UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended July 31, 2000
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _______ to _________
Commission file number 0-13245
New York Film Works, Inc.
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(Exact name of small business issuer as specified in its charter)
New York 13-3051895
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
928 Broadway, New York, New York 10010
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(Address of principal executive offices)
(212) 475 - 5700
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(Issuer's telephone number)
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes |_| No |_| Not Applicable |X| -Securities have not been distributed.
The number of shares outstanding of the issuer's common stock, par value $.001
per share, as of October 13, 2000 was 83,500,000.
Transitional Small Business Disclosure Format (Check One): Yes |_| No |X|
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NEW YORK FILM WORKS, INC.
Index Financial Statements
PART I. FINANCIAL INFORMATION Page No.
Item 1. Financial Statements: 3
Consolidated Balance Sheets as of July 31, 2000 4-5
(Unaudited) and October 31, 1999 (Audited)
Consolidated Statements of Operations for the Three 6
Months and Nine Months Ended July 31, 2000 (Unaudited)
and July 31, 1999 (Audited)
Consolidated Statements of Cash Flows for the 7
Nine Months Ended July 31, 2000 and 1999 (Unaudited)
Consolidated Statement of Shareholder's Equity (Unaudited) 8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis Financial 10-11
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
2
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NOTE CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Quarterly Report on Form 10-QSB that
are not statements of historical fact constitute forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). These statements involve risks and uncertainties
that may cause actual results to differ materially from those in such
statements. See Part I, Item 2 "Management's Discussion and Analysis and Results
of Operation" for additional information and factors to be considered with
respect to forward-looking statements.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The accompanying interim unaudited financial statements have been prepared
in accordance with the instructions to Form 10-QSB and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included, and the disclosures are adequate to make the
information presented not misleading. Operating results for the nine months
ended July 31, 2000, are not necessarily indicative of the results that may be
expected for the year ended October 31, 2000. These statements should be read in
conjunction with the financial statements and notes thereto included in the
Annual Report on Form 10-KSB (filed with the Securities and Exchange Commission)
for the year ended October 31, 1999.
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NEW YORK FILM WORKS, INC.
Consolidated Balance Sheets
ASSETS
July 31, 2000 October 31, 1999
(Unaudited) (Audited)
------------- ----------------
Current Assets:
Cash and Cash Equivalents - Note 1 $ 166,219 $ 167,169
Accounts Receivable-Net 131,667 153,132
Inventory - Note 1 12,870 11,911
Prepaid Expenses 1,132 7,886
Prepaid Insurance 7,009 5,715
---------- ----------
Total Current Assets 318,897 345,813
========== ==========
Property, Plant and Equipment:
Machinery and Equipment - Net 1,727,445 1,703,127
Furniture and Fixtures 189,048 189,048
Leasehold Improvements 436,180 436,180
---------- ----------
Total 2,352,673 2,328,355
Less: Accumulated Depreciation 2,221,267 2,221,268
---------- ----------
Property, Plant and Equipment - Net 131,406 113,937
Other Assets:
Security Deposits 32,058 32,058
---------- ----------
Total Assets $ 482,361 $ 484,958
========== ==========
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NEW YORK FILM WORKS, INC.
Consolidated Balance Sheets
LIABILITIES AND SHAREHOLDERS' EQUITY
July 31, 2000 October 31, 1999
(Unaudited) (Audited)
------------- ----------------
Current Liabilities:
Notes Payable $ $ --
Notes Payable - Shareholders 28,458
Accounts Payable 29,087 36,850
Accrued Expenses & Taxes 42,808 26,426
----------- -----------
Total Current Liabilities 91,478 91,734
=========== ===========
Stockholders' Equity:
Common Stock - $.001 Par Value
120,000,000 Shares Authorized;
83,500,000 Shares Issued and
Outstanding 83,500 83,500
Capital in Excess of Par 3,260,558 3,260,558
Retained Earnings (Deficit) (2,933,592) (2,950,834)
----------- -----------
Total Shareholders' Equity 410,465 393,224
----------- -----------
Total Liabilities and
Shareholders' Equity $ 482,361 $ 484,958
=========== ===========
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NEW YORK FILM WORKS, INC.
Statement Of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
July 31, 2000 July 31,1999 July 31, 2000 July 31, 1999
------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Sales $ 387,955 $ 330,869 $ 1,037,371 $ 979,113
Cost of Sales 199,364 196,805 609,596 581,893
----------- ----------- ----------- -----------
Gross Profit 188,591 134,064 427,775 397,220
Operating Expenses:
Selling and Shipping 48,106 24,752 101,614 78,694
General and Administrative 37,160 79,381 305,945 255,018
----------- ----------- ----------- -----------
Total Operating Expenses 85,266 104,133 305,945 333,712
----------- ----------- ----------- -----------
Net Income (Loss) from Operations $ 103,325 $ 29,931 $ 407,559 $ 63,508
----------- ----------- ----------- -----------
Earnings (Loss) before Income tax $ 103,325 $ 29,931 $ 20,216 $ 63,508
Income Tax 0 0 0 0
----------- ----------- ----------- -----------
Net Income (Loss) $ 103,325 $ 29,931 $ 20,216 $ 63,508
=========== =========== =========== ===========
Earnings Per Share 0.001 0.00 $ 0.00 $ 0.00
----------- ----------- ----------- -----------
Weighted Average Number
of Shares 83,500,000 83,500,000 83,500,000 83,500,000
</TABLE>
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NEW YORK FILM WORKS, INC.
Statement Of Cash Flows
(Unaudited)
Nine Months Ended
July 31, 2000 July 31, 1999
------------- -------------
Cash flows from operations $ 20,216 $ 63,508
Increase (Decrease) in Cash
Accounts Receivable 21,465 6,657
Inventory (959) (1,517)
Prepaid Expenses 6,754 1,450
Prepaid Insurance (1,294) (3,669)
Notes Payable -0- (22,657)
Accounts Payable (7,763) (19,450)
Accrued Expenses 16,382 11,585
Stockholders Loans (28,458) 20,000
--------- ---------
Cash flows from investing activities:
Purchase of Property and Equipment (25,393) (26,921)
--------- ---------
Increase (Decrease in Cash) (950) (1,662)
Cash beginning of period 167,169 178,165
--------- ---------
Cash end of period $ 166,219 $ 176,503
========= =========
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NEW YORK FILM WORKS, INC.
Statement of Shareholders' Equity
From November 1, 1996 to July 31, 2000
<TABLE>
<CAPTION>
Capital in Retained Total
Common Excess Earnings Shareholders'
Stock of Par (Deficit) Equity
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Balance - November 1, 1996 $ 83,500 $ 3,260,558 $(3,241,404) $ 102,654
Net Income (Loss) Y/E 10-31-97 74,496 74,496
----------- -----------
Balance - November 1, 1997 83,500 3,260,558 (3,166,908) 177,150
Net Income (Loss) Y/E 10-31-98 109,454 109,454
----------- -----------
Balance - November 1, 1998 83,500 3,260,558 (3,057,454) 286,604
Net Income (Loss) Y/E 10-31-99 106,620 106,620
----------- -----------
Balance - October 31, 1999 83,500 3,260,558 (2,950,834) 393,224
Prior Year Adj (2,975) (2,975)
Net Income - 9 months 7-31-2000 20,216 20,216
----------- -----------
Balance - July 31, 2000 83,500 3,260,558 (2,933,592) 410,465
----------- ----------- ----------- -----------
</TABLE>
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NEW YORK FILM WORKS, INC.
NOTES TO FINANCIAL STATEMENTS July 31, 2000
(Unaudited)
Note 1: Summary of Significant Accounting Policies
Description of Business: The Company provides film processing services
principally for the professional photographic market.
This summary of the major accounting policies of New York Film Works, Inc. is
provided to assist the reader in evaluating the financial statements of the
Company.
Cash and Cash Equivalents: The Company considers all highly liquid investments
with a maturity of three months or less when purchased to be cash equivalents.
Inventory: Inventory, which consists of supplies and raw materials, is stated at
the lower of cost or market, on a first-in, first-out basis.
Property, Plant and Equipment: Property, plant and equipment is stated at cost.
Additions, renewals and improvements, unless of relatively minor amounts, are
capitalized. Expenditures for maintenance and repairs are expensed as incurred.
The cost of property and equipment retired or sold, together with the related
accumulated depreciation, is removed from the appropriate asset and depreciation
accounts and the resulting gain or loss is included in the statement of income.
Depreciation: For financial reporting, depreciation and amortization are
provided on the straight-line method over the following estimated useful lives.
Leasehold Improvements.................. 10 Years
Machinery and Equipment................. 7 Years
Furniture and Fixtures.................. 7 Years
Income Taxes: Investment credits are accounted for under the flow-through
method. Under this method, credits are recognized as a reduction of income tax
expense in the year in which the credits are utilized for tax purposes.
Note 2: Income Taxes. The Company has sustained operating losses since inception
and loss carry forwards and investment tax credits will be used to reduce future
provisions for income taxes.
The Company has available net operating loss carry forwards of $2,532,839.
Note 3: Bankruptcy. The Company entered into bankruptcy under Chapter 11 of
Federal Bankruptcy Laws 8/25/92. The Company was discharged from Chapter 11 of
federal bankruptcy 8/2/96.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following discussion of the financial condition and results of operation of
our Company should be read in conjunction with the consolidated financial
statements and notes thereto appearing elsewhere herein. The results of
operations for the three and nine months ended July 31, 2000 are not necessarily
indicative of the results for the entire fiscal year ending October 31, 2000.
Discussion of Financial Condition and Results of Operations - Three Months and
Nine Months ended July 31, 2000 and 1999.
Total Sales include the selling price of the products and services sold by us.
Total Sales for the three months ended July 31, 2000 were $387,955 as compared
to sales of $330,869 for the corresponding period ended July 31, 1999. Total
Sales for the three months increased by approximately 17.5% because of the
greater demand for our products and services. Total Sales for the nine month
period ended July 31, 2000 increased from $979,113 for the period ended July 31,
1999 to $1,037,371 for the corresponding period ended July 31, 2000. We cannot
predict whether the demand for our products and services will continue. Nearly
all of our sales were generated by sales to professional photographers, film
dealers and photographic editors of magazines and periodicals. No single
customer accounted for 10% or more of our sales revenues.
Our Cost of Sales increased slightly to $ 199,364 for the quarter ended July 31,
2000 as compared to reported Cost of Sales of $196,805 for the corresponding
period ended July 31, 1999, primarily due to the increase in costs and expenses
associated with producing our services and products. During the nine months
ended July 31, 2000, Cost of Sales increased by approximately 4.8% from the
corresponding period ended July 31, 1999.
Our General and Administrative Expenses consist of payroll, executive and
administrative personnel expenses and other general corporate related expenses.
Our General and Administrative Expenses have decreased by $42,221 from $79,381
for the three months ended July 31, 1999 to $37,160 for the three months ended
July 31, 2000, primarily as a result of our management's reducing our overhead.
General and Administrative Expenses for the nine months ended July 31, 2000
increased to $305,945 from $255,018 for the nine months ended July 31, 1999.
Our Selling and Shipping Expenses increased by $23,354 from $24,752 for the
three months ended July 31, 1999 to $48,106 for the three months ended July 31,
2000, primarily due to the costs and expenses associated with selling and
shipping our products. Our Selling and Shipping Expenses for the nine months
ended July 31, 2000 were $101,614 as compared to $78,694 for the corresponding
period ended July 31, 1999. We expect that the foregoing expenses will continue
to increase if we are able to expand our customer and account base.
Liquidity and Capital Resources
At July 31, 2000 our Company's Cash and Cash Equivalents were $166,219 compared
to $167,169 at October 31, 1999.
Our Company had working capital of $227,419 for the three months ended July 31,
2000 compared to working capital of $254,079 at October 31, 1999. We believe we
have sufficient cash resources and
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working capital requirements for the balance of the current fiscal year.
However, any projections of future cash needs are subject to substantial
uncertainty. We finance our operations primarily with existing capital and funds
generated from operations.
Year 2000 Issues
The film processing markets were essentially unaffected by Year 2000 issues,
reporting only a few minor technical problems. We were not adversely affected.
We are also not aware of any material problems with our customers or suppliers.
We do not anticipate incurring material expenses or experiencing any material
operational disruptions as a result of Year 2000 issues. However, we will
continue monitoring our internal programs and computer systems and those of our
vendors to ensure that there are no material disruptions to our operations due
to Year 2000 issues.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
(1) Calculation of Earnings Per Share - Exhibit 11
(2) EDGAR Financial Data Schedule - Exhibit 27
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended July 31,
2000.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: October 19, 2000 NEW YORK FILM WORKS, INC.
By: /s/ Michael V. Cohen
---------------------------
Michael V. Cohen, President
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