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 April 30, 2000
|X| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _______ to _________
Commission file number 0-13245
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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 $.01
per share, as of August 10, 2000 was 83,500,000.
Transitional Small Business Disclosure Format (Check One): Yes |_| No |X|
NEW YORK FILM WORKS, INC.
Index Financial Statements
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements: 3
Consolidated Balance Sheets as at April 30, 2000 4-5
(Unaudited) and October 31, 1999 (Audited)
Consolidated Statements of Operations for the Three Months 6
and Six Months Ended April 30, 2000 (Unaudited) and April
30, 1999 (Audited)
Consolidated Statements of Cash Flows for the 7
Six Months Ended April 30, 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
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 - Cautionary Statement Concerning Forward-Looking Statements" 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 six months ended
April 30, 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.
3
NEW YORK FILM WORKS, INC.
Consolidated Balance Sheets
ASSETS
April 30, 2000 October 31, 1999
(Unaudited) (Audited)
----------- ----------
Current Assets:
Cash and Cash Equivalents - Note 1 $ 60,947 $ 167,169
Accounts Receivable-Net 152,248 153,132
Inventory - Note 1 12,955 11,911
Prepaid Expenses 1,588 7,886
Prepaid Insurance 1,953 5,715
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Total Current Assets 229,691 345,813
========== ==========
Property, Plant and Equipment:
Machinery and Equipment -Net 1,729,034 1,703,127
Furniture and Fixtures 189,048 189,048
Leasehold Improvements 436,180 436,180
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Total 2,354,263 2,328,355
Less: Accumulated Depreciation 2,221,268 2,221,268
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Property, Plant and Equipment - Net 132,995 113,937
Other Assets:
Security Deposits 32,058 32,058
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Total Assets $ 394,744 $ 484,958
========== ==========
4
NEW YORK FILM WORKS, INC.
Consolidated Balance Sheets
LIABILITIES AND SHAREHOLDERS' EQUITY
April 30, 2000 October 31, 1999
(Unaudited) (Audited)
----------- -----------
Current Liabilities:
Notes Payable $ 12,790 $ --
Notes Payable - Shareholders 28,458
Accounts Payable 46,425 36,850
Accrued Expenses & Taxes 32,263 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) (3,040,792) (2,950,834)
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Total Shareholders' Equity 303,266 393,224
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Total Liabilities and
Shareholders' Equity $ 394,744 $ 484,958
=========== ===========
5
NEW YORK FILM WORKS, INC.
Statement Of Operations
(Unaudited)
Three Months Ended Six Months Ended
April 30, 2000 April 30, 1999 April 30, 2000 April 30, 1999
-------------- -------------- -------------- --------------
Sales $ 345,794 $ 328,057 $ 649,416 $ 648,244
Cost of Sales 204,703 187,231 410,232 385,088
------------ ------------ ------------ ------------
Gross Profit 141,091 140,826 239,184 263,156
Operating Expenses:
Selling and Shipping 25,834 27,861 53,508 53,942
General and Administrative 155,594 75,312 268,785 175,637
------------ ------------ ------------ ------------
Total Operating Expenses 181,428 103,173 322,293 229,579
------------ ------------ ------------ ------------
Net Income (Loss) from Operations $ (40,337) $ 37,653 $ (83,109) $ 33,577
------------ ------------ ------------ ------------
Earnings (Loss) before Income tax $ (40,377) $ 37,653 $ (83,109) $ 33,577
Income Tax $ 0 $ 0 $ 0 $ 0
------------ ------------ ------------ ------------
Net Income (Loss) $ $ (40,337) $ 37,653 $ (83,109) $ 33,577
============ ============ ============ ============
Earnings Per Share $ 0.00 $ 0.00 $ 0.00 $ 0.00
------------ ------------ ------------ ------------
Weighted Average Number
of Shares 83,500,000 83,500,000 83,500,000 83,500,000
6
NEW YORK FILM WORKS, INC.
Statement Of Cash Flows
(Unaudited)
Six Months Ended
April 30, 2000 April 30, 1999
-------------- --------------
Cash flows from operations $ (89,958) $ 33,576
Increase (Decrease) in Cash
Accounts Receivable 884 (8,762)
Inventory (1,044) (124)
Prepaid Expenses 6,298 1,730
Prepaid Insurance 3,761 (1,135)
Notes Payable 12,790 (14,522)
Accounts Payable 9,575 (18,578)
Accrued Expenses 5,837 1,584
Stockholders Loans (28,458) 20,000
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Cash flows from investing activities:
Purchase of Property and Equipment (25,907) (21,007)
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Increase (Decrease in Cash) (106,222) (7,238)
Cash beginning of period 167,169 178,165
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Cash end of period $ 60,947 $ 170,927
========= =========
7
NEW YORK FILM WORKS, INC.
Statement of Shareholders' Equity
From November 1, 1996 to January 31, 2000
Capital in Retained Total
Common Excess Earnings Shareholders'
Stock of Par (Deficit) Equity
------ --------- ----------- -------------
$ $ $ $
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
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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
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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
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Balance - October 31, 1999 83,500 3,260,558 (2,950,834) 393,224
Prior Year Adj (6,850) (6,850)
Net Loss - 6 months 4-30-2000 (83,109) (83,109)
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Balance - April 30, 2000 83,500 3,260,558 (3,040,793) 303,265
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8
NEW YORK FILM WORKS, INC.
NOTES TO FINANCIAL STATEMENTS April 30, 2000
(Unaudited)
Note 1: Summary of Significant Accounting Policies
Description of Business: The Company provides film processing services
principally for the professional photographic market and the Company and its
wholly owned subsidiary E.S. Graphics, operate full service color labs.
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.
9
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.
Discussion of Financial Condition and Results of Operations - Three Months and
Six Months ended April 30, 2000 and 1999
Total Sales include the selling price of the products and services sold by us.
Total Sales for the three months ended April 30, 2000 were $345,794 as compared
to sales of $328,057 for the corresponding period ended April 30, 1999. The
demand for our products and services increased slightly by approximately 5.1%.
Total Sales for the six month period ended April 30, 2000 decreased
approximately by 9.1% from the corresponding period ended April 30, 1999. 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.
The Cost of Sales increased slightly to $204,703 for the quarter ended April 30,
2000 as compared to reported Cost of Sales of $187,235 for the corresponding
period ended April 30, 1999. During the six months ended April 30, 2000, Cost of
Sales increased by approximately 6% from the corresponding period ended April
30, 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 increased by $80,282 from $75,312
for the three months ended April 30, 1999 to $155,594 for the three months ended
April 30, 2000, primarily as a result of increased executive salaries and legal
and professional fees. General and Administrative Expenses for the six months
ended April 30, 2000 increased to $268,785 from $175,637 for the six months
ended April 30, 1999.
Our Selling and Shipping Expenses decreased by $2,027 from $27,861 for the three
months ended April 30, 1999 to $25,834 for the three months ended April 30, 2000
due primarily to the costs and expenses associated with selling and shipping our
products. Our Selling and Shipping Expenses for the six months ended April 30,
2000 were $53,508 as compared to $53,942 for the corresponding period ended
April 30, 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 April 30, 2000 our Company's Cash and Cash Equivalents were $60,947 compared
to $167,169 at October 31, 1999.
Our Company had working capital of $138,213 for the three months ended April 30,
2000 compared to working capital of $254,079 at October 31, 1999. We believe we
have sufficient cash resources and working capital requirements for the balance
of the current fiscal year. However, any projections of future cash needs is
subject to substantial uncertainty. We finance our operations primarily with
existing capital and funds generated from operations.
10
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.
(i) Calculation of Earnings Per Share - Exhibit 11
(ii) EDGAR - Financial Data Schedule - Exhibit 27
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended April 30,
2000.
11
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: August 11, 2000 NEW YORK FILM WORKS, INC.
By: /s/ Michael V. Cohen
--------------------
Michael V. Cohen, President
12