--------------------------------------------------------------------------------
J. Dan Sifford
PRESIDENT
Editworks, Ltd.
24843 Del Prado, #318
Dana Point, CA 92629
(Name and Address of Person Authorized to Receive Notices
and Communications on Behalf of the Person Filing Statement)
--------------------------------------------------------------------------------
WITH A COPY TO:
KARL E. RODRIGUEZ, ESQ
34700 Pacific Coast Highway, Suite 303
Capistrano Beach, CA 92624
(949) 248-9561
fax (949) 248-1688
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FORM 10-QSB/A1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Third Quarter ended October 31, 2000
Commission File Number: 0-28767
Editworks, Ltd.
(Exact name of Registrant as specified in its charter)
Nevada 88-0403070
(Jurisdiction of Incorporation) (I.R.S. Employer Identification No.)
24843 Del Prado Suite 326 Dana Point CA 92629
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (949) 488-0736
Securities registered pursuant to Section 12(g) of the Act: 49,122,000
Yes [X] No [ ] (Indicate by check mark whether the Registrant (1) has filed
all report 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.)
As of October 31, 2000, the number of shares outstanding of the Registrant's
Common Stock was 49,122,000.
1
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Attached hereto and incorporated herein by this reference are consolidated
unaudited financial statements (under cover of Exhibit FQ1a-10/31/00) for the
three months ended October 31, 2000.
Balance Sheet: 1st Quarter Year End
Selected Information 10/31/00 7/31/00
Unuadited Audited
----------------------------------------------------------------
Cash and Equivalents 0 580
Accounts Receivable 0 63,790
Current Assets 0 64,370
================================================================
Property and Equipment, Net 0 117,488
Organizational Costs 0 0
Other Assets 0 117,488
================================================================
Total Assets 0 181,858
================================================================
Accounts Payable 0 39,948
Advances (Related Party) 0 32,910
Total Liabilities 0 72,858
================================================================
Common Stock 49,122 73,122
Paid-in Capital 248,420 224,420
Accumulated Deficit (297,542) (188,542)
Total Equity 0 109,000
================================================================
Total Liabilities and Equity 0 181,858
================================================================
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
(A) PLAN OF OPERATION. On August 31, 2000, we resolved to distribute ownership
of our wholly operating subsidiary NetFilms, Inc. to our shareholders: one share
of NetFilms, Inc. for every share of Editworks, Ltd. of record at the close of
business September 1, 2000. As a result, our existing shareholder base was
unchanged, and our shareholders became the shareholders of NetFilms, Inc., a
private non-trading Nevada corporation. This was a related party transaction, in
which immediately following the distribution, the shareholders who control this
corporation were the shareholders who controlled NetFilms, Inc.
Two important consequences flow from the foregoing: (1) we had one month of
consolidated operations with our former subsidiary; and (2) our business and
2
<PAGE>
business plan changed on September 1, 2000, on which date we ceased to be an
operating company, and became a company whose business plan is to search for new
and profitable business opportunities, by direct or reverse acquisition, or
other business association or combination. The acquisition of such an
opportunity could and likely would result in some change in control of our
corporation at such time. This would likely take the form of a reverse
acquisition. That means that we would likely acquire businesses and assets for
stock in an amount that would effectively transfer control to the acquisition
target company or ownership group. It is called a reverse-acquisition because it
would be an acquisition by us in form, but would be an acquisition of us in
substance. Capital formation issues for the future would arise only when
targeted businesses or assets have been identified. Until such time, we have no
basis upon which to propose any substantial infusion of capital from sources
outside of our circle of affiliates.
OUR PREVIOUS BUSINESS. We have previously reported our former business an
operating computer aided, post-production editing service for various media
businesses, using 3-D capable computer equipment developed by the Avid 9000
Digital Editing System. The Avid 9000 is the only disk-based digital nonlinear
video workstation to feature real-time, full-motion alpha keys for two
independent 3-D video channels, the equivalent of four video channels. We had
only two contract customers to date. We had one current contract customer,
namely Reliant Interactive Media Corp. We were accordingly highly dependent on
the good will of a single principal customer. While we had no plans then to
engage in Reverse Acquisition transactions, such transactions were reported as
possible in the forseeable future. We reported that at the end of our contract
with Reliant, depending upon certain elections of Reliant whether or not to
exercise its options to purchase our equipment, then, we might decide whether to
acquire new equipment and continue our operations, or not. It was to depend upon
whether we were able to attract other customers and other business.
As of September 1, 2000, our former business became the business of
NetFilms, Inc., all assets and operations having been transferred to that
subsidiary previously, and ownership of that subsidiary having been distributed
to shareholders on September 1, 2000.
STOCK REPURCHASE. On September 5, 2000 we repurchased 2,400,000 shares of
common stock from our principal J. Dan Sifford, for $2,400 (par value, being the
basis on which such shares had been issued to him previously).
FORWARD SPLIT. On September 12, 2000, after the foregoing distribution of
NetFilms, Inc., we declared a ten for one forward split of our common stock. The
record date was September 25, 2000. As a result, our 7,312,200 pre-split share
(reduced by 2,400,000 repurchased shares) became 49,122,000 shares of common
stock issued and outstanding.
-------------------------
Pre-Split Post-Split
-------------------------
7,312,200 . 73,122,000
-------------------------
(2,400,000) (24,000,000)
-------------------------
4,912,200 . 49,122,000
-------------------------
(B) REVERSE ACQUISITION. A reverse acquisition is a formal acquisition by a
non-operating company of a going business, in which control passes to the owners
of the acquired target company or business. It is actually an acquisition of the
non-operating corporation by the owners of the target, in substance, and is
labeled "reverse" for that reason. While we do not intend to become a candidate
for such an acquisition, and while we intend to pursue our business plan as
disclosed, we have indicated that substantial risks of failure attend our
efforts. If our business fails, we would cease to be a going-concern. In that
event we might find ourselves to have become such a candidate.
3
<PAGE>
Certain important consequences may attend such a contingency. We may be
deemed a Blank Check Company as defined in Rule 419, essentially a company
with no business or business plan, except to search for a business acquisition
or combination. In such a contingency, our officers, directors, affiliates, and
their transferees, if any, may be deemed promoters and underwriters with respect
to the shares owned by them, or any shares issued to them in connection with the
transaction. The result would be that such shares would not be entitled to
reliance on ordinary resale rules, and would not be entitled to resale without
registration or an exemption from registration as may be available at the time
of any proposed sale.
COMPETITIVE POSITION WITH RESPECT TO REVERSE ACQUISITION. Other better
capitalized firms are engaged in the search for acquisitions or business
combinations which firms may be able to offer more and may be more attractive to
acquisition candidates. Other non-operating companies may have a substantial
reserve of cash, which we would not have in the case of such a contingency. We
have no significant pool of cash we could offer and no capital formation
incentive exists for our selection. We have a limited shareholder base
insufficient for acquisition target companies wishing to proceed for application
to NASDAQ. In comparison to other public shell companies we are unimpressive,
in the judgment of management, and totally lacking in unique features which
would make us more attractive or competitive than other public shell companies
. While management believes that the competition of other public shell
companies is intense and growing, it has no basis on which to quantify its
impression.
LIMITED SCOPE AND NUMBER OF POSSIBLE ACQUISITIONS: In the event of such a
contingency, we would not intend to restrict our consideration to any particular
business or industry segment, and we may consider, among others, finance,
brokerage, insurance, transportation, communications, research and development,
service, natural resources, manufacturing or high-technology. Of course, because
of our limited resources, the scope and number of suitable candidate business
ventures available would be limited accordingly, and most likely we would not be
able to participate in more than a single business venture. Accordingly, it is
anticipated that we would not be able to diversify, but may be limited to one
merger or acquisition because of limited financing. This lack of diversification
would not permit us to offset potential losses from one business opportunity
against profits from another.
REPORTING UNDER THE 1934 ACT. Following the effectiveness of this 1934 Act
Registration of our common stock, certain periodic reporting requirements will
be applicable. First and foremost, a 1934 Registrant is required to file an
Annual Report on Form 10-K or 10-K-SB, 90 days following the end of its fiscal
year. The key element of such annual filing is the Audited Financial Statement
prepared in accordance with standards established by the Commission. A 1934 Act
Registrant also reports on the share ownership of affiliates and 5% owners,
initially, currently and annually. In addition to the annual reporting, a
Registrant is required to file quarterly reports on Form 10-Q or 10-Q-SB,
containing audited or un-audited financial statements, and reporting other
material events. Some events are deemed material enough to require the filing of
a Current Report on Form 8-K. Any events may be reported currently, but some
events, like changes or disagreements with auditors, resignation of directors,
major acquisitions and other changes require aggressive current reporting. All
reports are filed and become public information. The practical effects of the
foregoing requirements on the criteria for selection of a target company are
two-fold: first, the target must have audited or auditable financial statements,
and the target must complete an audit for filing promptly upon the consummation
of any acquisition; and, second, that the target management must be ready,
willing and able to carry forth those reporting requirements or face de-listing
from the OTCBB, if listed, and delinquency and possible liability for failure to
report.
CASH REQUIREMENTS AND NEED FOR ADDITIONAL FUNDS, TWELVE MONTHS. We have no
substantial cash requirements during our present phase of availability for
business combination. We would expect modest related party advances during this
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period to maintain our reporting requirements and evaluate possible targets of
interest. No agreements to make such advances are in place, and no guarantee can
presently be given that additional funds, if needed, will be available. We would
also expect that advances will take the form of providing services on a deferred
compensation basis. Should further auditing be required, such services by the
Independent Auditor may not be the subject of deferred compensation. The
expenses of independent Audit cannot be deferred or compensated in stock or
notes, or otherwise than direct payment of invoices in cash.
We do not anticipate any contingency upon which we would voluntarily cease
filing reports with the SEC, even though we may cease to be required to do so.
It is in our compelling interest to report its affairs quarterly, annually and
currently, as the case may be, generally to provide accessible public
information to interested parties, and also specifically to maintain its
qualification for the OTCBB, if and when the Registrant's intended application
for submission may become effective.
(C) DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
OPERATIONS AND RESULTS FOR THE PAST TWO FISCAL YEARS.
The following table of selected financial information compares theses
years, from inception, and also compares the results of this first quarter of
2000 with 1999.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FIRST QUARTER ENDED Inception
OCTOBER 31, 2000. August 20,
SELECTED FINANCIAL INFORMATION. 1998
Operations. Three Months One Year to
10/31 7/31 Oct 31
2000 1999 2000 1999 2000
---------------------------------------------------------------------------------------------------
Revenues: . . . . . . . . . . . $ 0 $ 34,450 $ 106,956 $ 72,663 $ 179,619
(Expenses):
General & Administrative . . . (13,470) (42,746) (198,948) (169,213) (381,631)
Net (Loss). . . . . . . . . . . (13,470) (8,296) (91,992) (96,550) (202,012)
===================================================================================================
Net (Loss) per Share. . . . . . (0.0022) (0.0001) (0.01) (0.01) (0.0043)
Weighted Average. . . . . . . . 49,122,000 66,617,000 71,735,330 66,617,000 69,179,560
Shares Outstanding
</TABLE>
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. None
ITEM 2. CHANGE IN SECURITIES. None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS. None
ITEM 5. OTHER INFORMATION. None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. None
5
<PAGE>
EXHIBIT INDEX
--------------------------------------------------------------------------------
Exhibit FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
QF1-10/31/00 Un-Audited Financial Statements for the three months ended
October 31, 2000
--------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Form 10-Q Report for the Third Quarter ended October 31, 2000, has been signed
below by the following person on behalf of the Registrant and in the capacity
and on the date indicated.
EDITWORKS, LTD.
Dated: October 31, 2000
by
/s/J. Dan Sifford /s/Jena M. Harry
J. Dan Sifford Jena M. Harry
president/director secretary/director
6
<PAGE>
--------------------------------------------------------------------------------
EXHIBIT FQ1-10/31/00
UN-AUDITED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2000
--------------------------------------------------------------------------------
7
<PAGE>
EDITWORKS, LTD.
BALANCE SHEETS
For the fiscal years ended July 31, 1999
And the period ended October 31, 2000
October 31,
2000 July 31,
(Unaudited) 2000
CURRENT ASSETS
Cash. . . . . . . . . . . . . . . . . . . . . . . . . $ 0 $ 580
Accounts receivable . . . . . . . . . . . . . . . . . 0 63,790
-------------------------
TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . . 0 64,370
OTHER ASSETS
Editing equipment . . . . . . . . . . . . . . . . . . 0 176,722
Depreciation. . . . . . . . . . . . . . . . . . . . . 0 (59,234)
-------------------------
TOTAL OTHER ASSETS. . . . . . . . . . . . . . . . . . 0 117,488
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . $ 0 $ 181,858
=========================
LIABILITIES & STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable. . . . . . . . . . . . . . . . . . . $ 0 $ 72,858
-------------------------
STOCKHOLDERS' EQUITY
Common Stock, $.001 par value; authorized 50,000,000
shares; issued and outstanding, 7,104,200 shares
and 7,312,200 shares respectively. . . . . . . . . 49,122 73,122
Additional Paid-In Capital. . . . . . . . . . . . . . 248,420 224,420
Accumulated Equity (Deficit). . . . . . . . . . . . . (297,542) (188,542)
Total Stockholders' Equity. . . . . . . . . . . . . . 0 109,000
-------------------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY. . . . . . . $ 0 $ 181,858
=========================
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
EDITWORKS, LTD.
STATEMENTS OF LOSS AND ACCUMULATED DEFICIT (UNAUDITED)
For the periods ended October 31, 1999 and 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
From From From inception on
August 1, August 1, August 20,1998
2000 through 1999 through through
October 31, October 31, October 31,
2000 1999 2000
----------------------------------------------------------------------------------------
Revenues . . . . . . . . . . . . . . $ 0 $ 34,450 $ 179,619
General and administrative expenses. 13,470 42,746 381,631
--------------------------------------------------
Net Loss from Operations . . . . . . (13,470) (8,296) (202,012)
Net Income (Loss). . . . . . . . . . (13,470) (8,296) (202,012)
==================================================
Loss per Share . . . . . . . . . . . $ (0.00027) $ (0.00012) $ (0.00292)
==================================================
Weighted Average
Shares Outstanding . . . . . . . 49,122,000 66,617,000 69,179,560
==================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
EDITWORKS, LTD.
STATEMENTS OF STOCKHLOLDERS' EQUITY (DEFICIT)(UNAUDITED)
For the period from inception of the Development Stage
On August 20, 1998, through July 31, 2000
And the period ended October 31, 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Additional Accumulated Total Stock-
Common Par Paid-In Equity holders' Equity
Stock Value Capital (Deficit) (Deficit)
----------------------------------------------------------------------------------------------------------------
Common Stock issued at inception. . 60,422,000 $ 60,422 $ (54,380) $ 0 $ 6,042
Sale of Common Stock. . . . . . . . 10,620,000 10,620 254,880 0 0
Net (loss) during period. . . . . . 0 0 0 (96,550) 0
------------ ------------- -------------- ----------- -----------------
Balance at July 31, 1999. . . . . . 71,042,000 $ 71,042 $ 200,500 $ (96,550) $ 174,992
Sale of Common Stock. . . . . . . . 2,080,000 2,080 23,920 0 0
Net (loss) during period. . . . . . 0 0 0 (91,992) 0
------------ ------------- -------------- ----------- -----------------
Balance at July 31, 2000. . . . . . 73,122,000 $ 73,122 $ 224,420 $ (188,542) $ 109,000
Equity contributed to subsidiary in
spin-off on August 31, 2000. . . 0 0 0 (95,530) 0
Shares returned to Treasury . . . . (24,000,000) (24,000) 24,000 0 0
Net (loss) during period. . . . . . 0 0 0 (13,470) 0
------------ ------------- -------------- ----------- -----------------
Balance at October 31, 2000 . . . . 49,122,000 $ 49,122 $ 248,420 $ (297,542) $ 0
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
EDITWORKS, LTD.
STATEMENTS OF CASH FLOW (UNAUDITED)
For the periods ended October 31, 1999 and 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
From From From inception on
August 1, August 1, August 20,1998
2000 through. . . . . . . . . . . . . 1999 through through
October 31, . . . . . . . . . . . . . October 31, October 31,
2000 1999 2000
-------------------------------------------------------------------------------------------
Operating Activities
Net Income (Loss) . . . . . . . . . . . $ (13,470) $ (8,296) $ (202,012)
Cash contributed to subsidiary in
spin-off on August 31, 2000 . . . . . . (53) 0 (53)
Less items not effecting cash
Depreciation & Amortization . . . . . . 3,443 10,329 68,719
Increase in receivables . . . . . . . . 0 (14,524) (63,790)
Increase in payables. . . . . . . . . . 9,500 19,910 49,448
Increase in advances. . . . . . . . . . 0 0 32,910
----------------------------------------------------
Net Cash from Operations. . . . . . . . (580) 7,419 (114,778)
Cash Increase (Decrease) Investment in
computerized editing equipment. . . . . 0 (176,772) (176,722)
Cash Increase (Decrease) Sale of Stock. 0 265,500 291,500
----------------------------------------------------
Net increase (decrease) in cash . . . . (580) 96,147 0
Beginning Cash. . . . . . . . . . . . . 580 165 0
Ending Cash . . . . . . . . . . . . . . $ 0 $ 96,312 $ 0
====================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
EDITWORKS, LTD.
NOTES TO FINANCIAL STATEMENTS
for the fiscal year ended July 31, 2000
and for the periods ended October 31, 1999 and 2000
NOTES TO FINANCIAL STATEMENTS
EditWorks, Ltd. ("the Company") has elected to omit substantially all footnotes
to the financial statements for the three months ended October 31, 2000, since
there have been no material changes (other than indicated in other footnotes) to
the information previously reported by the Company in their General Form for
Registration of Securities Report filed on Form 10-KSB for the fiscal year ended
July 31, 2000.
REORGANIZATION AND SPIN OFF
On September 1, 2000, the Board of Directors and Shareholders of the Company,
approved a plan of reorganization and spin-off wherein the operations and assets
of the Company were spun out to NetF]Ims, Inc., a subsidiary of the Company.
The Shareholders of the Company were then issued shares in and distributed all
ownership and interest of NetFilms, Inc.
COMMON STOCK REPURCHASE
On September 12, 2000, the Board of Directors and Shareholders of the Company,
approved the repurchase of 24,000,000 shares of common stock from the Company's
principal shareholder for $24,000 (par value, being the basis on which such
shares had been previously issued).
COMMON STOCK FORWARD SPLIT
On September 5, 2000, the Board of Directors and Shareholders of the Company,
approved a ten for one (10:1) forward split of its common stock. All
presentations of shareholders' equity are presented as if the forward split had
been effect since inception.
UNAUDITED INFORMATION
The information furnished herein was taken from the books and records of the
Company without audit. However, such information reflects all adjustments which
are, in the opinion of management, necessary to properly reflect the results of
the period presented. The information presented is not necessarily indicative
of the results from operations expected for the full fiscal year.
12
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