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EX-32.2 - JOEY NEW YORK, INC.ex32_2.htm
EX-32.1 - JOEY NEW YORK, INC.ex32_1.htm
EX-31.2 - JOEY NEW YORK, INC.ex31_2.htm
EX-31.1 - JOEY NEW YORK, INC.ex31_1.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q/A
(Amendment No. 1)
(Mark One)
 
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended November 30, 2015

  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 
For the transition period from ____________ to ____________
 
Commission file number:   333-180954
 
Joey New York Inc.
(Exact name of small business issuer as specified in its charter)

Nevada
 
68-0682410
(State or other jurisdiction of
incorporation or organization)
 
(IRS Employer
Identification No.)
 
Trump Tower I, 16001 Collins Ave. #3202,
          Sunny Isles Beach, FL 33160        
(Address of principal executive offices)
 
                                (305) 948-9998                               
(Registrants telephone number, including area code)
_____________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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     No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes      No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company; as defined within Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
 
Accelerated filer
 
Non-accelerated filer
 
Smaller reporting company
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes    No
 
The number of shares outstanding of each of the issuer's classes of common equity as of June 1, 2016 was 69,760,134 shares of common stock.
 
 


 
Restatement
 

 
The Form 10Q filed by us on June 1, 2016 was inadvertently filed without the certain adjustments.
 
This Form 10Q is being restated to properly reflect the impact on our financial statements of adjustments proposed by our independent registered accounting firm resulting from their review of our interim financial statements.

The financial impact of this restatement is detailed in the restatement footnote Note 11 included in the footnotes to our financial statements in the restated Form 10Q.
 
 

 
- 2 -

 
 

 
 Contents

 
 
 
Part 1   
FINANCIAL INFORMATION
 
 
 
 
Item 1
Consolidated Financial Statements (unaudited)
 
 
 
 
   
     Consolidated Balance Sheets at November 30, 2015 and February 28, 2015 (unaudited)
5
 
 
 
      
     Consolidated Statements of Operations for the three month and nine month periods ending November 30, 2015 and 2014 (unaudited)
6
 
 
 
 
     Consolidated Statements of Cash Flows for the nine month periods ending November 30, 2015 and 2014 (unaudited)
7
 
 
 
 
     Notes to Consolidated Financial Statements (unaudited)
8
 
 
 
Item 2.   
Management's Discussion and Analysis of Financial Condition and Results of Operations
19
 
 
 
Item 3.   
Quantitative and Qualitative Disclosures About Market Risk
20
 
 
 
Item 4.
Controls and Procedures
20
 
 
 
 Part II.
OTHER INFORMATION
 
 
 
 
 Item 1   
Legal Proceedings
21
 
 
 
 Item 2.  
Unregistered Sales of Equity Securities and Use of Proceeds
22
 
 
 
 Item 3   
Defaults Upon Senior Securities
22
 
 
 
 Item 4      
Mine Safety Disclosures
22
 
 
 
 Item 5  
Other Information
22
 
 
 
 Item 6
Exhibits
23
 
 
 
 
SIGNATURES
24
 

 
 
- 3 -

 
 
PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements
 

Joey New York, Inc.
Financial Statements
For the Three and Nine Months Ended November 30, 2015

 
Page
Financial Statements (Unaudited):
 
   Consolidated Balance Sheets
 5
   Consolidated Statements of Operations
 6
   Consolidated Statements of Cash Flows
 7
   Notes to Audited Consolidated Financial Statements
8




- 4 -



Joey New York, Inc.
Consolidated Balance Sheets
November 30, 2015 and February 28, 2015
(Unaudited)

 
 
 
November 30, 2015
(Restated)
   
February 28, 2015
(Restated)
 
Assets
 
   
 
Current assets
 
   
 
  Cash and cash equivalents
 
$
195
   
$
5,063
 
  Accounts receivable, net
   
-
     
530
 
  Inventory
   
-
     
31,249
 
    Total current assets
   
195
     
36,842
 
 
               
Property and equipment, net
   
5,290
     
4,563
 
Advances to shareholder
   
-
     
-
 
Total assets
 
$
5,485
   
$
41,405
 
 
               
Liabilities and stockholders' deficit
               
Current liabilities
               
  Accounts payable
 
$
143,297
   
$
158,943
 
  Accrued liabilities
   
357,634
     
197,742
 
  Advances – related party
   
631,737
     
592,238
 
  Current portion of long-term debt
   
3,015,600
     
3,015,600
 
     Total current liabilities
   
4,148,268
     
3,964,524
 
 
               
Long-term debt, net of current portion
   
-
     
-
 
  Total liabilities
   
4,148,268
     
3,964,524
 
 
               
Commitments and Contingencies
               
 
               
Stockholder's deficit
               
  Common stock, $0.001 par value; 1,500,000,000 shares
    authorized; 70,135,159 and 69,885,134 shares issued and
    outstanding
   
70,135
     
69,885
 
  Additional paid in capital
   
(2,860,647
)
   
(2,910,402
)
  Accumulated deficit
   
(1,352,270
)
   
(1,082,602
)
    Total stockholder's deficit
   
(4,142,782
)
   
(3,923,119
)
 
               
Total liabilities and stockholder's equity
 
$
5,485
   
$
41,405
 
 
 
 
The accompanying notes are an integral part of these financial statements 
 
 
 
- 5 -

 

Joey New York, Inc.
Consolidated Statements of Operations
For the three and nine months ended November 30, 2015 and 2014
(Unaudited)
 
 
 
 
Three Months Ended
November 30,
(Restated)
   
Nine Months Ended
November 30,
(Restated)
 
 
 
2015
   
2014
   
2015
   
2014
 
Revenues
 
$
305
   
$
111,908
   
$
54,596
   
$
144,469
 
Cost of sales
   
227
     
55,559
     
42,888
     
72,845
 
Gross margin
   
78
     
56,349
     
11,707
     
71,624
 
 
                               
Operating expenses
                               
  Selling and marketing
   
60
     
10,913
     
770
     
57,252
 
  Professional
   
3,603
     
26,250
     
33,549
     
145,808
 
  General and administrative
   
59,071
     
33,142
     
114,305
     
161,179
 
  Depreciation and
    amortization
   
164
     
327
     
491
     
981
 
 
                               
    Total operating expenses
   
62,898
     
70,632
     
149,115
     
365,220
 
 
                               
Loss from operations
   
(62,820
)
   
(14,283
)
   
(137,408
)
   
(293,596
)
 
                               
Interest expense
   
(43,421
)
   
(92,900
)
   
(132,261
)
   
(125,955
)
 
                               
Loss before income taxes
   
(106,240
)
   
(107,183
)
   
(269,669
)
   
(419,551
)
 
                               
Provision (benefit) for income taxes
   
-
     
-
     
-
     
-
 
 
                               
Net loss
 
$
(106,240
)
 
$
(107,183
)
 
$
(269,669
)
 
$
(419,551
)
 
                               
Basic and diluted loss per share
 
$
(0.00
)
 
$
(0.00
)
 
$
(0.00
)
 
$
(0.01
)
 
                               
Weighted average shares outstanding
   
70,094,394
     
69,472,407
     
69,989,764
     
69,234,927
 
 
 
 
The accompanying notes are an integral part of these financial statements 
 
 
 
 
- 6 -



Joey New York, Inc.
Consolidated Statements of Cash Flows
For the nine months ended November 30, 2015 and 2014
(Unaudited)

 
 
2015
(Restated)
   
2014
(Restated)
 
Cash flows from operating activities:
 
   
 
Net loss
 
$
(269,669
)
 
$
(419,551
)
Adjustments to reconcile net income to net cash provided
               
  by operating activities:
               
    Depreciation and amortization
   
491
     
981
 
    Stock based compensation
   
-
     
67,027
 
    Bad debt
   
-
     
-
 
  Changes in operating assets and liabilities:
               
    Accounts receivable
   
531
     
(38,334
)
    Inventory
   
31,249
     
71,028
 
    Accounts payable
   
144,244
     
185,907
 
    Income tax payable
   
-
     
-
 
Net cash used in operating activities
   
(93,153
)
   
(132,952
)
 
               
Cash flows from investing activities:
               
  Purchases of property and equipment
   
(1,219
)
   
-
 
Net cash used in investing activities
   
(1,219
)
   
-
 
 
               
Cash flows from financing activities
               
  Proceeds from the sale of common stock
   
50,005
     
110,000
 
  Proceeds from related party advances
   
39,499
     
56,773
 
Net cash from financing activities
   
89,504
     
166,773
 
 
               
Net change in cash and cash equivalents
   
(4,868
)
   
33,821
 
 
               
  Cash and cash equivalents, beginning of period
   
5,063
     
120
 
  Cash and cash equivalents, end of period
 
$
195
   
$
33,941
 
 
               
Supplemental disclosure of cash flow information
               
  Interest paid
 
$
-
   
$
1,424
 
  Income taxed paid
 
$
-
   
$
-
 
 
               
Supplemental disclosures of non-cash transactions:
               
  Issuance of notes payable in connection with the
               
    recapitalization
 
$
-
   
$
3,000,000
 
 
 
 
The accompanying notes are an integral part of these financial statements 

 
 
- 7 -

 

Joey New York, Inc.
Notes to Consolidated Financial Statements
(Unaudited)



NOTE 1.  NATURE OF BUSINESS

ORGANIZATION
Joey New York, Inc. ("the Company") was incorporated under the laws of the State of Nevada on December 22, 2011.  Effective August 27, 2013, the Board of Directors approved a name change to Joey New York, Inc.  On May 12, 2014, the Company merged with a Florida limited liability company, RAR Beauty, LLC, which distributes natural skin care and beauty products on the wholesale and retail levels and operates under the name of Joey New York and with Pronto Corp a registered company.  The Company accounted for the acquisition as a reverse merger whereby, the operations of RAR Beauty, LLC is the continuing entity for financial reporting purposes and the former members of RAR Beauty, LLC owning approximately 75% of the Company.  On May 12, 2014, RAR Beauty, LLC became a wholly owned subsidiary of the Company.
 
The Company through its wholly owned subsidiary, RAR Beauty, LLC doing business under the name Joey New York, distributes natural skin care and beauty products on wholesale and retail levels.
 
The Company's headquarters is based in Sunny Isles Beach, Florida. The Company seeks to increase market share and introduce its product line through multiple channel markets. The Company faces competition from nationally recognized firms that may have greater resources of personnel, capitalization, and reputation. The Company has therefore concentrated its efforts on product quality and performance.
 
Joey New York product lines include skin care treatments and beauty enhancements that are health conscious, effective and affordable. In keeping with our beauty mission, we have utilized the water from tender young green coconuts, blended with Indian ginseng extract, into our new fast-acting QUICK RESULTS skincare collection.


NOTE 2. BASIS OF PRESENTATION
 
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles of the United States of America ("GAAP") for interim financial statements pursuant to the rules and regulations of the Securities and Exchange Commission.  Accordingly, they 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. Operating results for the three and nine month period ended November 30, 2015, are not necessarily indicative of the results that may be expected for the year ending February 29, 2016.  These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2015, as filed with the Securities and Exchange Commission ("SEC") on June 1, 2016.
 The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amount of revenues and expenses during the reporting period.  Actual results may differ from these estimates.


- 8 -




Joey New York, Inc.
Notes to Consolidated Financial Statements
(Unaudited)



NOTE 3.  SIGNIFICANT ACCOUNTING POLICIES

GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business.  For the nine months ended November 30, 2015 the Company has incurred a loss from operations of $269,669. The Company has a history of losses resulting in an accumulated deficit of $1,299,431.  The Company has negative working capital, in the amount of $4,093,680, as of November 30, 2015.  The Company intends to fund operations and continuing product development through debt and equity financing arrangements, which efforts may be insufficient to fund its capital expenditures, working capital and other cash requirements.  The Company cannot be certain that it will be successful in its efforts to attain such capital or that the terms of capital will be at acceptable terms.

These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern.  The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. general accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

FINANCIAL INSTRUMENTS
The Company's balance sheet includes certain financial instruments, primarily, cash, accounts receivable, inventory, accounts payable, and debt to related parties. The carrying amounts of current assets and current liabilities approximate their fair value due to the relatively short period of time between the origination of these instruments and their expected realization.

ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
 
 

- 9 -




Joey New York, Inc.
Notes to Consolidated Financial Statements
(Unaudited)



Level 1
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities
 
Level 2
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
 
Level 3
Inputs that are both significant to the fair value measurement and unobservable.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of February 28, 2015. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.

CASH
For purposes of the statement of cash flows, cash equivalents include demand deposits, money market funds, and all highly liquid debt instruments with original maturities of three months or less.

ACCOUNTS RECEIVABLE
The company uses the reserve method of accounting for doubtful accounts. There were no bad debts as of November 30, 2015 and February 28, 2015. Based on prior experience no provision for doubtful accounts was deemed necessary.

CONCENTRATIONS AND CREDIT RISKS
The Company's financial instruments that are exposed to concentrations and credit risk primarily consist of its cash and accounts receivable.  

Cash - The Company places its cash and cash equivalents with financial institutions of high credit worthiness.  At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits.  The Company's management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.

Receivables - The Company issues credit to its customers, based on their credit worthiness.  The Company does not have a long history with its customers, to base its credit history and therefore has credit risk.  The Company has not incurred bad debts and therefore has not set a provision for doubtful accounts.

INVENTORY
Inventory is stated at the lower of cost or market, determined by the first-in, first-out method.  Inventory consists solely of finished goods.
 
 

 

- 10 -





Joey New York, Inc.
Notes to Consolidated Financial Statements
(Unaudited)



PROPERTY AND EQUIPMENT AND LONG-LIVED ASSETS
Property and equipment are recorded at cost. Depreciation is provided over the estimated useful lives of the assets, five years, utilizing the straight method.  Maintenance and repairs are expensed as incurred.  Expenditures which significantly increase value or extend useful asset lives are capitalized. When property or equipment is sold or retired, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is recognized.  The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the depreciation period or balance is warranted. Based upon its most recent analysis, the Company believes that no impairment of property and equipment existed at November 30, 2015.

Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable.  When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset.  The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required.  If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset.  When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets.  We did not recognize any impairment losses for any periods presented.

REVENUE RECOGNITION
The Company recognizes revenue when it is realized or realizable and estimable in accordance with ASC 605, "Revenue Recognition".  The Company will recognize revenue only when all of the following criteria have been met:

i) Persuasive evidence for an agreement exists;
ii) Service has been provided;
iii) The fee is fixed or determinable; and,
iv) Collection is reasonably assured.

We recognize a sale when the product has been shipped at which time risk of loss has passed to the customer and the above criteria have been met.

SHARE-BASED EXPENSE
ASC 718, Compensation – Stock Compensation, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired.  Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights.  Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized in the period of grant. 
 
 

- 11 -





Joey New York, Inc.
Notes to Consolidated Financial Statements
(Unaudited)



The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, Equity – Based Payments to Non-Employees.  Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable:  (a) the goods or services received; or (b) the equity instruments issued.  The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.  
 
Share-based expense for the nine months ending November 30, 2015 and 2014 was $0 and $67,027, respectively.

RESEARCH AND DEVELOPMENT
The Company expenses research and development costs when incurred.  Research and development costs include testing of product and outputs.  We spent $0 and $0 in research and development costs for the three months ending November 30, 2015 and 2014, respectively.
 
DEFERRED INCOME TAXES AND VALUATION ALLOWANCE
The Company accounts for income taxes under ASC 740, Income Taxes.  Under the asset and liability method of ASC 740, 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.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs.  A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.  Deferred tax assets or liabilities were off-set by a 100% valuation allowance, therefore there has been no recognized benefit as of November 30, 2015.

NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per share is calculated in accordance with ASC 260, "Earnings Per Share."  The weighted-average number of common shares outstanding during each period is used to compute basic earning or loss per share.  Diluted earnings or loss per share is computed using the weighted average number of shares and diluted potential common shares outstanding.  Dilutive potential common shares are additional common shares assumed to be exercised.

Basic net income (loss) per common share is based on the weighted average number of shares of common stock outstanding at November 30, 2015 and 2014.  Due to net operating loss, there is no presentation of dilutive earnings per share, as it would be anti-dilutive. As of November 30, 2015, the Company had no dilutive potential common shares.

COMMITMENTS AND CONTINGENCIES
The Company follows ASC 450-20, "Loss Contingencies," to report accounting for contingencies.  Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.  There were no commitments or contingencies as of November 30, 2015.
 
 

- 12 -






Joey New York, Inc.
Notes to Consolidated Financial Statements
(Unaudited)



RECENTLY ACCOUNTING PRONOUNCEMENTS
In May 2014, FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers.   The revenue recognition standard affects all entities that have contracts with customers, except for certain items. The new revenue recognition standard eliminates the transaction-and industry-specific revenue recognition guidance under current GAAP and replaces it with a principle-based approach for determining revenue recognition.  Public entities are required to adopt the revenue recognition standard for reporting periods beginning after December 15, 2016, and interim and annual reporting periods thereafter. Early adoption is not permitted for public entities.  The Company has reviewed the applicable ASU and has not, at the current time, quantified the effects of this pronouncement, however it believes that there will be no material effect on the consolidated financial statements.

In June 2014, FASB issued Accounting Standards Update (ASU) No. 2014-12 Compensation — Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.  A performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition under Accounting Standards Codification (ASC) 718, Compensation — Stock Compensation. As a result, the target is not reflected in the estimation of the award's grant date fair value. Compensation cost would be recognized over the required service period, if it is probable that the performance condition will be achieved.  The guidance is effective for annual periods beginning after 15 December 2015 and interim periods within those annual periods. Early adoption is permitted.  Management has reviewed the ASU and believes that they currently account for these awards in a manner consistent with the new guidance, therefore there is no anticipation of any effect to the consolidated financial statements.

In August 2014, FASB issued Accounting Standards Update (ASU) No. 2014-15 Preparation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern.    Under generally accepted accounting principles (GAAP), continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity's liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements—Liquidation Basis of Accounting. Even when an entity's liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in this Update should be followed to determine whether to disclose information about the relevant conditions and events.  The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.  The Company will evaluate the going concern considerations in this ASU, however, at the current period, management does not believe that it has met conditions which would subject these financial statements for additional disclosure.

Recent accounting pronouncements issued by the FASB (Accounting Standards Update, including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are not believed by management to, have a material impact on the Company's present or future consolidated financial statements.
 
 


- 13 -





Joey New York, Inc.
Notes to Consolidated Financial Statements
(Unaudited)



NOTE 4.  INVENTORY

Inventory consists of finished goods.  Inventory is carried at cost on a first-in-first-out basis (FIFO) and held at public warehouse, which performs shipping and distribution function.  All products held in inventory are of our popular brands ordered and anticipated minimal order quantities are held in inventory necessary to operate without backlog or delays in order fulfillment.   Products have not significantly changed from year to year and there is no concentration of suppliers.


NOTE 5.  PROPERTY AND EQUIPMENT

Property consists of equipment purchased for the production of revenues.  As of November 30, 2015 and February 28, 2015:

   
November 30, 2015
   
February 28, 2015
 
Property and equipment
 
$
10,459
   
$
9,240
 
Less accumulated depreciation
   
5,169
     
4,677
 
   Property and equipment, net
 
$
5,290
   
$
4,563
 

Depreciation for the nine months ending November 30, 2015 and 2014 was $491 and $981, respectively.


NOTE 6.  RELATED PARTY ADVANCES

The Company's management has advanced funds and has made payments on behalf of the Company for the purpose of meeting obligations.  These accumulated advances have been formalized by demand notes payable and accrue interest at 2.6%.  The Company is indebted to its two majority shareholders for an aggregate amount of $631,737 and $592,238, as of November 30, 2015 and February 28, 2015, respectively.
 

NOTE 7. LONG-TERM DEBT

On May 12, 2014, in accordance with the acquisition agreement, the Company issued promissory notes payable, amounting $3,000,000 to its two majority shareholders.  The terms of the notes (2, each at $1,500,000) are at a stated interest rate of 5% and mature on May 12, 2016.  The Company recorded this as an equity transaction as the notes did not represent any prior or future compensation.

In accordance with the acquisition agreement, the previous majority shareholder of Pronto Corp. received a promissory note payable of $15,600 for costs incurred prior to the acquisition.  The note has a stated interest rate of 5% and matures on July 12, 2014.
 
 


- 14 -





Joey New York, Inc.
Notes to Consolidated Financial Statements
(Unaudited)



NOTE 8.  EQUITY

The Company is authorized to issue 1,500,000,000 shares of $0.001 par value common stock.

In June 2015, the Company received stock subscriptions for 250,025 restricted shares of common stock ($0.20 per share) in exchange for cash in the amount of $50,005.

There are no warrants or options outstanding.


NOTE 9.  COMMITMENTS AND CONTINGENCIES

Risks and Uncertainties

The Company's operations are subject to significant risks and uncertainties including financial, operational and regulatory risks, including the potential risk of business failure.

Related Party

The controlling members have pledged support to fund continuing operations; however there is no written commitment to this effect.  The Company is dependent upon the continued support of these parties in the immediate future, in order to meet its current obligations, until such time that revenues are generated to meet all current obligations or until such time that adequate capital is raised for its growth plans.

The Company has limited needs for office administration and does not own or lease property or lease office space. The office space used by the Company was arranged by the officers and directors of the Company to use at no charge.

The Company does not have employment contracts with its key employees, including the controlling shareholders who are officers of the Company.

The amounts and terms of the above transactions may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties.

Legal and other matters

In the normal course of business, the Company may become a party to litigation matters involving claims against the Company.   The Company's management is unaware of any pending or threatened assertions and there are no current matters that would have a material effect on the Company's financial position or results of operations.


NOTE 10. SUBSEQUENT EVENTS

Management has evaluated subsequent events through the date of filing the consolidated financial statements with the Securities and Exchange Commission, the date the consolidated financial statements were available to be issued.  Management is not aware of any significant events that occurred subsequent to the balance sheet date that would have a material effect on the consolidated financial statements thereby requiring adjustment or disclosure.
 


- 15 -

 
 

NOTE 11. RESTATEMENT
 
These financial statements are being restated to properly present financial position, results of operations, changes in stockholders' equity and cash flow resulting from the following revisions:

As of and for the quarter ended November 30, 2015:

(1)  Increase accrued liabilities by $54,784 for liabilities associated with legal fees not previously recorded

(2) Reduce additional paid-in capital by $1,944 for an error associated with the re-characterization of equity resulting from the share exchange agreement of May 12, 2014

(3) Reduced related party advances by $43,326

(4) Increase accumulated deficit by $52,839

(5) Eliminate an account receivable in the amount of $11,399 originally reflected as a receivable from a customer resulting from a revenue transaction which was actually a credit provided by a vendor resulting from a purchase transaction

(6) Increase accounts payable by $36,340

(7) Reduce proceeds from related party advances by $24,942

The impact to the financial statements as of November 30, 2015 is detailed in the following table:

             
   
As
Originally
Filed
   
As
Restated
   
Restatement
Adjustment
 
Balance sheet
           
Accrued liabilities
 
$
302,850
   
$
357,634
   
$
54,784
 
Additional paid in capital
 
$
(2,858,703
)
 
$
(2,860,647
)
 
$
(1,944
)
Accumulated deficit
 
$
(1,299,431
)
 
$
(1,352,270
)
 
$
(52,839
)
Statement of cash flow
                       
Accounts receivable
 
$
11,930
   
$
531
   
$
(11,399
)
Accounts payable
 
$
107,904
   
$
144,244
   
$
36,340
 
Proceeds from related party advances
 
$
64,441
   
$
39,499
   
$
(24,942
)
 
 
 
- 16 -


 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
 
GENERAL
 
Joey New York, Inc. was incorporated under the laws of the State of Nevada on December 22, 2011.  Our registration statement has been filed with the Securities and Exchange Commission on April 26, 2012 and was declared effective on August 27, 2012.  The Company completed the acquisition of an entity, RAR Beauty, LLC on May 12, 2014 and currently operates as a distributor of natural skin care and beauty products on the wholesale and retail levels
 
Forward-Looking Statements
 
The following discussion should be read in conjunction with our consolidated financial statements, which are included elsewhere in this Form 10-Q (the "Report"). This Report contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
 
For a description of such risks and uncertainties refer to our Registration Statement on Form S-1, on our Annual Report on Form 10-K and on our filings of Form 8-K with the Securities and Exchange Commission. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
 
 RESULTS OF OPERATION

Nine months ending November 30, 2015 and November 30,2014:

Revenues were $54,596 and $144,469 for the nine months ending November 30, 2015 and 2014, respectively.  The decrease in sales was primarily due to our small customer base and not necessarily due to economic factors.    Our gross profit was $11,707 and $72,845 or 22% and 50% of revenue for the nine months ending November 30, 2015 and 2014, respectively.  Fluctuations in our profit margins will be due to product mix and minor increases in our product costs.

During the nine months ended November 30, 2015, we incurred $149,115 in operating expenses compared to $365,220 for the nine months ended November 30, 2014.  The change in the operating expenses was due to the operating company expenses associated with the merger during the prior period. Significant expenses were professional fees which decreased from $145,808 to $33,549.  Professional fees in the prior period related to the merger transaction and regulatory compliance.  We acknowledge that our professional fees will continue due to compliance and regulatory costs.  Additionally, upon the raising of capital, we project additional costs of compensation and marketing.   

Three months ending November 30, 2015 and November 30, 2014:

Revenues were $305 and $111,908 for the three months ending November 30, 2015 and November 30, 2014, respectively.  The decrease in sales was primarily due to lack of capital to acquire products to sell and our small customer base.    Our gross profit was $78 and $56,349 for the three months ending November 30, 2015 and 2014, respectively.  Fluctuations in our profit margins will be due to product mix and minor increases in our product costs.

During the three months ended November 30, 2015, we incurred $62,898 in operating expenses compared to $70,642 for the three months ended November 30, 2014. Professional fees in the prior period related to the merger transaction and regulatory compliance.  We acknowledge that our professional fees will continue due to compliance and regulatory costs.  Additionally, upon the raising of capital, we project additional costs of compensation and marketing

LIQUIDITY AND CAPITAL RESOURCES

As of November 30, 2015, our current assets were $195 in cash.   We do not believe that we have sufficient cash to meet our current obligations for the near term and will require additional advances from our majority shareholders or through traditional financial institutions or capital through the sale of our common stock.   As of November 30, 2015, our working capital deficit was $4,148,072.
 
- 17 -


 

 
Cash Flows
We have not generated positive cash flows from operating activities.  For the nine months ended November 30, 2015, net cash flows used in operating activities was $93,153. Cash flow from financing activities was $89,504 flow which was financed by proceeds from shareholder advances $39,499 and sale of common stock in the amount of $50,005.
 
OFF-BALANCE SHEET ARRANGEMENTS

As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

CRITICAL ACCOUNTING POLICIES

BASIS OF CONSOLIDATION, PRESENTATION AND USE OF ESTIMATES
The Company prepares its consolidated financial statements (the accounts of Joey New York and its wholly-owned subsidiary, RAR Beauty, LLC) in conformity with accounting principles generally accepted in the United States of America ("GAAP"), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and reported amounts of revenues and expenses during the reporting period. Significant estimates include considerations for allowance for doubtful accounts, product obsolescence and depreciation lives and methods. Actual results could differ from those estimates.

FINANCIAL INSTRUMENTS
The Company's balance sheet includes certain financial instruments, primarily, cash, accounts receivable, inventory, accounts payable, and debt to related parties. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.

GOING CONCERN

As reflected in the accompanying consolidated financial statements, the Company has incurred a net loss, net cash used in operations for the three months ending November 30, 2015. Additionally, the Company has a history of net losses resulting in significant accumulated deficit and a working capital deficit, as of November 30, 2015.

The Company does not yet have a history of financial stability. Historically, the principal source of liquidity has been advances from related parties; there are no written or oral guarantees for the continuance of this funding practice. These factors raise substantial doubt about the Company's ability to continue as a going concern.
 
 
- 18 -

 

 
 
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations
  
Forward-Looking Statements

The following Management's Discussion and Analysis should be read in conjunction with our consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report.  The Management's Discussion and Analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions.  Any statements that are not statements of historical fact are forward-looking statements.  When used, the words "believe," "plan," "intend," "anticipate," "target," "estimate," "expect," and the like, and/or future-tense or conditional constructions ("will," "may," "could," "should," etc.), or similar expressions, identify certain of these forward-looking statements.  These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this Quarterly Report.  Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements.  Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading "Risks Factors" in our various filings with the Securities and Exchange Commission.  We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report.

Overview

Joey New York, Inc. was incorporated under the laws of the State of Nevada on December 22, 2011. Joey New York, Inc. completed the acquisition of RAR Beauty, LLC., a Florida Limited Liability Company on May 12. 2014.  We currently operate as a distributor of natural skin care and beauty products on the wholesale and retail levels through our wholly owned subsidiary RAR Beauty, LLC.

Financial Condition and Results of Operations

The comparative information presented is to the operating company (accounting acquirer) for the three and nine month periods ending November 30, 2015 and 2014.
 
Three Month Periods Ending November 30, 2015 and 2014:

Revenues were $305 and $111,908 for the three month periods ending November 30, 2015 and 2014, respectively.  The substantial decrease in sales was due to a restructure of the Company's sales model and platform.  Our gross loss for the three months ended November 30, 2015 was ($106,240) compared to a gross loss of ($107,183) for the comparable period in 2014.  Fluctuations in our operating margins are due to sales changes in sales volumes, mix of products sold and quantities.

During the three month period ended November 30, 2015, we incurred $62,898 in operating expenses compared to $70,623 during the comparable three period ended November 30, 2014.   We do anticipate that our costs will potentially increase in future periods as we continue to development new business opportunities.

Nine Month Periods Ending November 30, 2015 and 2014:

Revenues were $54,596 and $144,469 for the nine month periods ending November 30, 2015 and 2014, respectively.  The decrease in sales was due to a restructure of the Company's sales model and platform during the most recent quarter.  Our gross profit was $11,707 (22% of sales) and $71,624 (50% of sales), respectively.  Fluctuations in our operating margins are due to changes in sales volumes, mix of products sold and quantities.

During the nine month period ended November 30, 2015, we incurred $149,115 in operating expenses compared to $365,220 during the comparable nine month period ended November 30, 2014.  Changes were primarily due to the decrease of professional fees due to no longer complying with our disclosure requirements (which is now corrected), as well as the decrease in selling and marketing expense to $770.  We do anticipate that our costs will potentially increase in future periods as we continue to development new business opportunities.      

Liquidity and Capital Resources

As of November 30, 2015, our current assets were $195, all of which was in cash.   We did not have sufficient cash to meet our current obligations and required additional advances from our Officers and through the sale of our common stock.  As of November 30, 2015, our working capital deficit was $4,148,072, as compared to a working capital deficit of $3,923,119 as of February 28, 2015.  This principally consists of loans due to shareholders of $3,000,000 in the aggregate.

Cash Flows

We have not generated positive cash flows from operating activities.  For the nine month period ended November 30, 2015, net cash flows used in operating activities was $93,153, which was principally financed by proceeds from Officer advances, in the amount of $39,499 and the sale of common stock of $50,005.
 
 
 
- 19 -

 

 
Plan of Operation and Funding
 
We expect that working capital requirements will continue to be funded through Officer advances and capital raises through an issuance of securities. We have no guarantees or firm commitments that the Officer advances will continue in the near term.  Our working capital requirements are expected to increase with the growth of our business.

Existing working capital, further advances, capital raises and anticipated cash flow are expected to be adequate to fund our operations over the next twelve months.  We have no lines of credit or other bank financing arrangements.  Generally, we have financed operations to date through related party advances and proceeds from the sale of our common stock.

Management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of inventory; (ii) developmental expenses; and (iii) marketing expenses.  We intend to finance these expenses with issuances of securities.

Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders.  Further, such securities might have rights, preferences or privileges senior to our common stock.  Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

Off-Balance Sheet Arrangements

As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
 
Critical Accounting Policies
 
BASIS OF CONSOLIDATION, PRESENTATION AND USE OF ESTIMATES

The Company prepares its consolidated financial statements (the accounts of Joey New York and its wholly-owned subsidiary, RAR Beauty, LLC) in conformity with accounting principles generally accepted in the United States of America ("GAAP"), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and reported amounts of revenues and expenses during the reporting period. Significant estimates include considerations for allowance for doubtful accounts, product obsolescence and depreciation lives and methods. Actual results could differ from those estimates.
 
FINANCIAL INSTRUMENTS

The Company's balance sheet includes certain financial instruments, primarily, cash, accounts receivable, inventory, accounts payable, and debt to related parties. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.

GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business.  For the three month period ended November 30, 2015 the Company has incurred a loss from operations of $62,898.  The Company has a history of losses resulting in an accumulated deficit. The Company has negative working capital, in the amount of $4,148,072, as of November 30, 2015. The Company intends to fund operations and continuing product development through debt and equity financing arrangements, which efforts may be insufficient to fund its capital expenditures, working capital and other cash requirements.  The Company cannot be certain that it will be successful in its efforts to attain such capital or that the terms of capital will be at acceptable terms.

These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern.  The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
 
 
- 20 -




 
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
 
Not required for Smaller Reporting Companies.
 

 Item 4 - Controls and Procedures
 
Evaluation of Disclosure Controls and Procedures

The Company's Principal Executive Officer and Principal Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (the "Exchange Act").  Based on that evaluation, the Company's Chief Executive Officer and Principal Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are not effective in ensuring that information required to be disclosed in the reports that we file or submit under the Exchange Act reports is (1) recorded, processed, summarized and reported within the periods specified in the Commission's rules and forms, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

The ineffective control over financial reporting resulted from a general lack of resources directed to our accounting and financial reporting functions and a lack of internal proficiency on matters of financial reporting. We are addressing this issue by entering into a contract with a competent outside contractor to outsource all of these functions and dedicating a significant amount of resources to enter into that agreement.
 
Changes in Internal Control over Financial Reporting

We have not made a change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended November 30, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
Internal control systems, no matter how well designed and operated, have inherent limitations. Therefore, even a system which is determined to be effective cannot provide absolute assurance that all control issues have been detected or prevented. Our systems of internal controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.
 

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

We are not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties.  As of the date of this report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings.  We are not aware of any other legal proceedings pending or that have been threatened against us or our properties.

From time to time the Company may be named in claims arising in the ordinary course of business. Currently, no legal proceedings or claims, other than those disclosed above, are pending against or involve the Company that, in the opinion of management, could reasonably be expected to have a material adverse effect on its business and financial condition.
 
 
Item 1A    - Risk    Factors

Not required for Smaller Reporting Companies.


- 21 -




Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3 - Defaults   Upon Senior Securities

No disclosure required.

 
Item 4 – Mine Safety Disclosures

No disclosure required.

 
Item 5 - Other Information

No disclosure required.


 
- 22 -





Item 6. EXHIBITS
 
Exhibits:
 
Number
Description
 
 
31.1
Certification of Principal Executive Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant Section 302 of the Sarbanes Oxley Act of 2002
 
 
31.2
Certification of Principal Financial Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant Section 302 of the Sarbanes Oxley Act of 2002
 
 
32.1
Certification of Chief Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
32.2
 
Certification of Chief Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
101.INS
XBRL Instance Document
 
 
101.SCH
XBRL Taxonomy Extension Schema Document
 
 
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
 
 
101. DEF
XBRL Taxonomy Extension Definition Linkbase Document
 
 
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
 
 
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
 
 
- 23 -






SIGNATURES
 
 Pursuant to the requirements 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.
 
 
Joey New York, Inc.
 
 
 
 
 
Date:        June 3, 2016
By:
/s/ Joey Chancis
 
 
 
Joey Chancis, CEO
 
 
 
Principal Executive Officer
 
 
 
 
 
Date:        June 3, 2016
By:
/s/ Richard Roer
 
 
 
Richard Roer, President
 
 
 
Principal Financial Officer
 
 
 
 
 
 
 
 
- 24 -