
short-term maturity of these instruments.

i) Impact of Recently Issued Accounting  Standards:  In the course of developing
and evaluating  accounting policies and procedures,  the Company used estimates,
assumptions  and  judgments  to  determine  the most  appropriate  methods to be
applied. Such processes are used in determining  capitalization of costs related
to any film investments,  potential  impairment of those investments,  operating
cost  reimbursements,  and taxable income.  The Company has not yet assessed the
impact  of  the  adoption  of  recently  issued  accounting   standards  on  our
consolidated financial position, results of operations or cash flows.

The Company has adopted recent requirements of Revenue recognition. Revenue from
the sale or licensing of motion  pictures and television  programs is recognized
upon meeting all recognition requirements of Statement of Position (SoP 00-2) as
further defined in the Revenue Recognition Policy noted herein.


                                      F-8
<PAGE>
ODYSSEY PICTURES CORPORATION

Notes to Consolidated Financial Statements:

Included in the Company's  newly adopted  standards,  the Statement of Financial
Accounting  Standards  No.  145 (SFAS  145)  will  require  gains and  losses on
extinguishment  of debt to be  classified  as  income  or loss  from  continuing
operations rather than as extraordinary  items as previously required under SFAS
No. 4. Extraordinary  treatment will be required for certain  extinguishments as
provided in APB No. 30. The provisions of SFAS No. 145 related to the SFAS No. 4
revision  are  effective  for  financial  statements  issued  for  fiscal  years
beginning  after May 15,  2002,  however,  early  adoption is  encouraged.  Once
adopted,  any gain or loss on  extinguishment  of debt that was classified as an
extraordinary item in prior periods presented that does not meet the criteria in
APB No. 30 for classification as an extraordinary item should be reclassified.

Under staff accounting  Bulletin 74 (SAB 74) the Company is required to disclose
certain  information related to other new accounting  standards,  which have not
yet been  adopted due to delayed  effective  dates.33 2.  Changes in  Management
Control:

In January of 2000,  the Board  appointed  Mr. John Foster as  President  of the
Company and also elected him to the Board of Directors. Mr. Foster still remains
as the Company's  President and his contract was renewed for the periods  ending
June 30,  2001 and 2002.  Subsequently,  Mr.  Foster  was  nominated  as CEO and
Chairman of the Board on July 6, 2001. Mr. Johan Schotte stepped down as CEO and
became Executive Vice Chairman.  Mr. Schotte resigned from his board position on
December 12th. Mr. Pierre  Koshakji,  a previous  President and Secretary of the
Company,  resigned  on December  9th. On January 3, 2002 the board of  directors
filled  these two  vacancies  with Mr.  Peter  Bucher and Mr.  Kjell  Larsson by
unanimous  vote of the board.  In January the Company hired Mr. C. F. K. (Frank)
Cole, as Chief Financial  Officer.  Mr. Cole has a one-year contract expiring on
December  31st of this year.  In August  Mr.  Cole  requested  to  decrease  his
involvement  in the Company due to personal  needs.  The Company agreed to allow
him to continue as Vice  President of Finance and reduced his hours.  Mr. Foster
will also handle the matters of CFO until a replacement can be employed.

3. Results of Operations and Management's Plans:

The Company's  continued  existence is dependent upon its ability to resolve its
liquidity  problems.  The Company must achieve and sustain a profitable level of
operations  with  positive  cash  flows and must  continue  to obtain  financing
adequate to meet its ongoing  operation  requirements.  To offset these factors,
the  company has  embarked on an  aggressive  capital  campaign  and has been in
development for determining  it's most effective  method of exploiting  recently
acquired film rights and re-establishing its contacts in the foreign and US Home
Video  markets.  Since July 2001,  new  management  has embarked on a program to
reverse the unfavorable  results, by significantly  reducing overhead and taking
steps to rebuild  revenues.  Net loss for the recent periods has been due to the
delay  in  receipt  of  revenue  and  getting  to the  markets  at the  time the
availability  to  release  the  films  coproduced  or  otherwise   acquired  for
distribution  (which  results are  recorded in the  Company's  Film  Costs).  In
December the Company did enter into an exclusive  distribution  agreement with a
library of - films.  The company has just begun the  process of  marketing  this
library, which includes the development of sales materials, creating descriptive
listing  sheets for  licensees and to seek foreign  sales  representatives.  One
sales  representative is under contract for the Scandinavian market. The company
attended its first film market in several  years in Los Angeles and rejoined its
affiliation with the American Film Marketing  Association in 2002. The Company's
operations  have been greatly  reduced as a result of the  restructuring  of the
Company by new management.  The Company's principal office is located in Dallas,
Texas and as of December 31,  2001,  the Company had five  full-time  employees,
consisting of Mr. Foster, the CEO and President,  and Mr. Cole as Vice President
of  Finance  and   corporate   secretary,   and  two   production-administrative
assistants.  The Company also engaged  several  professionals  in sales and film
acquisition on a contract and commission basis. These  professionals are located
in our major market areas of Los Angeles and Europe. Additional staff is planned
in the  administrative  and sales areas, the latter of whom may be commission or
contract basis.

                                      F-9
<PAGE>
ODYSSEY PICTURES CORPORATION

Notes to Consolidated Financial Statements:

         a) Factors Affecting Operating Results

          The Company has a significant  investment in Film Costs, which contain
          relatively  most of its asset  valuation.  The Company has experienced
          difficulties in the past in generating  revenues to realize a value on
          its assets as indicated.  Several  factors have hampered the Company's
          ability to  effectively  market and sell or license the film titles it
          has. These reasons are mainly to the following circumstances:

New  management  and new board  members  have had a limited  period of time with
which to work  together and evaluate the business and  prospects.  The Company's
operating  history,  coupled  with  the  emerging  nature  of  new  markets  for
independent  films and other forms of broadcast as well as new  technologies  in
Internet-delivered Filmed/Video content, were either not available or built upon
in prior years,  as may have been with other  similar  companies.  Past economic
downturns  in the  Foreign  markets  and an overall  decline in the  independent
markets in general makes  predicting  future  operating  results  difficult.  In
addition,  the Company's  Licensee  prospects must be considered in light of the
uncertainties  encountered  by  past  negative  experiences  with  the  Company.
Although  management  and certain  board  members have  experience  in providing
market  expertise and positive  results,  this activity,  along with the rapidly
evolving markets,  (specifically  for delivery of Filmed/Video  content over the
Internet,  from which the Company developed a joint venture with Kasstech,  Inc.
as noted earlier),  may create unknown and uncertain results.  The result is the
Company's exposure to certain risks which, as summarized,  include the Company's
ability to:

1)   Acquire and retain repeat buyers and licensees for Foreign  Territories the
     Company was once active in; and,
2)   Build awareness,  acceptance and confidence in new management's  ability to
     deliver; and,
3)   Acceptance  and  awareness of  Filmzone.com,  the Content,  the new formats
     available  (for the library  product as well as the Company's new product);
     and,
4)   Renew or extend existing  financial  relationships  and acquire new content
     and new provider relationships; and,
5)   Manage growth to stay competitive and fulfill customer demand; and,
6)   Generate cash from operations and raise capital.

If the  Company  should  fail to  manage  these  risks  successfully,  it  would
materially adversely affect financial performance.

The above  elements make  prediction of future revenue  difficult.  There are no
assurances  that  the  Company  will be  able  to  predict  our  future  revenue
accurately.  Because the Company has had a significant  amount of restoration of
client  base,  films  product  and  delivery  methods,   revenue  has  suffered.
Turnaround  of assets  acquired  have been delayed (as earlier  mentioned).  The
Company's films are not obsolete,  unsaleable or marketable and, therefore, have
not had to  accelerate  removal of asset values or  additional  write-offs.  The
reason for this is due to offers,  considerations  of contracts,  inquiries from
past customers  ("Licensees") and other relationships that management has had in
the past with Licensees,  and the opportunities that exist in development of new
contacts and applying the Company's assets to new emerging markets.

In addition,  the Company's past  relationship  through the Kimon transaction in
involves a "yet to be  determined"  value from its  exclusive  arrangement  with
Hallmark Entertainment, as described herein, the results of this transaction and
its related activities are not known at this time.

The Company has had, and will  continue to have, a number of fixed  expenses and
may be unable to adjust spending in a timely manner to compensate for unexpected
revenue shortfalls.  Accordingly,  any significant  shortfall in relation to any
expectations  could  cause  significant  declines  in these and other  operating
results.   Quarterly   revenue,   expenses  and  operating  results  could  vary
significantly in the future, and that period-to-period comparisons should not be
relied upon as indications of future performance.  Due to the foregoing factors,
it is likely that in some future quarters our operating  results will fall below
the  expectations  of  securities  analysts  and  investors,  which could have a
material adverse effect on the trading price of our common stock.


                                      F-10
<PAGE>
ODYSSEY PICTURES CORPORATION

Notes to Consolidated Financial Statements:

         b) Other factors which may affect Operations:

The loss of key employees could jeopardize our growth prospects. The loss of the
services  of any  of  our  executive  officers  or  other  key  employees  could
materially  adversely  affect our business.  Our future  success  depends on the
continued  service  and  performance  of our  senior  management  and  other key
personnel,  particularly  of John W. Foster,  Chairman  and CEO, and  President.
There are no employment  agreements with any of our executive  officers or other
key employees.

The Company's inability to hire new employees may hurt our growth prospects. The
failure to hire new  personnel  could damage the  Company's  ability to grow and
expand its business.  The  Company's  future  success  depends on its ability to
attract,  hire and  retain  highly  skilled  technical,  managerial,  editorial,
marketing/sales  and  customer  service  personnel,  and  competition  for these
experienced individuals is considered high.

4. Acquisition of Film Assets:

On July 14, 1998, the Company entered into an Asset Purchase Agreement through a
Preferred stock issue with Sweden based Kimon Mediaright KB ("Kimon"),  pursuant
to which the Company  acquired  certain  intangible  assets from Kimon valued at
$4,500,000.  Kimon assets  purchased  consist of a film  library with  worldwide
and/or  Scandinavian  distribution  rights and Scandinavian  video  distribution
rights to certain Hallmark Entertainment  products. On February 26, 2000, all of
the  Preferred  Shares of Kimon were  converted to Common Shares under a revised
valuation,  which was due to an alteration of the original  agreement dated July
14, 1998  whereas a  "dollar-for-dollar"  exchange  was reduced for  purposes of
re-evaluating  Filmzone.com (a domain name with other possible services that the
Company  can  use  in  its  sales  efforts)  was  undertaken,  According  to the
valuation, an average discount was made on the exchange resulting in an exchange
to .91 per share. This conversion was not related to any inducement offer by the
Company,  however, we due to the re-evaluation of the acquisition itself and was
exercised to the benefit of the Company.36 Therefore there were 4,101,283 shares
issued for the 4,500,000 Preferred Shares.  Since the transaction from July 1998
was  adjusted  to the above  discount  along with  certain  "bonuses"  and other
considerations  being rescinded,  the shares were required to be issued with the
restrictions  that  accompany  new stock issues.  All  schedules  related to the
transaction,  such  as the  accounting  for the  asset  of  Filmzone.com  (which
resulted in a deduction  of the Kimon  Library  and an equal  allocation  to the
asset of Filmzone) and the  amortization  of both the Kimon Library and Filmzone
were properly allocated according to GAAP accounting guidelines.

In May of 2002 the company entered into an agreement to distribute certain films
from a local  supplier.  The  company  engaged  in its first  marketing  of film
product that it had acquired for sales and licensing for markets  beginning June
2002.

5. Income Taxes:

At June 30,  2002,  the  Company  had a net  operating  loss  carry  forward  of
approximately  $35,700,287.  Effective as of the  beginning of fiscal 2002,  the
Company adopted Statement of Financial Accounting Standards No. 109, "Accounting
for Income  Taxes"  (known as "SFAS  109"),  on a  prospective  basis.  SFAS 109
requires  the Company to change its method of  accounting  for income taxes from
the  deferred  method  to the  liability  method.  Under the  liability  method,
deferred tax liabilities  and assets are recognized for the tax  consequences of
temporary  differences  between the financial  reporting and tax basis of assets
and  liabilities.  There were no  significant  changes by the  adoption  of this
method.  The utilization of  approximately  $4,900,000 of these losses in future
periods is estimated by the Company to be limited to approximately  $350,000 per
year (the "annual earn out  limitation").  The use of these tax losses to offset
against  any  future  gains in any one tax year may be  limited  if a change  of
control is deemed to occur per United States tax regulations. As Management does
not  possess  a  majority  of the  outstanding  stock  they  cannot  affect  the
occurrence of a change of control event.  The company has not filed a tax return
since 1993 and is currently in the process of completing all tax returns.

                                      F-11
<PAGE>
ODYSSEY PICTURES CORPORATION

Notes to Consolidated Financial Statements:

6. Notes and Loans Payable:

In January of 2001,  the company had entered into a  settlement  with Ian Jessel
(Ian Jessel vs.  Odyssey  Pictures  Corporation)  of which an amount of $385,000
plus  interest of 10% per annum.  This amount has been  reduced from the accrued
portion of the balance sheet and entered into current  structured notes payable,
resulting in an increase to the Notes Payable.  The Settlement is in the form of
a note, with no specific payment  arrangements due to the Company's inability to
make any  payments  on a regular  basis.  As the Company  progresses  in seeking
alternate financing, moderate payments have been made which have been acceptable
to Mr. Jessel.

In June of 2001,  the company  borrowed  funds on an interim basis from a Non-US
investor  who is also a  shareholder  of the Company in order to pay the initial
payment to Mr.  Jessel,  which was $140,000.  The repayment of this interim note
occurred  from the Company  entering  into a  long-term  debt  arrangement  with
another lender. The Settlement Note does carry a default clause which, if called
and not cured  timely,  could  result in the  filing of a judgment  against  the
Company  in the  total  amount  that  would be due at that  time,  plus  accrued
interest.

Unsecured  Promissory  Notes: In August of 2001, two unsecured notes  previously
recorded  under Media Trust Notes  Payable were paid in full,  thus reducing the
liabilities to the Unsecured Promissory Notes by $98,550.

In April of 2002 the company  received  short-term  loans from an  individual to
accommodate  certain cash needs. To facilitate  these loans,  the Company issued
Warrants to purchase 25,000 shares  unregistered  common stock  exercisable at a
price of $0.40.  Pursuant to the  required  adoption of  Statement  of Financial
Accounting  Standards No, 123 (SFAS 123),  and in concert with the  requirements
issued in the Emerging Issues Task Force 96-18 (EITF 96-18), there was no charge
to the  issuance of the warrants  since,  firstly the note was funded and issued
and is an  interest-bearing  instrument  charged  in  accordance  with  interest
expense  requirements  and,  secondly  the  warrants  were  issued  only  as  an
inducement for said loan and certain market  conditions relate to achievement of
a specified market target price. The warrants expire in April of 2007.

Subsequent to the fiscal year end $50,000 was borrowed  from an unrelated  party
on a sixty day maturity. See "Subsequent Events".

7. Agreements to Satisfy Certain  Liabilities  Through  Issuance of Common Stock
During the quarter ended March 31, 2002, the Company  satisfied  consulting fees
for investment banking services related to past private placements with warrants
to purchase 500,000 shares at a price of 25 cents per share expiring on December
12, 2003 to a private party.  Pursuant to the Company's adoption of Statement of
Financial  Accounting  Standards  No, 123 (SFAS  123),  and in concert  with the
requirements issued in the Emerging Issues Task Force 96-18 (EITF 96-18),  there
was no charge to the  issuance  of the  warrants  since,  firstly  work that was
performed  was  charged  in the  issuance  of shares of stock (see  below)  and,
secondly the warrants were issued only as an inducement  for future  consultancy
issues,  if requested  by the Company and,  lastly,  certain  market  conditions
relate to achievement of a specified  market target price.  With respect to this
same  party,  services  were  expensed  in this  quarter  ending  March 31, 2002
totaling  $150,000  by the issue of 500,000  shares of  unregistered  restricted
shares of stock.  According to the  Company's  adoption of Financial  Accounting
Standards No, 123 (SFAS 123), and in concert with the requirements issued in the
Emerging Issues Task Force 96-19 (EITF 96-19),  a mutual  fair-market  valuation
was placed on the issuance and approved by  management.  This issue  resulted in
single expense charged to services for the specified period.

                                      F-12
<PAGE>
ODYSSEY PICTURES CORPORATION

Notes to Consolidated Financial Statements:

8. Commitments and Contingencies:

Lease  Commitments:  The  Company  conducts  its  operations  out of  sub-leased
premises at 16910 Dallas Parkway, Suite 104, Dallas, Texas 75248, which consists
of  approximately  2,500 square feet.  The  premises  are  presently  being made
available to the Company as a sublease by another company related to Mr. Foster,
named JL Media  Services  LLC.  Rent expense for the space is $ 2,500 per month,
with a $2,500  deposit and will continue for a period of five years,  to March 1
of 2006.  During  the fiscal  year  ending  June 30,  2002,  the lease  payments
increased per the master lease agreement for expense  allotments  (approximately
$2457  annually),  which  totaled an aggregate of $40,935 as compared to $34,094
for the same period  ending  6-30-01.  42The  Company has storage  facilities to
store its older records and film materials and leases on a month-to-month  basis
of $577 each month.  Earlier in the year, the company  consolidated  its storage
space and the rental is now $395 per month. The company has no other outstanding
lease obligations.

9. Shareholders' Deficit

The company continues to experience losses and an increasing loss carry forward.
The Deficit will continue to grow until the Company is able to increase revenues
to a point  beyond  break even.  The Company  does not release  earnings  and/or
revenue projections.  The Company desires to utilize the losses for tax purposes
against potential future taxable earnings.  The utilization of tax losses can be
significantly  reduced if there is a change of control. As the Company is widely
held and freely traded the Company  cannot  control  whether a change of control
might occur.  Such an action would limit the taxable losses in any one year to a
formula equal to the  applicable  federal bond rate times the losses at the time
of  change of  control.  Additionally  the  Company  must  file its tax  returns
properly with the additional  information required to be able to utilize the tax
losses.  The Company is in the process and has engaged two firms to complete the
tax returns.

10. Stock Options and Warrants:

During the fiscal year ended June 30, 1997, a total of 1,153,333  warrants  were
issued  to  officers,  directors,  employees,  consultants  and  third  parties,
exercisable  at prices  ranging  from $ 0.625 per share to $1.06 per share.  The
warrants are exercisable  for periods ranging from three to five years.  None of
such warrants have been exercised. All are to expire this coming year.

The Company's  stock has been  relatively  thinly traded and the Company  cannot
predict the extent to which a trading  market  will  develop.  The common  stock
trades on the  Over-the-Counter  Bulletin Board and is thinly traded compared to
larger more widely known  companies in this same industry.  Thinly traded common
stock can be more volatile than common stock trading in an active public market.
The Company  cannot  predict the extent to which an active public market for the
common stock will develop or be sustained in the future.

During the fiscal year ended June 30,  1998,  a total of 254,260  warrants  were
issued to third  parties,  exercisable at prices ranging from $1.00 per share to
$1.65 per share.  The warrants are  exercisable  for periods ranging from two to
five years.  None of such  warrants  have been  exercised.  All will expire this
year.

In July 1998, the Company  entered into a consulting  agreement with Media Trust
S.A., a company  that is an  affiliate  of Mr.  Schotte and in which the Company
holds a minority  interest  (see  "Related  Party  Transactions")  to  introduce
prospective  investors to the Company,  in exchange for which the affiliate will
receive  10% of any  investments  made in the  Company by  persons  or  entities
introduced by the affiliate,  together with five-year warrants (100 warrants per
$1,000 invested) at an exercise price equal to the market price of the Company's
stock on the date of the investment.  In connection with convertible  loans made
to  the  Company  in1998  by  Belgian  investors  in  the  aggregate  amount  of
approximately US$100,000,  and the purchase of 625,000 shares of common stock of
the Company by  Lecoutere  Finance,  S.A. in  December,  1998, a total of 29,537
five-year  warrants was issued to Media Trust, S.A. with exercise prices ranging
from 38 cents per share to 98 cents per share.  None of these warrants have been
exercised. In July of 2002, the company did not renew the consulting arrangement
with Media Trust,  but has an obligation  ongoing for commission  obligations if
one of its clients reinvests into Odyssey, up until July 2003.

                                      F-13
<PAGE>
ODYSSEY PICTURES CORPORATION

Notes to Consolidated Financial Statements:

In December  1998,  Lecoutere  Finance S.A., an affiliate of the then CEO of the
Company,  Johan Schotte (see "Related Party  Transactions"),  purchased  625,000
shares of common  stock  from the  Company  for an  aggregate  consideration  of
$187,500 (30 cents per share).  The price was based on the average  price of the
Company's  common  stock for the 30-day  period  preceding  the date of purchase
(i.e., 37 cents per share),  less a 20% discount due to the restricted nature of
the shares purchased. On December 1, 1998, a total of 50,000 three-year warrants
were issued to three  parties  (one of which is an  affiliate of the Company) in
consideration  of  extending  the  maturity  date of loans to the  Company.  The
warrants have an exercise price of $1.00 per share.  None of these warrants have
been exercised.

During the fiscal year ended June 30,  1999,  a total of 467,660  warrants  were
issued to  officers,  directors  and holders of notes  payable,  exercisable  at
prices  ranging from $0.55 to $1.65.  The warrants are  exercisable  for periods
ranging from two to five years,  except for two officers' issuances that have no
expiration date. None of such warrants have been exercised.

In October of 2000, a non-related party was issued warrants for a purchase price
of $25,000  for $1.00 per share  consideration.  As of the close of  business on
June 30, 2002, none of these warrants have been exercised.

On December 12, 2001 an  unaffiliated  party that  arranged a private  placement
received for its services  warrants of 500,000  shares with an exercise price of
25 cents per share.  The  warrants  expire in two years.  On April 19,  2002 the
Company entered in a Joint Venture with a private  company,  Kasstech,  Inc., to
exclusively sell its  patent-pending  digitization  services for a period of ten
years.  These  services  are  believed  to be  technically  the  most  efficient
available  service for  transmission  of picture and sound through  normal phone
lines with a possible 900 to 1  compression  ratio.  The Company is the managing
partner  of  the  Joint  Venture  with  all  administrative  and  sales  duties.
Originally  Odyssey agreed to reserve shares of stock for possible  funding into
the Joint  Venture and to pay  Kasstech and its owner for some of the rights and
services.  On October 9th Odyssey and Kasstech  agreed to discontinue  the share
contribution and reserves of stock.

In April of 2002 the company  raised  $100,000 for debt reduction by the sale of
625,000  shares  of  restricted  stock.  The  price of 6.25  cents per share was
calculated  on the use of funds to  reduce  debt,  versus  the  overall  cost of
interest  against the debt to be retired,  which was past due. Had this debt not
been repaid at that time, the Company would have faced financial penalties since
the loan was not renewable.  Along with the sale, the company  granted  warrants
for up to 125,000  shares of restricted  stock at a price of 16 cents per share.
This price was later  reduced to 6 cents per share in a  subsequent  transaction
(see "Subsequent Events").

In June the Company  raised  $316,000 in  multiple  transactions  by the sale of
restricted stock. The price for the shares ranged from 6.7 cents to 16 cents per
share,  depending on whether  warrants or commissions  were  involved,  and were
calculated  on the use of funds to  reduce  debt as before  stated.  Some of the
sales  included  warrants for up to three years for the  purchase of  restricted
stock at a price of 16 cents per share.  The funds were used for working capital
and debt reduction.  All parties involved with the above transactions from April
through to June of 2002 were non-affiliated.


During the fiscal year ended June 30,  2002,  2001 and 2000,  no  warrants  were
issued to officers, directors.

During the Fiscal  year  ended  June 30,  2002 and 2001,  no stock was issued to
officers or directors.

Additional  rights to warrants  were granted  after the end of the quarter,  see
below "Subsequent Events".

                                      F-14
<PAGE>
ODYSSEY PICTURES CORPORATION

Notes to Consolidated Financial Statements:

11. CHANGES IN SECURITIES AND USE OF PROCEEDS.

In  March of 2001 the  Board  of  Directors  approved  a $5  million  US  dollar
denominated  Senior  Secured  debt issue (the  "Senior  Debt") with  convertible
rights  to  common  stock at  maturity  and in  certain  circumstances  (such as
bankruptcy  and/or financial  defaults on other significant  debt).  Reserves of
shares for the  potential  conversion  have been made.  The Senior Debt requires
that the company not pledge any  significant  assets and gives the bondholders a
pledge on the "Kimon  Library"  assets.  The Senior Debt  carries an 8% interest
rate and matures on April 15,  2006.  The Senior Debt is not  registered  in the
United States and is only available to non-US citizens. The Trustee received the
first  subscription  on August 29, 2001 for $160,000.  The funds after financing
expenses of $14,364 were used to pay off two loans of 4 million francs (previous
paragraph) and some rent expenses of an office recently closed in Luxembourg.  A
previous  officer  used the  remaining  funds for claimed  expenses.  Odyssey is
pursuing additional subscriptions.

12. DEFAULTS UPON SENIOR SECURITIES

An interest  payment  due on April 12, 2002 was made by a third party  therefore
the Senior Secured Bond is in compliance with its requirements. The company does
not have sufficient cash to make its next  semi-annual  payment and,  therefore,
risks the Bond being placed in default.

13. Related Party Transactions:

In  November  1998,  the  Company  entered  into  the  following  related  party
transaction with E 3 Sports New Mexico, Inc., a company which is an affiliate of
Mr.  Schotte  and Mr.  Koshakji  (at the  time  of the  transaction  the CEO and
President  of the  Company,  respectively)  and in  which  the  Company  holds a
minority  interest:  (i) the Company  purchased a $25,000  sponsorship  from the
Albuquerque  Geckos,  the professional  soccer team owned by the affiliate;  and
(ii) the Board  authorized  the Company to loan up to $100,000 to the affiliate,
payable no later than July 15, 1999 with  interest at 15% per annum (the loan is
secured by 10,000 shares of E 3 Sports New Mexico,  Inc.). The loan has not been
repaid and the Company has terminated  accruing interest.  Current management is
pursuing  information  regarding  Company  interests.  For the current year, the
company  has  elected to write off the entire  amount  listed as an asset  which
totals 153,774 due to its uncollectible nature.

In July 1998, the Company entered into the following related party  transactions
with Media Trust S.A., a company  which is an  affiliate  of Mr.  Schotte and in
which the Company holds a minority interest:  (i) the Company has agreed to make
a $2,500  loan to the  affiliate,  payable in one year with  interest at 15% per
annum; (ii) the Company engaged the affiliate to introduce prospective investors
to the  Company,  in exchange  for which the  affiliate  will receive 10% of any
investments  made in the  Company  by  persons  or  entities  introduced  by the
affiliate,  together with five-year  warrants (100 warrants per $1,000 invested)
at an exercise  price equal to the market  price of the  Company's  stock on the
date of the investment. In connection with convertible loans made to the Company
in1998 by Belgian  investors in the aggregate amount of approximately  $100,000,
and the  purchase of 625,000  shares of common stock of the Company by Lecoutere
Finance,  S.A.  in  December,  1998 (see  below),  a total of  29,537  five-year
warrants was issued to Media Trust,  S.A. with exercise  prices  ranging from 38
cents per share to 98 cents per share.

In December  1998,  Lecoutere  Finance S.A., an affiliate of the then CEO of the
Company,  purchased  625,000  shares of common  stock  from the  Company  for an
aggregate consideration of $187,500 (30 cents per share). The price was based on
the average price of the Company's  common stock for the 30-day period preceding
the date of  purchase  (37  cents  per  share)  less a 20%  discount  due to the
restricted nature of the shares purchased.

On December 1, 1998, a total of 50,000 three-year  warrants were issued to three
parties  (one of which is an  affiliate  of the  Company)  in  consideration  of
extending  the  maturity  date of loans to the  Company.  The  warrants  have an
exercise price of $1.00 per share.

                                      F-15
<PAGE>
ODYSSEY PICTURES CORPORATION

Notes to Consolidated Financial Statements:

In October of 2000, a non-related party exercised  warrants for a purchase price
of  $25,000  for $1.00  per  share  consideration.  During  the  course of these
transactions,  the Company  accumulated a net deficit owed to Media Trust in the
amount of $42,591 after certain  deductions and  accommodations of expenses were
met. Note that present  management never realized a value in the ongoing efforts
of Media  Trust,  and that it was  entitled  to 18%  interest in Media trust net
proceeds,  combined  with the fact that the  Company  did not  receive  required
disclosure in order to accurately report to its shareholders, management elected
to declare it right of offset and deduct  the  liability  from its  exposure  to
affiliated and related  entities and transaction in order to secure its position
and   protect   and   preserve   the   Company's   interest   in   its   outside
"interparty-related"  investments  (being that of Mr. Schotte).  In spite of its
repeated  demands and requests for payment  and/or  reimbursement,  there was no
response.  Being that the company has never received required  financial reports
from  Media  Trust  and has made  attempts  and as well as  demands,  management
elected to fully offset any  outstanding  amounts  owing and  properly  recorded
these  against  current  write-downs  of assets  considered  related  in nature.
Although the company is still pursuing  financial  information from Mr. Schotte,
the main  principal  and  director  of Media  Trust,  with no response a of this
present  time,  the  company has  elected to write off  substantially  all debts
against advances and loans for lack of sufficient information.

In October of 2001,  the company  entered  into an Exclusive  Film  Distribution
Agreement  ("Agreement")  with JL Media Services LLC, a company  specializing in
supply of feature  films  product  and of which the  current  CEO has a minority
interest  in  ("Media").  The terms of this  Agreement  enables  for  Odyssey to
exclusively  sell and license  feature  films  belonging to Media as well as new
productions  for a commission  in the total amount of 15% of the Gross  Proceeds
(as earlier  defined in Revenue  Recognition)  and deduct  limited  expenses the
Company may have  incurred  from the sales and  marketing  of each  product.  In
consideration for this exclusive  arrangement,  the Company shall pay, in shares
of common  stock , an amount  equivalent  to the same 15% based  upon  quarterly
reports  and  upon  the  average  trade  price of each  calendar  quarter.  This
Agreement extends for a period of fifteen years,  however, the revenue share for
stock extends only for a period of five years,  unless otherwise adjusted by the
Parties.

 14. Extraordinary or non recurring items:

An affiliate of the Company's  CEO, JL Media  Services LLC,  advanced  funds and
services for overhead and  operations  of the Company from January to October of
2001.  The Company  began  repaying  against a formal note  between the parties,
which was dated effective  January 2001, in October of 2001. The note carries an
interest of 12% per annum and has  provisions to be increased  from time to time
depending  upon the  operations,  services  and  overhead  needs of the Company,
should it be necessary. As of the end of the period of June 30, 2002 the Company
owed $192,035 in interest and  principal,  which became due and payable on March
1, 2002. The Company sought,  an was granted,  a renewal for said loan effective
as of the due date of March,  1, 2002  through  to a new due date of  January 1,
2003, with no penalties.  The provisions of the loan also include the acceptance
of shares of stock in the Company for payments of interest, if so elected.

The company  reversed some expenses claimed by a previous officer due to lack of
documentation.  The  Company  wrote  off a  prior  entry  for a  deposit  on the
production of a film project  where an option  period had elapsed.  The item was
carried as a prepaid asset. These items are netted out in Non-recurring items.

Unusually high costs associated with the litigation settlements, including legal
fees and interest on legal fees,  was  $126,789  for the period  ending June 30,
2002.

The Company  expensed  $125,000 in consulting  fees tied to previous and current
marketing services begun by previous management. The valuation of the charge was
made  pursuant to the  Company's  adoption of Statement of Financial  Accounting
Standards No, 123 (SFAS 123),  as earlier  described,  as a present  fair-market
value and as mutually accepted by both parties.

                                      F-16
<PAGE>
ODYSSEY PICTURES CORPORATION

Notes to Consolidated Financial Statements:

The  services  were  paid by the  issuance  of the  500,000  shares  of stock in
December. The contract for services is not being renewed.

An additional $98,000 was expensed for consideration of continuation of services
and fees for note extensions  from the Company's  financial  consultant,  Cofima
Finanz, AG in Zurich, Switzerland.  The amount was placed in an interest-bearing
term note, with a scheduled payment date not beginning in next fiscal year.

Pursuant  to the  guidelines  as  established  and  adopted  by the  Company  in
Statement of Financial Accounting Standards No, 5 (SFAS 5, loss contingency), an
accounting reserve for possible liabilities was established referring to various
lawsuits as express earlier herein. As this reserve was recently established,  a
total of $250,000 in "other accrued" expenses has been charged during the fiscal
periods ending 6-30-01 and 6-30-02 inclusively.  As earlier mentioned in Item 3,
Legal  Proceedings,  the  Company  has  attempted  to settle  all  lawsuits  and
disputes. The Company,  although it has settled the major lawsuits (two of which
are in a "workout"  stage) and still has two known judgments  totaling  $65,000,
and has been dismissed from a possible  class-action  suit,  still faces ongoing
litigation  on the  Muller-Smith  case.  As  there  are  remaining  motions  and
discovery underway at present, the motions and results of the discovery have not
yet been decided upon.  Due to the inherent  uncertainties  of litigation  (even
though the  litigation  is beyond its  preliminary  stage),  the Company  cannot
accurately  predict the ultimate outcome of the motions.  The Company's  defense
will possibly be a continuing  effort that has a significant  expense,  which it
may not be able to afford.  Even at this  juncture,  should the Company lose its
defense,  there could possibly be a judgment entered which would be in excess of
$300,000.  In  addition,  due to the  Company  being  unable to meet its current
obligations when due, or timely,  there could be others who may elect to sue for
non-payment.

The company  added a one-time  expense for Filmzone due to its  development  and
reposturing  of the sales  purpose for the  website.  Pursuant to the  Company's
adoption of  Statement of Financial  Accounting  Standards  No, 95 (SFAS 95), as
earlier  described,  it was determined that a significant  amount  ($75,000) was
considered  to be a  development  expense and,  accordingly  to such ruling,  is
considered an expense, which was deducted from operations.31 The company reduced
is valuation of the Odyssey Ventures Online  Holdings,  SA ("OVO") assets mainly
due to its determination of liquidity and recent  recognition of certain startup
expenses.  In addition,  and pursuant to the Company's  adoption of Statement of
Financial  Accounting  Standards No, 95 (SFAS 95), as earlier described,  it was
determined  that  a  significant   amount  ($67,293)  was  considered  to  be  a
development  expense and,  accordingly to such ruling, is considered an expense,
which was deducted from operations. The company wrote off all of the development
expense relating to the OVO initial startup.  In light if the recent  write-down
(as  opposed to the  Company's  earlier  adoption of the  AICPA's  Statement  of
Position  SOP  98-5,  where  all  startup  expenses  were to be  written  off as
incurred) the Company had been exposed to expenses under its own obligation from
prior  management  and in advancing  initial funds for OVO.  These advances were
maintained  under  Subsidiary  investments  since the Company was supposed to be
reimbursed upon OVO subsequent  funding.  As this did not occur,  and in view of
the earlier  disclosures as noted in Item 14:  Subsequent  Events, a reserve has
been expensed.

The company  reduced its  valuation  of the Media Trust SA  investment  and note
receivable due to undeterminable recovery.

The company wrote off its loan to the Geckos Soccer team, a once partially owned
affiliate of E3 Sports New Mexico, Inc., due to its unexpected recovery.

                                      F-17
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ODYSSEY PICTURES CORPORATION

Notes to Consolidated Financial Statements:

15. Subsequent Events:

In September the company  borrowed  $50,000 for working capital needs in a sixty
day note at 12% per  annum.  The loan also  repriced  certain  warrants  already
outstanding  to a price of six cents per  share.  The  total  warrants  affected
306,666  shares and  extended the final  exercise  date of all  certificates  to
September  23, 2005.  Additional  warrants  could be required if the loan is not
paid per its terms.  The  repricing  of the warrants  was not  recognized  as an
accounting  item and  expensed  due to the fact that  there was no basis for the
original  issue and the recent  adoption of Statement  of  Financial  Accounting
Standards No, 84 (SFAS 84) states a  recognition  in expense in the case of fair
market value for  "debtor-induced  conversion"  of a convertible  debt, or which
there was no change in such fair market value.

The  Company  in March gave  notice to the  Managing  Director  of its 99% owned
Luxembourg subsidiary,  Odyssey Ventures Online Holdings, S.A ("OVO").,  that it
was  removing  all  Directors  and  replacing  them with  members of the Odyssey
Pictures  Corporation  Board. The Company has hired legal counsel in Brussels to
recover the assets of the  subsidiary to facilitate the Company in either a sale
or its assets or an orderly  liquidation.55  While the Company was advised  that
the action in March was legally binding,  the Company's legal counsel  delivered
formal notice to further  formalize the actions taken in July. The Company is in
the  process  of  exploring  all  avenues  for full  recovery  of these  assets,
inclusive of possible lawsuit.  However,  in light of the recent adoption by the
Company in  Statement  of  Financial  Accounting  Standards  No, 5 (SFAS 5, loss
contingency), a reserve was established referring to any potential losses.

The company  entered into another  settlement  agreement with Ian Jessel (in the
lawsuit of Jessel vs.  Odyssey  Pictures  Corporation,  Johan  Schotte,  Red Sun
Productions,  Inc, et. al. dated December 2000) and this agreement,  the parties
agreed to issue stock for the final  payments  to Mr.  Jessel and to pay out the
remaining  cash portion over a period of time. The company signed an arrangement
with  Orpheus  Entertainment,  a  manufacturer  of  Video,  DVD  product  and  a
distributor for all North American  markets.  In this  arrangement,  the company
shall pay a number of  registered  shares  for the  consultation  and  advice of
marketing and placement of product into all markets.  The result of this type of
stock  arrangement  will allow the Company to have a higher margin on product it
delivers  to the market  from the retail  level for video and DVD sales in North
America on a direct basis.  In addition,  the Company also signed an arrangement
for  distribution  of its  soundtracks  and  original  audio works with the same
company for international distribution.

In relation  to the  Pfannebecker,  et. al. case filed in 1995,  the Company was
settled all claims regarding a possible class action status (the case was denied
Class Action status) as of July 2002.  There are remaining  issues with possible
claims of indemnification from former officers and directors, some of which have
been released as of October 2002 with no further obligations from the Company.


                                      F-18
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