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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of
The Securities Exchange Act of 1934
For the Quarter Ended Commission File No.
September 30, 1996 0-23920
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JAVA GROUP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 11-2987370
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
404-999 Canada Place, Vancouver, B.C. Canada V6C 3E2
- -------------------------------------------- ------------
(Address of principal executive offices) (Postal Code)
Registrant's telephone number, including area code: (604) 641-1362
Last Fiscal Year Ended June 30, 1996
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No ___
Number of shares outstanding of each class of the registrant's Common Stock as
of September 30, 1996.
Common Stock, par value $.0001 per share: 6,390,000
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<PAGE>
INDEX
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PART 1 -- Financial Information
Page
Item 1. Financial Statements ............................................... 2
Consolidated Balance Sheet as of September 30, 1996 and 1995 (unaudited) .... 3
Consolidated Statement of Operations Accumulated from
May 25, 1989 (Inception) to September 30, 1996 and the
three months ended September 30, 1996 and 1995 (unaudited) ............. 4
Consolidated Statement of Stockholders' Equity Accumulated from
May 25, 1989 (Inception) to September 30, 1996 (unaudited) ............. 5
Consolidated Statements of Cash Flows Accumulated from
May 25, 1989 (Inception) to September 30, 1996 and the
three months ended September 30, 1996 and 1995 (unaudited) ............. 6
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition .................................. 7
PART II -- Other Information ................................................ 8
Signatures .................................................................. 9
-1-
<PAGE>
PART 1 Financial Information
Item 1. Financial statements (Unaudited)
-2-
<PAGE>
Java Group, Inc.
(A Development Stage Company)
Consolidated Balance Sheet
as of September 30, 1996 and 1995
(Unaudited)
1996 1995
$ $
Assets
Current Assets
Cash 142,579 --
Accounts receivable 33,149 --
Inventory 14,937 --
Loans receivable 43,386 --
Prepaid expenses and deposits 28,835 9,087
-------- --------
262,886 9,087
Capital Assets 207,114 81,479
Investment in Joint Venture (50%) 10,790 9,024
-------- --------
480,790 99,590
======== ========
Liabilities and Stockholders' Deficit
Current Liabilities
Bank Indebtedness -- 15,524
Accounts Payable 22,909 15,351
Loans payable - demand 464,103 335,290
-------- --------
487,012 366,165
Officer's Loan 13,810 36,086
-------- --------
500,822 402,251
-------- --------
Stockholders' Deficit
Common Stock, 50,000,000 common shares
authorized, par value $0.0001 per share,
6,530,000 and 4,900,000 shares
issued respectively, 140,000 of which
are owned by the treasury and
6,390,000 shares are outstanding 653 490
Paid in Capital, subscriptions for stock paid
for in excess of par value 861,637 46,800
Deficit Accumulated During the Development Stage (882,322) (349,951)
-------- --------
(20,032) (302,661)
-------- --------
480,790 99,590
======== ========
-3-
<PAGE>
Java Group, Inc.
(A Development Stage Company)
Consolidated Statement of Operations
Accumulated from May 25, 1989 (Inception)
to September 30, 1996 and the three
months ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Accumulated 1996 1995
$ $ $
<S> <C> <C> <C>
Coffee House Operations
Revenue 55,513 26,932 --
------ ------ --------
Expenses
Amortization 11,895 4,051 --
Bank charges 179 12 --
Coffee and supplies 27,938 16,026 --
Office 2,362 522 --
Rent 38,990 11,421 --
Royalties 2,775 1,346 --
Telephone 1,223 176 --
Travel and automobile 2,796 81 --
Wages 26,085 10,846 --
------- ------ --------
114,243 44,481 --
------- ------ --------
Net loss before adjustment for
minority interest (58,730) (17,549) --
Less minority interest 10,625 2,389 --
-------- ------ --------
Net loss from Coffee House operations (48,105) (15,160) --
-------- ------ --------
Coffee House start-up costs (7,063) (7,063) --
------ ------ --------
Head Office Expenses
Accounting and legal 130,354 3,089 2,500
Advertising 24,706 3,289 1,900
Amortization 1,839 713 --
Bank charges and interest 5,235 765 142
Consulting 50,851 -- 1,476
Foreign exchange 6,769 2,477 1,092
Investor relations 158,691 34,084 9,085
Office, rent and telephone 246,965 69,553 13,844
Transfer agent 12,716 153 --
Travel and promotion 136,418 28,078 --
-------- ------ --------
(774,544) (142,201) (30,039)
-------- ------ --------
Other Income and Losses
Interest income 6,627 2,682 --
Other assets written-off (26,540) -- --
Income (loss) from equity investments (79,304) 566 (2,684)
------ ------ --------
(99,217) 3,248 (2,684)
------ ------ --------
Net loss from operations before extraordinary item (928,929) (161,176) (32,723)
Extraordinary item - extinguishment of debt 46,607 -- --
======== ========= ==========
Net Loss (882,322) (161,176) (32,723)
======== ========= ==========
Net Loss Per Share (.03) (.01)
========= ==========
Weighted Average Shares Outstanding 6,390,000 4,760,000
========= ==========
</TABLE>
-4-
<PAGE>
Java Group, Inc.
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity
Accumulated from May 25, 1989 (Inception) to September 30, 1996
(Unaudited)
Deficit
Accumulated
During the
Issued Common Paid-In Development
Shares Stock Capital Stage
# $ $ $
Issuance of common stock at $.001 2,250,000 225 2,025
Net loss for the period (105)
--------- --- ------- --------
Balance December 31, 1989 2,250,000 225 2,025 (105)
Issuance of common stock at $.10 250,000 25 24,975
Net loss for the year (150)
--------- --- ------- --------
Balance, December 31, 1990 2,500,000 250 27,000 (255)
Net loss for the year (150)
--------- --- ------- --------
Balance, December 31, 1991 2,500,000 250 27,000 (405)
Net loss for the year (150)
--------- --- ------- --------
Balance, December 31, 1992 2,500,000 250 27,000 (555)
Merger with Avon Funding,
Inc. at $.0001 400,000 40
Net loss for the period (75)
--------- --- ------- --------
Balance June 30, 1993 2,900,000 290 27,000 (630)
Issuance of common stock at $.01 2,000,000 200 19,800
Net loss for the year (103,766)
--------- --- ------- --------
Balance, June 30, 1994 4,900,000 490 46,800 (104,396)
Net loss for the year (212,832)
--------- --- ------- --------
Balance, June 30, 1995 4,900,000 490 46,800 (317,228)
Regulation "D" financing at $0.50 1,000,000 100 499,900 --
Regulation "D" warrants exercised
at $0.50 630,000 63 314,937 --
Net loss for the year (403,918)
--------- --- ------- --------
Balance June 30, 1996 *6,530,000 653 861,637 (721,146)
Net loss for the period (161,176)
--------- --- ------- --------
Balance, September 30, 1996 6,530,000 653 861,637 (882,322)
========= === ======= ========
* 140,000 shares previously issued are owned by the treasury and are not
outstanding.
-5-
<PAGE>
Java Group, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
Accumulated from May 25, 1989 (Inception)
to September 30, 1996 and the three
months ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Accumulated 1996 1995
$ $ $
<S> <C> <C> <C>
Cash Flows to Operating Activities
Net loss (882,322) (161,176) (32,723)
Adjustments to reconcile net loss to cash
Amortization 13,734 4,764 --
Development costs written-off 26,540 -- --
(Income) loss from equity investments 79,304 (566) 2,684
Gain on extinguishment of debt (46,607) -- --
(Increase) in accounts receivable (33,149) (29,888) --
(Increase) decrease in inventory (14,937) 1,507 --
(Increase) in loan receivable (43,386) (10,863) --
(Increase) in prepaid expenses (28,835) (22,802) (5,650)
Increase (decrease) in accounts payable 22,909 5,727 (8,801)
--------- -------- ------
Net cash Used by Operating Activities (906,749) (213,297) (44,490)
--------- -------- ------
Cash Flows to Investing Activities
Increase in capital assets (220,098) (82,587) (24,308)
Increase in other assets (27,290) -- --
Increase in coffee house investments (90,094) (958) --
--------- -------- ------
Net Cash Used by Investing Activities (337,482) (83,545) (24,308)
--------- -------- ------
Cash Flows to Financing Activities
Increase (decrease) in minority interest -- (1,558) --
Increase in shares issued 653 -- --
Increase in paid in capital 861,637 -- --
Increase (decrease) in loans from an officer 13,810 (42,690) 34,674
Increase in loans from others 510,710 42,782 18,600
--------- -------- ------
Net Cash Provided by Financing Activities 1,386,810 1,466 53,274
--------- -------- ------
Increase (decrease) in cash 142,579 (298,308) 15,524)
Cash - beginning of period -- 440,887 --
--------- -------- ------
Cash - end of period 142,579 142,579 (15,524)
========= ======== ======
-6-
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Conditions
Currently, the Company's principal use of cash is for expenses related to
raising capital, marketing its program and opening coffee houses in Germany.
Although significant cash expenditures will be required for each new coffee
house, the Company anticipates that financing of not less than 75% of the cost
of furniture, fixtures and equipment will be provided by the German breweries.
During the three months ended September 30, 1996, the Company incurred a loss of
approximately $161,000, of which approximately $74,000 was related to
administrative costs in establishing the business and becoming a reporting
company. Furthermore, approximately $65,000 related to travel and administrative
costs in connection with the German expansion and approximately $10,000 was due
to losses in the Broadway store operation. A total of $5,000 was due to the loss
in the first two months of operations in Chemnitz, Germany, and a further $7,000
was spent in start-up rent and wages.
-7-
<PAGE>
PART II Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submissions of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
-8-
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Form 10-Q to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 27, 1996 JAVA GROUP, INC.
Per: /s/ Rob Gillingham
---------------------------------
Rob Gillingham
-9-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 142,579
<SECURITIES> 0
<RECEIVABLES> 33,149
<ALLOWANCES> 0
<INVENTORY> 14,937
<CURRENT-ASSETS> 262,886
<PP&E> 220,070
<DEPRECIATION> 12,956
<TOTAL-ASSETS> 480,790
<CURRENT-LIABILITIES> 487,012
<BONDS> 0
862,290
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> (20,032)
<SALES> 26,932
<TOTAL-REVENUES> 30,180
<CGS> 0
<TOTAL-COSTS> 42,092
<OTHER-EXPENSES> 149,264
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (161,176)
<INCOME-TAX> 0
<INCOME-CONTINUING> (161,176)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (161,176)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
