SECURITIESAND
EXCHANGE COMMISSION


Washington,
D.C. 20549


Form
10-K


x Annual Report under
Section 13 or 15(d) of the Securities


Exchange
Act of 1934


For
the fiscal year ended June 30, 2009


or


o Transitional Report
under Section 13 or 15(d) of the


Securities
Exchange Act of 1934


0-18954Commission
      file number




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




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




2321
      Coit Rd. Suite E, Plano, TX 75075(Address
      of principal executive office)




(972)
      867-0055(Issuer's
      telephone number)




Securities
registered under Section12(b) of the Exchange Act: NONE


Securities
registered under Section 12(g) of the Exchange Act:




Common
      Stock: $.01 Par Value(Title
      of Class)





Indicate
by check mark whether the registrant if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act   Yes oNo x


Indicate
by check mark whether the registrant if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act  Yes xNo o


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 xNo o


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
or any amendment to this Form 10-K. o


Indicate
by check mark whether the registrant if the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company (check one)




Large
      Accelerated Filer o
            Accelerated
      Filer o
            Non-accelerated
      Filer o
            Smaller
      Reporting Company x


Indicate
by a check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes oNo x


The
aggregate market value of the voting stock held by non-affiliates of the
Registrant as of June 30, 2009 was approximately $2,840,590 (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, 2009 there were outstanding 65,081,013 shares of Odyssey Pictures
Corporation's common stock, par value $.01 per share (the "Common
Stock").








ODYSSEY
PICTURES CORPORATION




Form
10-K




Report
for the Fiscal Year




Ended
June 30, 2009





PART
      I
            1Item
      1. Business
            1Item
      2. Properties
            4Item
      3. Legal Proceedings
            5Item
      4. Submission of Matters to a Vote of Security Holders
            6PART
      II
            6Item
      5. Market for Registrant's Common Stock and Related Stockholder Matters
      and Issuer Purchases of Equity Securities
            6Item
      7. Management's Discussion and Analysis of Financial Condition and Results
      of Operations
            7Item
      8. Financial Statements and Supplementary Data
            10Item
      9. Changes in and Disagreements with Accountants on Accounting and
      Financial Disclosure
            10Item
      9A(T). Controls and Procedures
            10PART
      III
            12Item
      10. Directors and Executive Officers of the Registrant
            12Item
      11. Executive Compensation
            12Item
      12. Security Ownership of Certain Beneficial Owners and Management and
      Related Shareholder Matters
            13Item
      13. Certain Relationships and Related Transactions
            13Item
      14. Principal Accountant Fees and Services
            13Item
      15. Exhibits
            13Signature
            16











PART
I





ITEM
1.                                DESCRIPTION
OF 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. 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").  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.


Beginning
in the fiscal year ended June 30, 2008 the Company began selling branding
services, web site design and development services and graphics and online
business presentation services to a limited numbers of companies. These projects
are managed by the Company and are completed using principally third party
contract services. To the extent that the company relies on outside vendors,
there is no assurance that acceptable vendors will remain available to enable
the Company to continue to offer these services as part of its business offering
however, to the extent they are available, the Company expects to expand this
line of business in addition to film, digital delivery technologies, finance,
marketing and other related businesses.


(b)
Narrative Description of Business


The focus
of the distribution segment of the industry in general, has expanded into areas
other than filmed entertainment properties. With emerging markets in e-commerce,
varying levels of broadcast, new fields of revenue opening for direct-to-market
applications, along with technological advancement for electronic distribution
of media content throughout the world, Odyssey developed a new plan to engage in
latest methods of distribution at various levels of this technological
advancement for delivery of content and services to the client, client
affiliates, or the end users.


As a next
step in its business development the Company has been selling branding services,
web site design and development services and graphics and online business
presentation services to a limited numbers of companies on a contract basis.
These projects are managed by the Company and are completed using principally
third party contract services. The Company’s delivery of services on a contract
basis allows it to receive revenues throughout the production and delivery of
the service rather than waiting until final product delivery.


The
delivery of web site design, development and content services as well as hosting
platform design services allows the Company to initiate development of its own
proprietary platform, now the beginning stages, at the same time that it is
providing these services for customers.










1


Our
business has a new focus and generally falls into the following
categories:


1.
Service Representation. Our company contracts with a client to organize and
administer a new campaign for their image, branding, marketing, and general
awareness of their product, media materials including all forms of recorded
media, and defining methods of distribution specific to that particular client's
needs. Our company engages with the client and receives a fee in consideration
for the proposed duration of time, the amount of man hours that are going to be
devoted in order to build the various campaigns that are required, and
formulates a budget based on new materials that have to be generated in order to
penetrate the clients markets.


2.  Distribution
Methods. Along with the assemblage of service platform for the client, the
company receives rights to distribute, organize, and otherwise make ready all
necessary content elements in order to administer them to the network, outlet,
or specified end performance venue of such content. As before practiced, the
Company then seeks to license the rights it has been authorized to
subdistributors in the territories for the respective distribution rights. In
general, the grant of rights to the subdistributors includes all media since
digital distribution does involve all forms previously segregated for
independent sales among one or many other sales agents in the past. 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 becoming
due before access to the content can be made through the company's secure
process over the Internet. In some cases, our company will provide certain
arrangements where advertising revenue is split in lieu of licensing fees for
the benefit of the client and where the client may have sponsorships,
advertising, marketing campaigns already directed by our company. This revenue
sharing process is incorporated as a part of the service arrangement that we are
providing for the client. In this case, our company is licensing both the
content and the entire advertising/sponsorship program package from which
revenue would be generated upon transmission and/or broadcast.


With
worldwide distribution markets developing new platforms on a rapid basis, the
independent media releasing and distribution industry has had to change methods
of operating in order to remain competitive with the broadcast, film, and
prerecorded (DVD) business (notice the reduction of venues from past
replications). The entry level to online access for broadcast markets has become
an essential element in determining and maintaining the existence and future of
many businesses and entertainment venues.


Online
distribution or "digital media distribution" has become a necessity in effecting
access to audio and video content and is incumbent upon the distributor now to
seek and streamline new methods of acquiring, storing, securing, and procuring
quality of reproduction over the Internet, and providing this within an economic
condition that allows us to compete as well as to keep up with the economics of
upgrading with challenging and changing technology requirements.


The
Company expects to be able to create a reliable system for the end user that
matches the impact from which many high profile companies were very successful
in establishing the “experience of high-quality media delivery”. This includes
having the ability “in-house” to store and secure content and make content
accessible to expanding markets such as digital theaters, pay per view, video on
demand, and downloads including mobile “on demand” and interactive technology
such as short code technology and instant access response. With this new
platform in the forefront of Odyssey's new developments, we have found it
necessary to expand into other areas of content reproduction such as live
events, prerecorded concerts, educational and learning programs, educational,
fitness, self-help and medical, even customizing related technology to
client-specific needs and future affiliated organizations in other areas of
content provision.


2


Odyssey
has also become involved with development and delivery of intellectual property
products. The Company expects that the future of the business would rely on
certain technological advancements at the forefront of digital distribution and
delivery. The Company believes that it is prudent to develop products such as
system infrastructure design, website design with video interface, online
support systems, special secure coding, as well as Internet broadcast solutions
and satellite access. These elements, now embedded into the management and
operations of the Company, will become known as “Proprietary Management Systems”
and are unique to the media and media processing venues that capitalize on
current market interest and will be valuable in the very near future. Certain
applications to this new service would include branding, image design, corporate
and graphic presentation matters such as logos, logo colors, logo statements in
various templates from which new business systems will be redesigned and
developed for numerous business applications over the Internet and
broadcast.


Overall,
the company should find itself able to not only support additional product and
media within its own structure, but also engage other affiliates and related
companies into cross-marketing and promotion for expanded media projects on
several levels, including interactive media.


With the
onset of several different and diverse web-based companies, we are also
developing a series of advertising partners, sponsors, and other venues which
will result in promotional considerations to offset our costs and being able to
place content out into various markets of all levels. New digital delivery
systems such as the one we are embarking upon enable us to deliver to the
traditional markets, new digital transmission venues, broadcast over the
Internet, Satellite accessibility, and even video interface and multi-response
mobile communications as well.


Once
Odyssey has a significant amount of content available, it creates its own"
library" with which to categorize in various areas of interest, either by the
end licensing company (such as foreign buyers, foreign television/broadcast,
integration into entertainment slots in cable/satellite networks, and
programming via our own defined broadcast capabilities) or to specific
requirements to clients. The end result should be to create additional streams
of revenue, additional opportunities for service income, more control over
distribution and security, and operating more on an "international
multi-function delivery service basis".


Competition


The
entertainment and media industry generally are highly competitive and not always
predictable. The Company's competition includes the smaller independent
companies operating in similar distribution and delivery venues as well as
independent producers and even major studios funding similar operations. Many of
these competitors have financial means and other resources significantly greater
than those available to the Company. The Company faces competition in all
aspects of the business and cannot represent or warrant any assurances that it
will be able to compete effectively.


3


The
business of providing content over the Internet is experiencing rapid growth and
is characterized by substantial technological changes. Moreover, there are new
and varying well-established companies entering into the same fields. Many of
these companies have financial, technological, promotional and other resources
that are much greater than those available to us and could more effectively use
or adapt to current technology changes, or are able to purchase technology to
provide a service directly competitive with the Company. Rapidly changing
financial markets in our industry and the present economical outlook are not
favorable for the Company to have ready-access to capital in order to offset
such market interference from competitors. New digital markets and ever-changing
technologies require the Company to compete, bid and successfully market for
licensing rights and maintain a strong and consistent level of sub-distributor
and client relationships in its on-going efforts and enter into potentially
volatile markets that it has to afford to remain competitive in over the long
term.


We will
greatly rely on our strategic relationships to assist us in capitalizing on new
digital transmission services with digital download and multi-faceted broadcast
capabilities along with the affordability to maintain our position in these
markets.


Operations


The
Company's operations have been greatly reduced as a result of there structuring
of the Company by management. The Company's principal office is located in
Plano, Texas (see "Properties") and, as of June 30, 2009, the Company had two
full-time employees, consisting of Mr. John Foster, the CEO and President of the
Company, along with an administrative assistant in the Plano office. The company
is fortunate to have been able to use some of its board members, along with a
past board member, to help in areas where it could not afford full-time
personnel. The company also supports intern programs from time to time where
college students can work at the offices on a part-time basis for college
credit. Additional staff is planned in the administrative, accounting,
technological interests and sales areas, either on a commission or contract
basis.


The
Company has continued to expand development of its own web site for use in the
distribution of broadcast media and other products.


In
addition, beginning in the fiscal year ended June 30, 2008 the Company began
selling branding services, web site design and development services and graphics
and online business presentation services to a limited numbers of companies.
These projects are managed by the Company and are completed using principally
third party contract services. To the extent that the company relies on outside
vendors, there is no assurance that acceptable vendors will remain available to
enable the Company to continue to offer these services as part of its business
offering however, to the extent they are available, the Company expects to
expand this line of business in addition to other related
businesses.


ITEM
2.                                PROPERTIES


During
the reported period, the Company conducted its operations out of leased premises
at 2321 Coit Rd. Suite E, Plano, Texas, consisting of approximately 2,500 square
feet.  Rent expense for each of the fiscal years through end of term
at June 30, 2009, is as follows:


June
      30, 2009
            
            $
            22,900June
      30, 2008
            
            $
            17,800


4
  ITEM
3.                                LEGAL
PROCEEDINGS


Ian
Jessel v. Odyssey Pictures Corp. A settlement of this breach of contract matter
had been negotiated prior to November 2001 for payment of a sum certain
overtime. The Company failed to perform and a judgment of $369,160 was entered
by stipulation on May 13, 2004. The matter was settled subsequent to the end of
the fiscal year ended June 30, 2009, the settlement terms having been paid in
full by the Company as of the date of this filing.


Dennis
Morgan v. Odyssey Pictures Corp. A settlement of this breach of contract matter
had been negotiated prior to 2003 for payment of a sum certain over time. The
Company failed to perform and a judgment of $229,875 was entered by stipulation
on April 11, 2003. The matter was settled subsequent to the end of the fiscal
year ended June 30, 2008 the settlement terms having been paid in full by the
Company as of the date of this filing.


The
“Muller & Smith Case" A lawsuit was filed for indemnification and
reimbursement of legal fees regarding the Pfannebecker Case. A judgment was
entered against Odyssey in the amount of $360,000. Subsequently attorney’s fees
of $85,000 were granted resulting in an aggregate of $445,000 plus accrued
interest due. This matter was settled during the fiscal year  ended
6-30-09.


Lawsuit-
Watson, Farley and Williams v. Odyssey Pictures Corp., Gold Leaf Pictures,
Belgium, Johan Schotte, Chardonnay Enterprise Ltd, and A Hero From Zero N.V.
Complaint filed April 30, 2001, New York Supreme Court, New York County, for
balance owing of services rendered from the period beginning 1997 through to
April of 2001. Odyssey has answered this complaint, although it was not notified
until August 10,2001 denying its position in the named defendants. Odyssey
contends that it did, in fact, pay any and all outstanding related legal bills
related to the Plaintiff’s corporate involvement. Odyssey had 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,
2009.


In August
of 2003, the Company received notice of a federal tax lien being filed in the
amount of $27,210 for non-payment of federal payroll tax deposits. The Company
has been making payments toward this obligation.


On March
22, 2005 a judgment was entered against the Company in favor of Distinct Web
Creations, Inc. and Denise K. Houston in the amount of $32,000 plus prejudgment
interest in the amount of $6,291.50, plus attorneys fees in the Circuit Court in
Volusia County, Florida. On April 25, 2006, a judgment was entered in favor of
the Carlton Fields law firm in the amount of $21,848.12 in the Circuit Court in
and for Hillsborough County, Florida for legal services in representing the
Company in the Distinct Web Creations, Inc. matter.


On June
30, 2006 the Company entered into a settlement agreement with ThorFilms, LLC. as
to claims of each whereby the Company agreed to make payment of $100,000 to
ThorFilms, LLC prior to December 30, 2006. As of the date of this filing the
Company has not made payment under this settlement
agreement.


5


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.


PART
II


ITEM
5.                               MARKET
FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASE OF EQUITY SECURITIES.


The
following table sets forth the range of high and low bid information for the
Common Stock of the Company as reported by the National Quotation Bureau’s Pink Sheets on a quarterly
basis for each of the two preceding fiscal years. The Company's shares have
traded in the over-the-counter market on the OTC market. 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,
markdowns or commissions and may not necessarily represent actual
transactions.


Common
Stock


Fiscal
      2009
            
            High
            
            
            LowFirst
      Quarter
            
            $
            .013
            
            
            $
            .005Second
      Quarter
            
            
            .018
            
            
            
            .006Third
      Quarter
            
            
            .055
            
            
            
            .008Fourth
      Quarter
            
            
            .09
            
            
            
            .05





Fiscal
      2008
            
            High
            
            
            LowFirst
      Quarter
            
            $
            .01
            
            
            $
            .007Second
      Quarter
            
            
            .014
            
            
            
            .007Third
      Quarter
            
            
            .016
            
            
            
            .002Fourth
      Quarter
            
            
            .01
            
            
            
            .002


As of
June 30, 2009, there were approximately 4,271 record holders of the Company's
Common Stock.





In
January, 2009, the Company completed the cancellation of 41,840,469 shares of
its common stock previously held by seven (7) individuals and
companies.    The shares were acquired by the Company for a
total of $105,000 in cash and were cancelled and returned to “authorized but
unissued” status pursuant to a  unanimous consent of the Company’s
Board of Directors and Nevada Law.





Also in
January 2009,  the Company completed the sale of 2,500,000 shares of
the Company’s common stock to Future Vision Consulting, SA for $125,000 in
cash.   Stefan Drakelid,  a member of the Company’s
Board of Directors is a principal of Future Vision Consulting, SA.





As of
June 30, 2009 the Company issued an additional 8,000,000 to Redcliffe Svenska,
S.A which was earlier agreed as reported on Form 8-K January 24,
2007,  to be issued in exchange for satisfaction of $80,000 plus
interest of additional debt owed to it by the Company bringing their total
holdings to 22,000,000 shares.





The
company recorded the surrender of shares for the period ending December 31, 2008
pursuant to that certain settlement agreement with La Jolla Cove Investors, Inc.
as entered into on April 3, 2008 and as earlier reported. In compliance with
that settlement agreement, an earlier issued certificate of 2,500,000 common
shares was returned to the company and promptly retired by the company. This
event was noted in the company's 8-K filing dated January 20, 2009.




On August
15, 2009, subsequent to  the end of the reported period but prior to
the filing of this Report,   The  Company’s Board of
Directors approved the sale of 234,375 shares of the Company’s common stock to
Amarillo Entertainment, Inc. in exchange for the satisfaction of  a
$25,000 promissory note given for advances to and on behalf of the
Company.


6





ITEM
7.                                MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION.


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


Overview


During
all periods included in this Annual Report, the Company has not had significant
operations. As of the date of this report, the Company has had limited ongoing
operations consisting of: selling branding services, web site design and
development services and graphics and online business presentation services to a
limited numbers of companies. These projects are managed by the Company and are
completed using principally third party contract services; and of raising
capital to pay legal fees to settle claims and of expenditures to maintain the
Company in compliance with Securities and Exchange Commission regulations such
as accounting and auditing and other expenditures related to financial
disclosure obligations.


Results
of Operations for years ended June 30, 2009 and 2008


Sales for
the year ended June 30, 2009 were $1,225,300, up from $400,000 for the year
ended June 30, 2008 resulting in Income Before other Income and Taxes of
$323,200 for the period ended June 30, 2009 up from $143,000 the prior
year.    These increases were due primarily to the increased
expansion of the Company’s branding services, website design, development
services and graphic services for the year.


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


Selling,
general and administrative expenses increased to $434,800 for the year period
ended June 30, 2009, from $278,500 for the  prior
year.    The increase was primarily associated with expenses
related to increased sales.


Interest
expense decreased to $181,700 for the year ended June 30, 2008 from $267,600 for
the prior year.   We recognized the full discount as interest
expense in the current period.


The
valuation of derivatives at June 30, 2009 resulted in a $0.00
adjustment  to earnings down from $25,200 for the prior year. This
valuation may vary each reporting period as we adjust it to current fair
value.


Earnings
for the year ended June 30, 2009 were $2,937,800 up from $158,400 for the year
ended June 30, 2008. The Earnings for the current period included an entry for
Excess Carrying Value of Renegotiated Payables of $2,796,300 up from $282,000
for the prior year.   This resulted in Earnings per Share of $.04
for the year ended June 30, 2009, up from Nil for the prior
year.


7


As of
June 30, 2009, the Company had no agreements with sub-distributors relating to
distribution commitments or guarantees that had not been recognized in the
statement of operations.


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




In 2009
and 2008 the Company negotiated revised amounts and terms on a trade payable and
five judgments.  In addition, it wrote off certain accounts payable in
which no attempts at collection had been made or which we had determined were
barred from collection by the Texas, California and New York statute of
limitations.  A summary of the amounts recognized as income from the
discharge of debt is as follows:
  2009
              
              
              2008Excess
      carrying value of settled obligations
              
              $
              1,053,767
              
              
              $
              121,800Related
      accrued interest
              
              
              720,125
              
              
              
              60,000Write
      off of obligations deemed barred by statute of limitations
              
              
              913,680
              
              
              
              101,000Other
              
              
              108,728
              
              
              
              0$
              2,796,300
              
              
              $
              282,800


Liquidity
and Capital Resources


The
Company had Net Cash Generated from Operating Activities of $639,700 after
operating expenses for the year ended June 30, 2009 up from $69,400 for the
prior year. The Company had $2,500.00 in cash as of June 30, 2009.


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





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


Commitments
and Capital Expenditures


The
Company had no material commitments for capital expenditures as of June 30,
2009.


8


Critical
Accounting Policies Involving Management Estimates and Assumptions


Our
discussion and analysis of our financial condition and results of operations is
based on our financial statements. In preparing our financial statements in
conformity with accounting principles generally accepted in the United States of
America, we must make a variety of estimates that affect the reported amounts
and related disclosures.




Revenue Recognition. The
Company Earns revenue under a three year “Branding & Services” Agreement
that  for a monthly licensing fee. Revenue is recognized monthly on a
straight line basis.


Stock Based Compensation. We
will account for employee stock-based compensation costs in accordance with
Statement of Financial Accounting Standards ( SFAS ), No. 123R, Share-Based Payment, which
requires all share-based payments to employees, including grants of employee
stock options, to be recognized in our statements of operations based on their
fair values. We will utilize the Black-Scholes option pricing model to estimate
the fair value of employee stock based compensation at the date of grant, which
requires the input of highly subjective assumptions, including expected
volatility and expected life. Changes in these inputs and assumptions can
materially affect the measure of estimated fair value of our stock-based
compensation.


Use of Estimates. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.


Deferred Tax Valuation
Allowance.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount more
likely than not to be realized. Income tax expense is the total of tax payable
for the period and the change during the period in deferred tax assets and
liabilities.


Accounting For Obligations And
Instruments Potentially To Be Settled In The Company s Own Stock: We
account for obligations and instruments potentially to be settled in the Company
s stock in accordance with EITF Issue No. 00-19, Accounting for Derivative Financial
Instruments Indexed To, and Potentially Settled In a Company s Own Stock.
This issue addresses the initial balance sheet classification and measurement of
contracts that are indexed to, and potentially settled in, the Company's own
stock.


Off-Balance
Sheet Arrangements


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





9





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. The accompanying consolidated financial statements have
been prepared assuming that the Company will continue as a going concern and,
therefore, has the ability to manage the recovery of its assets and satisfy its
liabilities in the normal course of its continued operation.


ITEM
9.                                CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.


None


ITEM
9A(T).                 
     CONTROLS AND PROCEDURES


EVALUATION
OF DISCLOSURE CONTROLS AND PROCEDURES


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


Our
management has evaluated the effectiveness of our disclosure controls and
procedures as of June 30, 2009 (under the supervision and with the participation
of the Chief Executive Officer and the Principal Accounting Officer), pursuant
to Rule13a-15(b) promulgated under the Exchange Act. As part of such evaluation,
management considered the matters discussed below relating to internal control
over financial reporting. Based on this evaluation, our Company's Chief
Executive Officer and Principal Accounting Officer have concluded that our
Company's disclosure controls and procedures were not effective as of June 30,
2009 due to the failure to file complete and timely reports with the Securities
and Exchange Commission. Management with the assistance of its Securities
Counsel will closely monitor all future filings to ensure completeness of all
company filings.


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


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


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




10


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


MANAGEMENT'SANNUAL
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rule 13a-15(f) under the
Exchange Act). Our internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Therefore, even those systems
determined to be effective can provide only reasonable assurance of achieving
their control objectives.


Our
management, with the participation of the Chief Executive Officer, evaluated the
effectiveness of the Company's internal control over financial reporting as of
June 30, 2009. In making this assessment, our management used the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission
("COSO") in Internal Control -- Integrated Framework. Based on this evaluation,
our Company's Chief Executive Officer and Principal Accounting Officer have
concluded that our Company's disclosure controls and procedures were not
effective as of June 30, 2009 due to the following:


Company's
disclosure controls and procedures were not effective as of June 30, 2009 due to
the failure to file complete and timely reports with the Securities and Exchange
Commission.


This
Annual Report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permits us to provide only management's report in this
annual report.


CHANGES
IN INTERNAL CONTROLS OVER FINANCIAL REPORTING


In
connection with the evaluation of the Company's internal controls during the
Company’s last fiscal year, the Company's Principal Executive Officer and
Principal Accounting Officer have determined that there are no changes to the
Company's internal controls over financial reporting that have materially
affected, or are reasonably likely to materially effect, the Company's internal
controls over financial reporting.


INHERENT
LIMITATIONS ON EFFECTIVENESS OF CONTROLS


The
Company's management does not expect that its disclosure controls or its
internal control over financial reporting will prevent or detect all error and
all fraud. A control system, no matter how well designed and operated, can
provide only reasonable, not absolute, assurance that the control system's
objectives will be met. The design of a control system must reflect the fact
that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Further, because of the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance
that misstatements due to error or fraud will not occur or that all control
issues and instances of fraud, if any, within the Company have been detected.
These inherent limitations include the realities that judgments in decision
making can be faulty and that breakdowns can occur because of simple error or
mistake. Controls can also be circumvented by the individual acts of some
persons, by collusion of two or more people, or management override of the
controls. The design of any system of controls is based in part on certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions. Projections of any evaluation of controls effectiveness to
future periods are subject to risks. Over time, controls may become inadequate
because of changes in conditions or deterioration in the degree of compliance
with policies or procedures.


11
  PART
III





ITEM
10.                             DIRECTORS
AND EXECUTIVE OFFICERS OF THE REGISTRANT.


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





Name
            
            Age
            
            PositionJohn
      W. Foster
            
            56
            
            Director,
      Chairman of the Board and CEO/PresidentDan
      Persson
            
            70
            
            DirectorStefan
      Drakelid
            
            56
            
            DirectorFrank
      Saran
            
            53
            
            Director





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


Mr. 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
investments 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 that time. His contract was extended and he is currently serving as
Chairman, President and CEO of the Company during the reported
period.


Mr. Dan
Persson holds an MBA in Economics from the Gothenburg School of Economics and
has practiced as a Certified Public Accountant.


Mr.
Stefan Drakelid holds an LL.M. degree from the University of Lund, Sweden. He
has specialized in economics, taxation law and legal issues relating to
entertainment since 1981, acting as consultant and co-partner/investor in
Scandinavia, Great Britain and the United States. He is a founder of TNO
Group.


Mr. Frank
Saran received a BS degree in Business in 1979 from Eastern Illinois
University.  He was previously with Merrill Lynch and subsequently
Shearson, Lehman.  He has been an investor in media related companies
and has known and worked in various outside consulting and advisory capacities
since 1990.


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,
2008, the Company's officers, directors and greater than10% stockholders did not
comply with filing requirements under section16(a) except for disclosure
provided in the Company’s 10-K.


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
only compensated executive officer as of June 30, 2009. Other significant
employees would not be required to be included in the table due to the fact that
such employees were not executive officers of the Company at the end of the most
recently completed fiscal year:


12


Annual
      Compensation
                
                
                PayoutsName
      and
                  Principal
      Position
                
                Fiscal
                  Year
                
                
                Salary
                
                
                Bonus
                
                
                Other
                  Annual
                  Compensation
                
                
                Underlying
                  Options
                
                
                All
      Other
                  CompensationJohn
      W. Foster,
                
                
                2008
                *
                
                
                
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --President/CEO
                
                
                2009
                
                
                $
                142,000


*Mr.
Foster has waived salary from July 1, 2007 to December 31, 2007.


Options/Stock
Appreciation Rights:


There
were no stock options and stock appreciation rights ("SARs") granted to
executive officers during the fiscal year ended June 30, 2009 or in
2008.


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 of  2009
or fiscal 2008.
  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. There have been no distributions of Stock to the
Board Members as of the end of June 30, 2008 and the same period ending June 30,
2009.


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


As of
July of 2001, Mr. Foster served as President and was voted as Chairman and CEO
by the Board of Directors. He received a pay increase to $14,700 per month and
his contract was extended through June 30, 2002, with a 5% increase beginning
July 1, 2002 and each year thereafter. A portion Mr. Foster's salary has gone
unpaid and remains payable by the Company as of the end of June 30, 2008 and
2009.


ITEM
12.                             SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.


The
following table sets forth information concerning ownership of common stock, as
of June 30, 2009, 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.


Shares
            
            PercentageName of beneficial owner
            
            Status
            
            Beneficially
            
            of ClassJohn
      W. Foster
            
            Director,
      President CEO
            
            2,000
            
            Less
      than 1%Stefan
      Drakelid
            
            Director
            
            2,500,000
            
            3.69%Redcliffe
      Svenska, SA
            
            5%
      holder
            
            22,000,000
            
            32.47%2,670,000*
            
            3.94%All
      Executive Officers & DirectorsAnd
      Affiliates
            
            
            
            
            
            40.1%


*warrants
to purchase common stock held by Redcliffe Svenska, SA





ITEM
13.                             CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS.


In
January 2009,  the Company completed the sale of 2,500,000 shares of
the Company’s common stock to Future Vision Consulting, SA for $125,000 in
cash.   Stefan Drakelid,  a member of the Company’s
Board of Directors, is a principal of Future Vision Consulting,
SA.


13




The Board
of  Directors of the Company on June 15, 2009 approved the sale of
670,000 shares of the Company’s common stock to Redcliffe Svenska,
SA.   These shares were sold in exchange for the
settlement  of $134,000 in debt represented by cash advances from
Redcliffe Svenska SA  in addition to the waiver of any and all
outstanding interest owed to them by the Company for this debt as well as any
and all outstanding interest owed on an additional debt of $80,000 which was
earlier converted into shares.  As of the date of this
filing,  this transaction had not yet been completed.  At
the time of this transaction Redcliffe Svenska, S.A. held 22,000,000 shares of
the company’s common stock.


ITEM
14.                              PRINCIPAL
ACCOUNTANT FEEES AND SERVICES


(1)    Audit
Fees:  The Company’s principal accountant has billed for Audit
services $9,500 for the Year ended 2009 and $9,500 for the Year ended
2008.


(2)    Audit
Related Fees:        None





(3)    Tax
Fees:                          None





(4)    All
Other
Fees:                None





PART
IV





ITEM
15.                              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 1995Private 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 April1995
      (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)





14





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, Suite104, 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 March2, 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)


31.1
            Officer's
      Certification Pursuant to Section 302
(14)


32.1
            Certification
      Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002 (14)


15


Odyssey Pictures CorporationBalance
      SheetAssets
            
            June
      30, 2009
            
            
            June
      30, 2008Current
      AssetsCash
      & cash equivalent's
            
            $
            2,500
            
            
            $
            0Accounts
      receivable
            
            
            0
            
            
            
            0Total
      current assets
            
            
            2,500
            
            
            
            0Intangible
      assets, net
            
            
            6,500
            
            
            
            6,500Other
            
            
            2,600
            
            
            
            0Total
      assets
            
            $
            11,600
            
            
            $
            6,500Liabilities
      and Stockholders' DeficiencyCurrent
      Liabilities:Accounts
      payable
            
            $
            166,500
            
            
            $
            933,900Accounts
      payable-related parties
            
            
            401,400
            
            
            
            468,200Accrued
      interest
            
            
            716,900
            
            
            
            1,281,100Other
      accrued expenses
            
            
            761,300
            
            
            
            999,100Legal
      settlements & judgments
            
            
            324,900
            
            
            
            1,532,100Convertible
      Debt obligations
            
            
            0
            
            
            
            80,000Debt
      obligations in default
            
            
            755,500
            
            
            
            1,243,400Derivative
      liability
            
            
            0
            
            
            
            17,400Deferred
      income
            
            
            445,000
            
            
            
            0Total
      current liabilities
            
            
            3,571,500
            
            
            
            6,555,200Related
      parties
            
            
            156,100
            
            
            
            156,100Reserve
      for loss contingencies
            
            
            110,000
            
            
            
            150,000Stockholders'
      Deficiency:common
      stock-110,000,000 authorized $0.01 par value65,081,013
      issued & outstanding (99,471,482 in 2008)
            
            
            650,800
            
            
            
            994,700Additional
      paid in capital
            
            
            38,482,100
            
            
            
            38,047,200Accumulated
      deficit
            
            
            (42,958,900
            )
            
            
            (45,896,700
            )Total
      Stockholders' Deficiency
            
            
            (3,826,000
            )
            
            
            (6,854,800
            )Total
      Liabilities and Stockholders' Deficiency
            
            $
            11,600
            
            
            $
            6,500See
      Summary of Significant Accounting Policies and Notes to Financial
      Statements.







16









Odyssey
      Pictures CorporationStatement
      of OperationsYears
      Ended June 30,2009
            
            
            2008Net
      Sales of services
            
            $
            1,225,300
            
            
            $
            400,000Costs
      Applicable to Sales & Revenue
            
            
            359,800
            
            
            
            (2,900
            )Gross
      Profit
            
            
            865,500
            
            
            
            402,900Selling,
      General & Administrative Expenses
            
            
            434,900
            
            
            
            278,500Settlements,
      net
            
            
            107,400
            
            
            
            6,400Derivative
      valuation charges
            
            
            0
            
            
            
            (25,200
            )Total
      Operating Expenses
            
            
            542,300
            
            
            
            259,700Income
      (Loss) Before Other Income & Income Taxes
            
            
            323,200
            
            
            
            143,200Other
      Income (Expense)Debt
      forgiveness
            
            
            2,796,300
            
            
            
            282,800Interest
      (Expense)
            
            
            (181,700
            )
            
            
            (267,600
            )Income
      (Loss) Before Income Taxes
            
            
            2,937,800
            
            
            
            158,400Income
      Taxes
            
            
            0
            
            
            
            0Net
      Income(Loss) available to common shareholders
            
            $
            2,937,800
            
            
            $
            158,400Basic
      and Diluted Net Income Per Common Share
            
            $
            0.04
            
            
            NilWeighted
      Average Common Shares Outstanding (Basic)
            
            
            79,671,688
            
            
            
            99,471,482See
      Summary of Significant Accounting Policies and Notes to Financial
      Statements.





17






Odyssey
      Pictures CorporationStatement
      of Cash FlowsYear
      Ended June 30,2009
            
            
            2008Cash
      Flows from Operating Activities:Net
      Income
            
            $
            2,937,800
            
            
            $
            158,400Adjustments
      required to reconcile net loss to cash flowsfrom
      operating activities:Debt
      forgiveness
            
            
            (2,796,300
            )
            
            
            (384,700
            )Fair
      value of services provided without cost
            
            
            0
            
            
            
            36,000Increase
      in contingency reserve
            
            
            0
            
            
            
            82,600Change
      in value of derivatives
            
            
            0
            
            
            
            (25,200
            )Changes
      in Operating Assets & Liabilities:Increase
      in deferred income
            
            
            445,000
            
            
            
            0Increase
      in payables to affiliates
            
            
            (66,800
            )
            
            
            13,900Accounts
      Payable & Other
            
            
            120,000
            
            
            
            184,400Net
      cash generated by operating activities
            
            
            639,700
            
            
            
            65,400Cash
      Flows from Investing Activities:Increase
      in security deposits
            
            
            (2,600
            )
            
            
            0Net
      cash used by investing activities
            
            
            (2,600
            )
            
            
            0Cash
      Flows from Financing Activities:Proceeds
      from sale of common stock
            
            
            125,000
            
            
            
            0Acquisition
      of treasury stock
            
            
            (105,000
            )Loan
      proceeds
            
            
            0
            
            
            
            11,000Payments
      made on long term debt
            
            
            (43,000
            )
            
            
            (37,000
            )Payments
      made on settlements & judgments
            
            
            (611,600
            )
            
            
            (39,400
            )Net
      cash used by financing activities
            
            
            (634,600
            )
            
            
            (65,400
            )Net
      Change In Cash
            
            
            2,500
            
            
            
            0Cash-Beginning
            
            
            0
            
            
            
            0Cash-Ending
            
            $
            2,500
            
            
            $
            0See
      Summary of Significant Accounting Policies and Notes to Financial
      Statements.




18







Odyssey
      Pictures CorporationStatement
      of Stockholders' DeficiencyStockholders'
      DeficiencyCommon
      StockShares
            
            
            Common
      Stock Amount
            
            
            Additional
              Paid-In
              Capital
            
            
            Accumulated
              Deficit
            
            
            TotalBalance
      at June 30, 2007
            
            
            99,471,482
            
            
            $
            994,700
            
            
            $
            38,011,200
            
            
            $
            (46,055,100
            )
            
            $
            (7,049,200
            )Fair
      value of services provided without cost
            
            
            
            
            
            
            
            
            
            
            36,000
            
            
            
            
            
            
            
            36,000Net
      Loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            158,400
            
            
            
            158,400Balance
      at June 30, 2008
            
            
            99,471,482
            
            
            $
            994,700
            
            
            $
            38,047,200
            
            
            $
            (45,896,700
            )
            
            $
            (6,854,800
            )Acquisition
      & retirement of treasury stock
            
            
            (41,840,469
            )
            
            
            (418,400
            )
            
            
            313,400
            
            
            
            
            
            
            
            (105,000
            )Fair
      value of stock returned as part of settlement agreements
            
            
            (3,050,000
            )
            
            
            (30,500
            )
            
            
            (22,000
            )
            
            
            
            
            
            
            (52,500
            )Stock
      issued for cash
            
            
            2,500,000
            
            
            
            25,000
            
            
            
            100,000
            
            
            
            
            
            
            
            125,000Derivatives
      reclassified as permanent equity
            
            
            
            
            
            
            
            
            
            
            17,400
            
            
            
            
            
            
            
            17,400Fair
      value of other warrants issued
            
            
            
            
            
            
            
            
            
            
            26,100
            
            
            
            
            
            
            
            26,100Stock
      issued to Redcliffe upon conversion of debt
            
            
            8,000,000
            
            
            
            80,000
            
            
            
            
            
            
            
            
            
            
            
            80,000Net
      Loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2,937,800
            
            
            
            2,937,800Balance
      at March 31, 2009
            
            
            65,081,013
            
            
            $
            650,800
            
            
            $
            38,482,100
            
            
            $
            (42,958,900
            )
            
            $
            (3,826,000
            )See
      Summary of Significant Accounting Policies and Notes to Financial
      Statements.









19


ODYSSEY
PICTURES CORPORATION




BACKGROUND
AND


SIGNIFICANT
ACCOUNTING POLICIES


June
30, 2009






The
Company




Organizational
Background: 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. The Company has been engaged to operate in the multi-media
industry, specifically, in connection with the services of branding, marketing
and development of digital media distribution.





Significant
Accounting Policies




Use of
EstimatesThe preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statement and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from the estimates.




Reclassification:Certain
reclassifications have been made to prior year amounts to conform to the current
period presentation.




Cash and
Cash Equivalents:For financial statement presentation purposes, the Company considers
those short-term, highly liquid investments with original maturities of three
months or less to be cash or cash equivalents.




Property
and Equipment  New property and equipment are recorded at cost.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets, generally 5 years. Expenditures for renewals and
betterments are capitalized. Expenditures for minor items, repairs and
maintenance are charged to operations as incurred. Gain or loss upon sale or
retirement due to obsolescence is reflected in the operating results in the
period the event takes place.




Valuation
of Long-Lived Assets: We review the
recoverability of our long-lived assets including equipment, goodwill and other
intangible assets, when events or changes in circumstances occur that indicate
that the carrying value of the asset may not be recoverable. The assessment of
possible impairment is based on our ability to recover the carrying value of the
asset from the expected future pre-tax cash flows (undiscounted and without
interest charges) of the related operations. If these cash flows are less than
the carrying value of such asset, an impairment loss is recognized for the
difference between estimated fair value and carrying value. Our primary measure
of fair value is based on discounted cash flows. The measurement of impairment
requires management to make estimates of these cash flows related to long-lived
assets, as well as other fair value determinations.




Stock
Based Compensation:Stock-based awards to
non-employees are accounted for using the fair value method in accordance with
SFAS No. 123R, Accounting
for Stock-Based Compensation, and EITF Issue No. 96-18, Accounting for Equity Instruments
that are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling Goods or Services.




On
January 1, 2006, we adopted the provisions of Statement of Financial Accounting
Standards (“SFAS”) 123R, “Share-Based Payment” (“SFAS 123(R)”), which requires
that companies measure and recognize compensation expense at an amount equal to
the fair value of share-based payments granted under compensation arrangements.
Prior to January 1, 2006, we accounted for our stock-based compensation plans
under the recognition and measurement principles of Accounting Principles Board
(“APB”) Opinion 25, “Accounting for Stock Issued to Employees,” and related
interpretations, and would typically recognize no compensation expense for stock
option grants if options granted had an exercise price equal to the market value
of the underlying common stock on the date of grant.




F-1





We
adopted SFAS 123(R) using the “modified prospective” method, which results in no
restatement of prior period amounts. Under this method, the provisions of SFAS
123(R) apply to all awards granted or modified after the date of adoption. In
addition, compensation expense must be recognized for any unvested stock option
awards outstanding as of the date of adoption on a straight-line basis over the
remaining vesting period. We calculate the fair value of options using a
Black-Scholes option pricing model. We do not currently have any outstanding
options subject to future vesting. SFAS 123(R) also requires the benefits of tax
deductions in excess of recognized compensation expense to be reported in the
Statement of Cash Flows as a financing cash inflow rather than an operating cash
inflow. In addition, SFAS 123(R) required a modification to the Company’s
calculation of the dilutive effect of stock option awards on earnings per share.
For companies that adopt SFAS 123(R) using the “modified prospective” method,
disclosure of pro forma information for periods prior to adoption must continue
to be made.




Accounting
For Obligations And Instruments Potentially To Be Settled In The Company’s Own
Stock: We account for obligations and instruments potentially to be
settled in the Company’s stock in accordance with EITF Issue No. 00-19, Accounting for Derivative Financial
Instruments Indexed To, and Potentially Settled In a Company’s Own Stock.
This issue addresses the initial balance sheet classification and measurement of
contracts that are indexed to, and potentially settled in, the Company’s own
stock.




Fair
Value Accounting:On July 1, 2008, we
adopted Statement of Financial Accounting Standards No. 157, Fair Value
Measurements (“SFAS 157”) (as amended by FSP No. 157-2), which
defines fair value, establishes guidelines for measuring fair value and expands
disclosures regarding fair value measurements.  SFAS 157 does not require
any new fair value measurements, and has been partially deferred for
non-financial assets and non-financial liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually), until our fiscal year beginning July 1, 2009, and
interim periods within those fiscal years. The partial adoption of SFAS 157 for
financial assets and liabilities did not have a material impact on our
consolidated financial position, results of operations or cash
flows.




In addition, on July 1, 2008, we
adopted Statement of Financial Accounting Standards No. 159,The Fair
Value Option for Financial Assets and Financial Liabilities(“SFAS 159”).  Under SFAS 159,
companies may elect to measure certain financial instruments and certain other
items at fair value.  The standard requires that unrealized gains and
losses on items for which the fair value option has been elected be reported in
earnings.  We did not elect to use the fair value option.  Therefore,
the adoption of SFAS 159 did not impact our consolidated financial position,
results of operations or cash flows.




Fair
Value of Financial Instruments: Statements of Financial
Accounting Standards No. 107, "Disclosures about Fair Value of Financial
Instruments," requires disclosure of fair value information about financial
instruments. Fair value estimates discussed herein are based upon certain market
assumptions and pertinent information available to management as of June 30,
2009. The respective carrying value of certain on-balance sheet financial
instruments approximated their fair values.




These
financial instruments include cash and cash equivalents, accounts payable and
accrued expenses. Fair values were assumed to approximate carrying values for
these financial instruments since they are short-term in nature and their
carrying amounts approximate fair values or they are receivable or payable on
demand.




Revenue
Recognition: We earn revenue under a three year “Branding & Services”
agreement that provides for a monthly licensing fee. Revenue is recognized
monthly on a straight line basis over the term of the agreement.




Earnings
per Common Share: Basic net loss per share is
computed using the weighted average number of common shares outstanding during
the period. Diluted net loss per common share is computed using the weighted
average number of common and dilutive equivalent shares outstanding during the
period. Dilutive common equivalent shares consist of options to purchase common
stock (only if those options are exercisable and at prices below the average
share price for the period) and shares issueable upon the conversion of our
convertible debt. In loss years dilutive common equivalent shares are excluded
from the computation of diluted loss per share, as inclusion would be
anti-dilutive for the periods presented. Fully diluted earning per share for the
year ended June 30, 2009  was $.04 and was calculated as
follows:


F-2







Basic
      EPS:net
      income from continuing operations
            
            
            2,937,800numerator-diluted
      eps-no adjustments required
            
            
            2,937,800denominator-Basic
      EPS-Weighted average common shares outstanding (1)
            
            
            79,671,688"in
      the money" call options & warrants
            
            
            453,700denominator-diluted
      EPS
            
            
            80,125,388common
      shares not included in diluted eps because their impact would
      beantidilutive
      based on current market prices for our common stock
            
            
            2,400,000(1)
      basic shares includes contingent shares when contingency has been met
      except for nominal consideration





Income
Taxes:We
must make certain estimates and judgments in determining income tax expense for
financial statement purposes. These estimates and judgments occur in the
calculation of certain tax assets and liabilities, which arise from differences
in the timing of recognition of revenue and expense for tax and financial
statement purposes.




Deferred
income taxes are recorded in accordance with SFAS No. 109, “Accounting for Income Taxes,”
or SFAS 109. Under SFAS No. 109, deferred tax assets and liabilities are
determined based on the differences between financial reporting and the tax
basis of assets and liabilities using the tax rates and laws in effect when the
differences are expected to reverse. SFAS 109 provides for the recognition of
deferred tax assets if realization of such assets is more likely than not to
occur. Realization of our net deferred tax assets is dependent upon our
generating sufficient taxable income in future years in appropriate tax
jurisdictions to realize benefit from the reversal of temporary differences and
from net operating loss, or NOL, carryforwards. We have determined it more
likely than not that these timing differences will not materialize and have
provided a valuation allowance against substantially all of our net deferred tax
asset. Management will continue to evaluate the realizability of the deferred
tax asset and its related valuation allowance. If our assessment of the deferred
tax assets or the corresponding valuation allowance were to change, we would
record the related adjustment to income during the period in which we make the
determination. Our tax rate may also vary based on our results and the mix of
income or loss in domestic and foreign tax jurisdictions in which we
operate.




In
addition, the calculation of our tax liabilities involves dealing with
uncertainties in the application of complex tax regulations. We recognize
liabilities for anticipated tax audit issues in the U.S. and other tax
jurisdictions based on our estimate of whether, and to the extent to which,
additional taxes will be due. If we ultimately determine that payment of these
amounts is unnecessary, we will reverse the liability and recognize a tax
benefit during the period in which we determine that the liability is no longer
necessary. We will record an additional charge in our provision for taxes in the
period in which we determine that the recorded tax liability is less than we
expect the ultimate assessment to be.




The
Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," ("SFAS 109") which
requires recognition of estimated income taxes payable or refundable on income
tax returns for the current year and for the estimated future tax effect
attributable to temporary differences and carry-forwards. Measurement of
deferred income tax is based on enacted tax laws including tax rates, with the
measurement of deferred income tax assets being reduced by available tax
benefits not expected to be realized.




F-3


Uncertain Tax
Positions




The
Financial Accounting Standards Board issued Interpretation No. 48, “Accounting
for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109,
Accounting for Income Taxes” (“FIN No. 48”) which was effective for the Company
on July 1, 2007.  FIN No. 48 addresses the determination of whether
tax benefits claimed or expected to be claimed on a tax return should be
recorded in the financial statements.  Under FIN No. 48, the Company
may recognize the tax benefit from an uncertain tax position only if it is more
likely than not that the tax position will be sustained on examination by the
taxing authorities based on the technical merits of the position.  The
tax benefits recognized in the financial statements from such position should be
measured based on the largest benefit that has a greater than fifty percent
likelihood of being realized upon ultimate settlement.  FIN No. 48
also provides guidance on derecognition, classification, interest and penalties,
accounting in interim periods and disclosure requirements.




We file a
federal and state income tax return. The Company’s federal and state income tax
returns are open for audit by either federal or state agencies for fiscal years
ending on or after June 30, 1993. Management of the Company is not aware of any
additional needed liability for unrecognized tax benefits at June 30, 2009 and
June 30, 2008.





Contingent
Liabilities




We are
subject to lawsuits, investigations and other claims related to operations,
securities, product, taxing authorities and other matters, and are required to
assess the likelihood of any adverse judgments or outcomes to these matters, as
well as potential ranges of probable losses and fees.





A
determination of the amount of reserves and disclosures required, if any, for
these contingencies are made after considerable analysis of each individual
issue. We accrue for contingent liabilities when an assessment of the risk of
loss is probable and can be reasonably estimated. We disclose contingent
liabilities when the risk of loss is reasonably possible or
probable.




Our
contingent liabilities contain uncertainties because the eventual outcome will
result from future events, and determination of current reserves requires
estimates and judgments related to future changes in facts and circumstances,
differing interpretations of the law and assessments of the amount of damages or
fees, and the effectiveness of strategies or other factors beyond our
control.




We have
not made any material changes in the accounting methodology used to establish
our contingent liabilities during the past three fiscal years.





We do not
believe there is a reasonable likelihood there will be a material change in the
estimates or assumptions used to calculate our contingent liabilities. However,
if actual results are not consistent with our estimates or assumptions, we may
be exposed to gains or losses that could be material.


F-4
  Recent
Accounting Pronouncements




In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.”  SFAS 162 identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States.  SFAS 162 is effective 60 days following the SEC’s
approval of the Public Company Accounting Oversight Board amendments to AU
Section 411, The Meaning of
Present Fairly in Conformity With Generally Accepted Accounting
Principles.  Our Company is currently evaluating the impact of
SFAS 162 on its financial statements but does not expect it to have a material
effect.





In June
2009, the FASB issued SFAS No. 168, The FASB Accounting Standards
CodificationTM and
the Hierarchy of Generally Accepted Accounting Principles (“SFAS 168”). SFAS 168
establishes the FASB Accounting Standards CodificationTM (the
“Codification”) as the single source of authoritative U.S. GAAP recognized by
the FASB to be applied by nongovernmental entities. Rules and interpretive
releases of the SEC under authority of federal securities laws are also sources
of authoritative U.S. GAAP for SEC registrants. When effective, the Codification
will supersede all existing non-SEC accounting and reporting standards. All
other non-grandfathered non-SEC accounting literature not included in the
Codification will become non-authoritative. Following SFAS 168, the FASB will
not issue new standards in the form of Statements, FASB Staff Positions, or
Emerging Issues Task Force Abstracts. Instead, the FASB will issue Accounting
Standards Updates, which will serve only to: (a) update the Codification; (b)
provide background information about the guidance; and (c) provide the bases for
conclusions on the change(s) in the Codification. SFAS 168 and the Codification
are effective for financial statements issued for interim and annual periods
ending after September 15, 2009. The Company has evaluated this new statement
and has determined that it will not have a significant impact on the
determination or reporting of its financial results.





In May
2009, the FASB issued SFAS No. 165, Subsequent Events
("SFAS 165"). SFAS 165 establishes guidance related to accounting for
and disclosure of events that happen after the date of the balance sheet but
before the release of the financial statements. SFAS 165 is effective for
reporting periods ending after June 15, 2009. The Company adopted
SFAS 165 on June 30, 2009. SFAS 165 affects disclosures only.





Management
does not anticipate that the adoption of these standards will have a material
impact on the financial statements.






F-5







ODYSSEY
PICTURES CORPORATION




NOTES TO
FINANCIAL STATEMENTS


June
30, 2009











1.
Notes and Loans Payable:




During
2008, the Company received several loans for overhead expenses  from a
series of  private lenders,  totaling $11,000. These loans all were
made on a short-term 8% interest-bearing basis.




Convertible
Debt




In
January, 2007 we issued a $220,000 convertible promissory note. The note bears
interest at 6% per annum until paid or converted.  The initial
conversion rate is $0.01 per share (subject to standard anti-dilution
provisions). The convertible note matured on June, 2007.




The
convertible debt securities were issued with a non-detachable conversion feature
and 2,000,000 detachable warrants. We evaluate and account for such securities
in accordance with EITF Issue Nos. 98-5, 00-19, 00-27, 05-02, 05-04 and 05-08,
and SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities as amended.




In
accordance SFAS No. 133, we evaluate that the holder's conversion right
provision, interest rate adjustment provision, liquidated damages clause, cash
premium option (if applicable), and the redemption option (collectively, the
debt features) contained in the terms governing the Notes to determine whether
they are or are not clearly and closely related to the characteristics of the
note. Accordingly, if the features qualify as embedded derivative
instruments at issuance and, furthermore if they do or do not qualify for any
scope exception within SFAS No. 133 (paragraphs 12-32), then they are
required by SFAS No. 133 to be accounted for separately from the debt
instrument and recorded as derivative financial instruments.




The note
is convertible at the option of the holder at any time and from time to time
into Common Stock of the Company at an initial conversion price of $0.01 per
share, subject to standard anti-dilution adjustments.




The
2,000,000 warrants permit the purchasers to purchase 2,000,000 shares of common
stock at an initial exercise price of $0.06 per share and are exercisable from
January, 2007 until January, 2010. They contain standard anti-dilution
provisions similar to the convertible debt.




The
values ascribed to the note, the conversion feature of the note, other potential
embedded derivative features, and detachable warrants follow the guidance of
EITF Issue No. 00-19,Accounting for Derivative Financial Instruments Indexed to, and Potentially
Settled in, a Company's Own Stock  ; SFAS No. 150,Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity
; and EITF Issue No. 00-27, Application of Issue No. 98-5
to Certain Convertible Instruments.




In
accordance with the FASB Emerging Issues Task Force ("EITF") Issue No. 98-5
"Accounting for Convertible Securities with Beneficial Conversion Features or
Contingently Adjustable Conversion Ratios" and EITF Issue No. 00-27
"Application of Issue No. 98-5 to Certain Convertible Instruments," we
determined that the convertible note contains an embedded beneficial conversion
feature resulting in a discount to the carrying amount of the note equal
to:




(i)
            the
      difference between the effective conversion rate and the market price of
      our common stock on the date of issuance; multiplied
  by







(ii)
            the
      number of shares into which the Notes are convertible. Per EITF Issue
      No. 98-5 and EITF Issue No. 00-27, upon issuance we recorded a
      $211,952 discount to the convertible
Notes.




For
convertible debt securities, any recorded discount resulting from the allocation
of proceeds to the beneficial conversion feature should be recognized as
interest expense over the minimum period from the date of issuance to the date
of maturity using the effective yield method.




The
Company used the Black-Scholes option pricing model in valuing the detachable
warrants. The inputs for the valuation analysis of the warrants include the
market value of the Company's common stock, the estimated volatility of the
Company's common stock, the exercise price of the warrants and the risk free
interest rate. The key inputs for the valuation analysis in January, 2007 were a
volatility of 100%, common stock value of $0.02 and a risk free interest rate of
4.4%. In accordance with EITF 98-5, the Company recorded the warrants as a debt
discount and a derivative liability for their relative fair value of
$8,048.




The note
was considered to have an embedded beneficial conversion feature because the
effective conversion price was less than the quoted market price at the time of
the issuance. The Company allocated the proceeds of the debt between the
warrants and the debt based on relative fair values which amounted to $ 8,048
and $211,952 respectively. The beneficial conversion feature of $211,952 was
recorded separately based on the intrinsic value method per EITF 98-5. The
intrinsic value of the beneficial conversion feature exceeds the proceeds
allocable to the convertible debt therefore, the amount of the discount assigned
to the beneficial conversion feature was limited to the amount of the proceeds
allocable to the convertible debt.


F-6


The
aggregate discount of $220,000 was amortized immediately to interest expense due
to the conversion of $140,000 of the debt which occurred in 2007.




2.
Income Taxes:




We have
adopted SFAS 109 which provides for the recognition of a deferred tax asset
based upon the value the loss carry-forwards will have to reduce future income
taxes and management's estimate of the probability of the realization of these
tax benefits.




We have a
current operating loss carry-forward of $ 39,470,000. We have determined it more
likely than not that these timing differences will not materialize and have
provided a valuation allowance against substantially all our net deferred tax
asset.




Future
utilization of currently generated federal and state NOL and tax credit carry
forwards may be subject to a substantial annual limitation due to the ownership
change limitations provided by the Internal Revenue Code of 1986, as amended and
similar state provisions. The annual limitation may result in the expiration of
NOL and tax credit carry forwards before full utilization.




The
Company is not under examination by any jurisdiction for any tax year. At
June 30, 2009 and 2008, the Company had no material unrecognized tax
benefits and no adjustments to liabilities or operations were required under
FIN 48.




3.
Commitments:





Leases




The
Company leases its office space on a month-to-month basis. Rent expense was
$22,900 and $17,800 for the years ended June 30, 2009 and 2008 respectively.
Rent expense is recognized on a straight-line basis over the respective lease
terms. Future minimum lease payments are as follows:




2010
            
            $
            30,9232011
            
            
            30,9232012
            
            
            30,9232013
            
            
            23,192$
            115,961




Employment
Agreements




As of
July of  2001,  Mr.  Foster served as President  and
was  voted as  Chairman  and CEO by the  Board of 
Directors.  He received a pay increase to $14,700  per month
and his  contract  was  extended through June 30, 2002, with a 5%
increase beginning July 1, 2002 through to June 30,  2003 and each year
thereafter.   From the years, 2004 through 2006, Mr.
Foster's salary has principally gone unpaid and remains payable by the
Company as of the end of June 30, 2008 and 2007.  Approximately
$100,000 of his salary was waived in calendar 2007, to which a fair market value
of $36,000 was expensed by the Company. Beginning January 2008 Mr. Faster’s
salary was readjusted at a rate of $6,850 monthly, and then again adjusted in
July of 2008 to $12,543 monthly where it presently remains. He also receives a
medical and life insurance allowance.  Mr. Foster is currently owed
$759,918 under this agreement.


F-7


Settlements
& Judgments




Material
Items are as follows:




In 2003
the holders of  convertible promissory notes (LaJolla), and certain
Directors individually (but for the benefit of the Company) entered into a put
and call agreement whereby the Directors agreed to acquire any or all shares
acquired by LaJolla upon the conversion of the underlying debt at a price then
to be determined based upon a stipulated formula.  Based upon defaults
in this put and call agreement LaJolla brought suit against the individual
Directors and obtained a judgment against the individual directors, which
judgment was later paid.   In 2007 LaJolla filed an action in the
Superior Court of the State of California, County of San Diego upon defaults of
subsequent put and call agreements which were entered into based upon subsequent
advances. The parties, including the Company, entered into a Settlement
Agreement on these subsequent claims and Mutual Release dated April 3, 2008
whereby all claims between the parties including the judgment and the
convertible promissory notes would be settled and the parties released upon the
payment of $236,470 to LaJolla. The payments are to be made in six equal
installments commencing April 30, 2008.  The 2,500,000 shares of the
Company ‘s stock obtained by LaJolla were returned and cancelled.  As
of June 30, 2009, five payments have been made as scheduled.




Reserve
for Contingencies




We assess our exposures to losscontingencies including legal and other matters and we record
accruals for such contingencies if it is judged to be probable and reasonably
estimable. The legal proceedings are complex in nature and have outcomes that
are difficult to predict.  If the actual loss from a contingency
differs from our estimate, there could be a material impact on our results of
operations or financial position. Operating expenses associated withcontingencies are expensed when incurred.




Currently
two such proceedings have been identified and reserved. The Company has
determined that losses related to these proceedings is probable and has reserved
for the estimated amounts of losses and related legal expenses. Judgments that
have been finalized and awarded are reclassified to “Judgments and settlements”
on the balance sheet. We settled a dispute with Matheson in 2009 for $40,000 and
have reclassified this amount from our current reserve estimate.




Discharge
of Debt




In 2009
and 2008 we wrote off certain accounts payable in which no attempts at
collection had been made or which we had determined were barred from collection
by the Texas, California and New York statute of limitations. We also negotiated
revised amounts and terms on a trade payable and five judgments. A summary of
the amounts recognized as income from the discharge of debt is as
follows:


2009
            
            
            2008Excess
      carrying value of settled obligations
            
            $
            1,053,767
            
            
            $
            121,800Related
      accrued interest
            
            
            720,125
            
            
            
            60,000Write
      off of obligations deemed barred by statute of limitations
            
            
            913,680
            
            
            
            101,000Other
            
            
            108,728
            
            
            
            0$
            2,796,300
            
            
            $
            282,800




F-8




4. Stockholders' Equity:




Common
Stock




We are
currently authorized to issue up to 110,000,000 shares of $ 0.01 par value
common stock. All issued shares of common stock are entitled to vote on a 1
share/1 vote basis.




During
the year ended June 30, 2009 we issued 8,000,000 shares of our common stock upon
the conversion of $80,000 of convertible notes payable. We also purchase and
constructively retired 41,840,469 shares of our common stock in December, 2008.
The repurchase price of $105,000 was $313,400 less than the par or stated value
of the shares. Accordingly, the excess was credited to additional paid-in
capital.




5.
Stock Options and Warrants:




Summary
of Warrant Activity




As part
of a restructured settlement agreement, we issued 400,000 warrants. Exercise
price are $0.10 and expired three years from the date of issuance. We evaluate
and account for such securities in accordance with EITF Issue No. 00-19,and SFAS
No. 133, Accounting for
Derivative Instruments and Hedging Activities as amended.




The
Company used the Black-Scholes option pricing model in valuing the warrants. The
inputs for the valuation analysis of the warrants include the market value of
the Company's common stock, the estimated volatility of the Company's common
stock, the exercise price of the warrants and the risk free interest rate. The
key inputs for the valuation analysis at June 30, 2009 were a volatility of
164%, common stock value of $0.078 and a risk free interest rate of 4.4%. A
table summarizing the assumptions for each year presented is as
follows:




Year
            Interest
      Rate
            Dividend
      Yield
            Expected
      Volatility
            Expected
      Life2009
            4.4%
            0.0%
            164.0%
            36-48
      mos.2008
            4.4%
            0.0%
            164.0%
            36-48
      mos.




The
following table provides summary information on the various warrants issued by
us in private placement transactions; the warrants exercised to date; the
warrants that are presently exercisable and the current weighted average
exercise prices of such warrants.




All
      Plan & Non-Plan Compensatory Type OptionsWeighted
      average exercise price
            
            
            Weighted
      average remaining contractual term (years)
            
            
            Aggregate
              intrinsic
      value*SharesOptions
      outstanding at June 30, 2007
            
            
            3,377,250
            
            
            $
            0.32Granted
            
            
            0
            
            
            $
            0.00Exercised
            
            
            0
            
            
            $
            0.00Lapsed
            
            
            (206,770
            )
            
            $
            0.10Options
      outstanding at June 30, 2008
            
            
            3,170,480
            
            
            $
            0.21
            
            
            
            2.3
            
            
            $
            0Granted
            
            
            400,000
            
            
            $
            0.10Exercised
            
            
            0
            
            
            $
            0.00Lapsed
            
            
            (500,000
            )
            
            $
            1.06Options
      outstanding at June 30, 2009
            
            
            3,070,480
            
            
            $
            0.05
            
            
            
            0.9
            
            
            $
            32,854Options
      exercisable at June 30, 2009
            
            
            3,070,480
            
            
            $
            0.05
            
            
            
            0.9
            
            
            $
            32,854*
      Amount by which the fair value of the stock at the balance sheet date
      exceeds the exercise price







F-9







The
      following table summarizes the status of the Company's aggregate warrants
      as of June 30, 2009:Warrants
      Outstanding
            
            Warrants
      ExercisableRange
      of exercise prices
            Shares
            Weighted
              average
              exercise
      price
            Weighted
              average
              remaining
      life
              in
      months
            Shares
            Weighted
              average
              exercise
      price$
      0.01-$ 0.50
            3,070,480
            $0.05
            10.2
            3,070,480
            $0.05$
      0.51-$ 1.00
            0
            $0.00
            0.0
            0
            $0.00Total
      Shares
            3,070,480
            
            
            3,070,480







Equity
Instruments Classified as Derivatives




We follow
the provisions of SFAS No. 133 "Accounting for Derivative Instruments and
Hedging Activities" (SFAS No. 133") along with related interpretations EITF No.
00-19 "Accounting for Derivative Financial Instruments Indexed to, and
Potentially Settled in, a Company's Own Stock" ("EITF 00-19") and EITF No. 05-2
"The Meaning of ‘Conventional Convertible Debt Instrument' in Issue No. 00-19"
("EITF 05-2").  SFAS No. 133 requires every derivative instrument
(including certain derivative instruments embedded in other contracts) to be
recorded in the balance sheet as either an asset or liability measured at its
fair value, with changes in the derivative's fair value recognized currently in
earnings unless specific hedge accounting criteria are met.  We value these
derivative securities under the fair value method at the end of each reporting
period (quarter), and their value is marked to market at the end of each
reporting period with the gain or loss recognition recorded against
earnings.  We continue to revalue these instruments each quarter to reflect
their current value in light of the current market price of our common
stock.  We utilize the Black-Scholes option-pricing model to determine fair
value.  Key assumptions of the Black-Scholes option-pricing model include
applicable volatility rates, risk-free interest rates and the instrument's
expected remaining life.  These assumptions require significant management
judgment.




At June
30, 2008, the Company determined that approximately 2.6 million common shares
committed and reserved for issuance under the options/warrants were in excessofauthorizedshares on a fully diluted
basis (the “Excess Options”).  The Company classified the fair value,
calculated using the Black-Scholes model, of these Excess Options totaling
$17,400 as a liability on the balance sheet at June 30,
2008.




The fair
value of the derivative liability was determined using the Black-Scholes option
pricing model. The key inputs for the valuation analysis at June 30, 2008
were a volatility of 164%, common stock value of $0.01 and a risk free interest
rate of 4.4%.




We
classify derivatives as either current or long-term in the balance sheet based
on the classification of the underlying convertible debt
instrument.




6.
Related Party Transactions not Disclosed Elsewhere:




Due Related Parties:Amounts
due related parties consist of corporate operating expenses and advances paid by
affiliates. Such items totaled $557,471 and $624,300 at June 30, 2009 and 2008
respectively.




F-10




7.
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 continue to sustain
a profitable level of operations with  positive  cash  flows
and must  continue  to obtain  financing adequate to meet its
ongoing  operation  requirements.  The  Company's  cost
of operations  have  been  greatly  reduced  as 
a  result  of  the restructuring of the Company by
management.  The Company's  principal office is located in 
Plano,  Texas and as of June 30,  2009,  the  Company 
had two full-time  employees,  consisting  of Mr. 
Foster, the  CEO and   President, and an administrative
secretary. The Company also hires on occasion, several professionals in
technology areas on a contract  basis. Additional staff is planned in
the administrative and sales areas, the latter of whom may be commission or
contract basis.  We also participate in various “intern programs” on
an “as needed” basis.




8.
Subsequent Events:




The final
payment to LaJolla Cove Investors was timely paid on July 30, 2009 and all
releases have been properly filed.











F-11




REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




Michael
F. Cronin


Certified
Public Accountant


Orlando,
FL 32708













Board of
Directors and Shareholders


Odyssey
Pictures Corp.


Plano,
TX






I have
audited the accompanying balance sheets of Odyssey Pictures Corp. as of June 30
2009 and 2008 and the related statements of operations, stockholders' deficiency
and cash flows for the years then ended. The financial statements are the
responsibility of the directors. My responsibility is to express an opinion on
these financial statements based on my audits.




I
conducted my audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those
standards require that I plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. The company is not required to have, nor was I engaged to perform,
an audit of its internal control over financial reporting. My audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, I express no such
opinion. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audits provide a reasonable basis for my opinion.





In my
opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Odyssey Pictures Corp.
as of June 30, 2009 and 2008 and the results of its operations, its cash flows
and changes in stockholders' deficiency for the years then ended in conformity
with accounting principles generally accepted in the United States.





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in financial statement notes, the
Company has a $3.6 million working capital deficiency  The Company may not
have adequate readily available resources to fund operations through June 30,
2010. This raises substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to these matters are also described
in the Notes. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty





October
28 2009




/s/
      Michael F.
      CroninMichael
      F. CroninCertified
      Public AccountantNY,
      FL







F-12





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:
October 28, 2009


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.


by: /s/ John W.
Foster


John W.
Foster,


CEO,
Chairman and President