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The accompanying notes are an integral part of these financial statements

 

 

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For the three months ended May 31, 2016 and 2015

(Unaudited)

The accompanying notes are an integral part of these financial statements

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For the three months ended May 31, 2016 and 2015

(Unaudited)

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements

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Joey New York, Inc.

Notes to Consolidated Financial Statements May 31, 2016

(Unaudited)

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 month period ended May 31, 2016, are not necessarily indicative of the results that may be expected for the year ending February 28, 2017.  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 29, 2016, as filed with the Securities and Exchange Commission ("SEC") on June 2, 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.

 

 

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Joey New York, Inc.

Notes to Consolidated Financial Statements May 31, 2016

(Unaudited)

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 months ended May 31, 2016 the Company has incurred a loss from operations of $88,495. The Company has a history of losses resulting in an accumulated deficit of $1,487,012. The Company has negative working capital, in the amount of $4,192,994, as of May 31, 2016.  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.

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 May 31, 2016 and May 31, 2015.  Due to net operating loss, there is no presentation of dilutive earnings per share, as it would be anti-dilutive. As of May 31, 2016, 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 May 31, 2016.

 

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Joey New York, Inc.

Notes to Consolidated Financial Statements May 31, 2016

(Unaudited)

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Joey New York, Inc.

Notes to Consolidated Financial Statements May 31, 2016

(Unaudited)

NOTE 7.  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 8. 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.

 

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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

 Three months ending May 31, 2016 and May 31, 2015:

Revenue 

Revenues were $ 143 and $36,804 for the three months ending May 31, 2016 and May 31, 2015, respectively.  The decrease in sales was primarily due to drop of customer demand. Our gross profit was $100 and $13,700 or 70% and 37% of revenue for the three months ending May 31, 2016 and 2015, respectively.  Fluctuations in our profit margins will be due to product mix and minor increases in our product costs.

Operating Expenses

During the three months ended May 31, 2016, we incurred $ 44,382 in operating expenses compared to $68,052 for the three months ended May 31, 2015. The total $23,570 decrease was mainly due to the $28,770 decrease in office expense. The decreases were partially offset by $2,449 increase in professional fees and $2,453 increase in selling and marketing expense. 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.   

Other Expenses

 Other expenses consisted only interest expense. Interest expense decreased to $44,114 for the three months ended May 31, 2016, from $44,614 for the three months ended May 31, 2015.

 

LIQUIDITY AND CAPITAL RESOURCES

As of May 31, 2016, our current assets were $ 89,553, comprising of cash of $2,382, account receivable of 1,275, due from related party of $42,613 and inventory of $43,283.  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 May 31, 2016, our working capital deficit was $ 4,192,994.

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We have not generated positive cash flows from operating activities.  For the three months ended May 31, 2016, net cash flows used in operating activities was $ 53,296, which was financed by proceeds from shareholder advances of $11,250 and from the sale common stock of $39,000.

 

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 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.

 

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 May 31, 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.