UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED SEPTEMBER 30, 2000
OR
[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT HAVE 1934
FOR THE TRANSITION PERIOD FROM ______________ TO ________________
COMMISSION FILE NUMBER: 000-24269
THE HAVANA GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 34-1454529
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYEROR ORGANIZATION
OF INCORPORATION) IDENTIFICATION NO.)
5701 MAYFAIR ROAD, NORTH CANTON, OHIO 44720
(ADDRESS OF PRINCIPLE EXECUTIVE OFFICES) (ZIP CODE)
(330) 492-8090
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past 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 [ ]
As of November 10, 2000, there were 2,855,000 shares of the Registrant's
Common Stock $.001 par value issued and outstanding, after giving effect to the
issuance of 450,000 shares in connection with the Registrant's acquisition of
Phillips & King International, Incorporated on August 4, 2000
Transitional Small Business Disclosure Format.
Yes [ ] No [X]
<PAGE>
INDEX
<TABLE>
<CAPTION>
<S> <C>
Consolidated Balance Sheets - September 30, 2000 (Unaudited) and December 31, 1999 3-4
Consolidated Statements of Operations (Unaudited) - Three Months and Nine Months Ended 5
September 30, 2000 and 1999
Consolidated Statements of Cash Flows (Unaudited) - Nine Months Ended September 30, 2000 6
and 1999
Notes to Financial Statements 7
Item 2 - Management's Discussion and Analysis or Plan of Operations 10
Part II - Other Information 13
</TABLE>
<PAGE>
THE HAVANA GROUP, INC. AND SUBSIDIARIES
Balance Sheets
<TABLE>
<CAPTION>
(UNAUDITED)
September 30, December 31,
2000 1999
---- ----
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash $245,005 $1,058,390
Receivables 1,223,082 56,460
Inventories 2,834,522 706,070
Due from affiliates 100 143,753
Deferred catalog expense 81,952 57,357
Prepaid expense 25,673 23,171
------------------- ----------------------
Total Current Assets 4,410,334 2,040,201
DEFERRED FEDERAL INCOME TAX 29,070 29,070
PROPERTY AND EQUIPMENT
Leasehold Improvements 131,505 92,244
Machinery and equipment 67,733 10,981
Data processing equipment 62,174 52,343
Web site development 111,324 110,849
Furniture and fixtures 65,141 20,571
------------------- ----------------------
437,877 286,988
Less accumulated depreciation 96,506 51,394
------------------- ----------------------
341,371 235,594
OTHER ASSETS
Customer list 358,313 387,067
Catalog and product development 81,111 92,518
Note receivable 26,702 -
Other 94,457 9,654
------------------- ----------------------
560,583 489,239
------------------- ----------------------
$5,341,358 $2,799,104
=================== ======================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE HAVANA GROUP, INC. AND SUBSIDIARIES
Balance Sheets
<TABLE>
<CAPTION>
(UNAUDITED)
September 30, December 31,
2000 1999
---- ----
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
<S> <C> <C>
Current portion of long-term debt $240,000 $ -
Accounts payable 1,088,509 276,734
Accrued expenses 173,855 10,062
Due to affiliates - 290,054
Customer advances and other 3,299 7,679
--------------------- ------------------
Total Current Liabilities 1,505,663 584,529
LONG-TERM DEBT, NET OF CURRENT PORTION 1,210,320 -
STOCKHOLDERS' EQUITY:
Preferred stock 6,100 6,100
Common 2,855 1,860
Additional paid - in capital 7,011,132 6,501,322
Retained earnings (deficit) (4,394,712) (4,294,707)
--------------------- ------------------
Total Stockholders' Equity 2,625,375 2,214,575
--------------------- ------------------
5,341,358 2,799,104
===================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE HAVANA GROUP, INC. AND SUBSIDIARIES
Statements of Operations
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------- --------------------------------------
2000 1999 2000 1999
-------------------- ---------------- -------------- -------------------
<S> <C> <C> <C> <C>
Total sales $2,550,083 $366,322 $3,474,323 $997,456
Cost of sales 1,925,733 215,770 2,419,078 547,315
-------------------- ---------------- -------------- -------------------
Gross profit 624,350 150,552 1,055,245 450,141
Selling expenses 162,219 86,082 390,525 264,328
General and administrative 422,324 115,966 740,520 263,040
expenses
-------------------- ---------------- -------------- -------------------
Income (loss) from operations 39,807 (51,496) (75,800) (77,227)
Interest income (expense) (29,595) 21,058 (24,205) 44,255
-------------------- ---------------- -------------- -------------------
Net income (loss) $10,212 $(30,438) $(100,005) $(32,972)
==================== ================ ============== ===================
Basic and diluted earnings $.00 ($0.02) $(.04) ($0.02)
(loss) per share
==================== ================ ============== ===================
</TABLE>
<PAGE>
THE HAVANA GROUP, INC. AND SUBSIDIARIES
Statements of Cash Flows
<TABLE>
<CAPTION>
(UNAUDITED)
Nine Months Ended September 30,
----------------------------------------------------
2000 1999
------------------- --------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net (loss) $(100,005) ($32,972)
Adjustments to reconcile net (loss) to net
cash (used) by operating activities:
Depreciation and amortization 85,273 42,917
Change in:
Accounts receivable (246,950) (5,974)
Inventories (464,002) (179,660)
Deferred catalog expense (24,595) (83,659)
Prepaid expenses 78,715 (32,630)
Other assets (28,376) -
Accounts payable, customer advances and
accrued expenses 43,004 129,663
------------------- --------------------
Net cash (used) by operating activities (656,936) (162,315)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in property and equipment (59,750) (117,727)
CASH FLOWS FROM FINANCING ACTIVITIES
Change in due to/from affiliates (146,401) (129,695)
Sale of common stock 342,056 -
Payment on long-term debt (292,354) -
------------------- --------------------
Net cash (used) provided by financing activities (96,699) (129,695)
------------------- --------------------
Net (decrease) in cash (813,385) (409,737)
Cash - beginning 1,058,390 1,634,276
------------------- --------------------
Cash - ending $245,005 $1,224,539
=================== ====================
ADDITIONAL DISCLOSURE OF NON-CASH INVESTING ACTIVITY:
Issuance of stock in acquisition of Phillips & King
International, Inc. - 450,000 shares of common
$168,750 -
</TABLE>
<PAGE>
THE HAVANA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Business Description and Principles of Consolidation
The Havana Group, Inc. (Havana) is in the mail order and Internet business
and sells to customers throughout the United States. The Company sells tobacco,
cigars, smoking pipes and accessories. Products are purchased from a variety of
manufacturers. The consolidated financial statements include the accounts of The
Havana Group, Inc., and its two wholly owned subsidiaries, Monarch Pipe Company
and Phillips and King International, Incorporated (collectively, "the Company").
Phillips & King International, Inc. sells cigarettes, cigars and related
products to retail outlets throughout the United States. Monarch manufactures
smoking pipes and sells them exclusively to Havana. All significant
inter-company accounts and transactions have been eliminated in consolidation.
Duncan Hill, Inc. owns approximately 80% of the outstanding voting capital stock
of Havana.
Note 2. Basis of Presentation
A. The accompanying unaudited financial statements have been prepared by
the Company. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. In the opinion of the Company's
management, the disclosures made are adequate to make the information presented
not misleading, and the consolidated financial statements contain all
adjustments necessary to present fairly the financial position as of September
30, 2000, the results of operations for the three and nine month periods ended
September 30, 2000 and September 30, 1999 and cash flows for the nine month
periods ended September 30, 2000 and September 30, 1999. The results of
operations for the three and nine month periods are not necessarily indicative
of the results to be expected for the full year.
Reclassification - Certain amounts in the prior year financial statements
have been reclassified to conform to the current year presentation.
Per Share Amounts - The number of shares outstanding in computing basic and
diluted earnings per share for the nine month periods ended September 30, 2000
and 1999 was 2,363,889 and 1,860,000 respectively and for the three month
periods ended September 30, 2000 and 1999 was 2,645,000 and 1,860,000,
respectively.
B. Recently Issued Accounting Pronouncements
In June 1999, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
Of FASB Statement No. 133 - an amendment of FASB Statement No. 133," which
Postponed the effective date of SFAS No. 133, "Accounting for Derivative
Financial Instruments and Hedging Activities," to all fiscal years beginning
after June 15, 2000. In June 2000, the FASB issued Statement 138 "Accounting for
Certain Derivative Instruments and Certain Hedging Activities, an amendment of
FASB Statement No. 133". The standard has no effect as the Company does not
engage in those hedging activities.
In March 2000, the FASB issued Interpretation No.44, "Accounting for
Certain Transactions Involving Stock Compensation - an interpretation of APB
Opinion No. 25" ("FIN 44"). This interpretation clarifies the definition of
employee for purposes of applying Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25"), the criteria for
determining whether a plan qualifies as a noncompensatory plan, the accounting
consequence of various modifications to the terms of a previously fixed stock
option or award, and the accounting for an exchange of stock compensation awards
in a business combination. This Interpretation is effective July 1, 2000, but
certain conclusions in this Interpretation cover specific events that occur
after either December 15, 1998 or January 12, 2000. The Company believes that
the impact of FIN 44 will not have a material effect on its financial position
or results of operation.
In December 1999, the Securities and Exchange Commission issued SAB101,
"Revenue Recognition in Financial Statements" SAB101, as amended by SAB101A and
SAB101B, provides guidance on applying generally accepted accounting principles
to revenue recognition issues in financial statements. This statement is
effective in the fourth quarter of 2000. The Company is evaluating the effect
the adoption may have on the Company's consolidated results of operations and
financial position.
Note 3. Agreement with Affiliated Company
Effective January 1, 1997, the Company contracted with Kids Stuff, Inc.
("Kids"), a subsidiary of Duncan Hill, Inc., to provide telemarketing, order
fulfillment, data processing and certain administrative functions. The Company
is charged for its portion of the expenses on a direct cost basis, as
applicable, or on a pro rata basis. Actual costs are those direct costs that can
be charged on a per order or per hour basis, fixed costs are allocated on a pro
rata basis by dividing the total assets of the Company by the sum of the total
assets of the Company and Kids.
At January 1, 1999 the agreement was modified and extended on a
month-to-month basis as the Company began to incur direct costs for its
administrative functions. The Company pays to Kids an accounting, data
processing, and administrative charge of $15,000 per year. Additionally, a $1.75
per shipment for warehouse services was paid by Havana until March 8, 2000 when
Havana obtained their own warehousing facility and no longer required Kids Stuff
Inc.'s fulfillment services.
Note 4. Stockholders' Equity
Common Stock
The Havana Group, Inc. has 25,000,000 shares of $.001 par value common
stock authorized. The number of common shares issued and outstanding was
2,855,000 and 1,860,000 at September 30, 2000 and December 31, 1999,
respectively. The holders of Common shares are entitled to one vote on all
stockholder matters.
The Company is not currently subject to any contractual arrangements, which
restricts its ability to pay cash dividends. The Company's Certificate of
Incorporation prohibits the payment of cash dividends on the Company's Common
Stock in excess of $.05 per share per year so long as any Serial Preferred Stock
remains outstanding unless all accrued and unpaid dividends on Serial Preferred
Stock has been set apart and there are no arrearages with respect to the
redemption of any Serial Preferred Stock.
In Febuary 2000, Mr. Miller purchased 240,000 unregistered shares of the
Company's common stock at a price of $.4044 per share for total proceeds of
approximately $97,000. In March 2000, the Company sold 245,000 unregistered
common shares to seven investors in a private placement for $245,000. In August,
2000, 450,000 common shares were issued pursuant to the acquisition of Phillips
& King International, Inc. (See Note 5).
B. Series A Preferred Stock
The Board of Directors has the authority to issue up to 10,000,000 shares
of Preferred Stock in one or more series and to fix all rights, preferences,
privileges, and restrictions. In December 1997, the Company issued, as a
dividend to Duncan Hill, Inc., 5,000,000 shares of Series A Preferred Stock
(Series A) to Duncan Hill, Inc. The Series A holders are entitled to one vote
for each share held on all matters submitted to a vote of the stockholders. The
Series A stock is not subject to redemption and has no conversion rights or
rights to participate in dividend payments. In the event of any voluntary or
involuntary liquidation of the Company, each share of Series A stock has a
liquidation preference of $.001 per share.
C. Series B Preferred Stock
In December 1997, the Company issued 1,100,000 shares of its Series B
Convertible Preferred Stock (Series B) to Duncan Hill. In return, Duncan Hill
assumed a $300,000 liability due to an affiliate. Series B has the same voting
privileges as the Common Stock. Each share of Series B stock is convertible into
one share of the Company's Common Stock at the option of either the holder or
the Company upon reaching net pre-tax earnings of at least $500,000. If declared
by the Board of Directors, Series B shareholders are entitled to receive
quarterly dividends of no more than $.025 per share, payable out of surplus or
net profits of the Company. As of November 10, 1999, the Board of Directors has
not declared any dividends. As the Series B Preferred pays a $.10 dividend per
share, the Company has recorded the Series B stock at $1.00 per share to reflect
its estimated fair value. The Series B stock is not subject to redemption. In
the event of a voluntary or involuntary liquidation of the Company, each share
of Series B stock has a liquidation preference of $.001, which is subordinated
to the liquidation preference of the Series A stock.
D. Class A Warrants
As of March 31, 2000, the Company has 2,858,000 Class A Warrants
outstanding, which is comprised of 920,000 warrants included in the units sold
in the initial public offering (see Note 8); 1,400,000 warrants issued in
connection with the conversion of a note payable (see Note 4E); 138,000 warrants
issued to Duncan Hill in replacement of warrants issued in conjunction with a
reorganization; and 400,000 warrants issued to Mr. William Miller, the Company's
CEO, as described in Note 5, 200,000 of which he currently owns.
Each Class A Warrant entitles the Holder to purchase one share of common
stock at a price of $5.25 and expires May 2003. The Company may redeem the Class
A Warrants at a price of $.10 per warrant, upon not less than 30 days' prior
written notice, if the closing bid price of the common stock has been at least
$10.50 per share for 20 consecutive trading days ending no more than the 15th
day prior to the date on which the notice of redemption is given.
Note 5. Acquisition
Effective August 4, 2000, the Company acquired 100% of the capital stock of
Phillips & King International, Incorporated (P&K) for 450,000 shares of
restricted common stock of Havana. Costs incurred pursuant to the acquisition
were $47,115. The estimated value of assets acquired was $2,886,722 and
liabilities assumed was $2,670,857, for a net value of $215,865. The agreement
stipulated that $900,000 in cash be transferred from Havana to P&K for the
payment of certain bankruptcy related liabilities. The purchase is being
accounted for as a purchase in accordance with APB 16.
The following unaudited pro forma results of operations for the three and
nine month periods ended September 30, 2000 and 1999 assume the acquisition
occurred as of January 1, 1999:
<TABLE>
<CAPTION>
------------------------------ --------------------------------------- --------------------------------------
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales $3,399,476 $4,032,370 $10,386,388 $11,880,421
Net Income $361,582 $(47,445) $166,069 $(647,638)
Earnings (loss) per Share $.13 $(.02) $.07 $(.28)
------------------------------ ------------------ -------------------- -------------------- -----------------
</TABLE>
Net income for the three and nine month periods ended September 30, 2000
includes non re-occurring items of $452,000 or $.16 per share related to a
bankruptcy of P&K prior to the acquisition. The pro forma results are for
illustrative purposes only and do not purport to be indicative of the actual
results which would have occurred had the transaction been consummated as of an
earlier date, nor are they indicative of results of operation which may occur in
the future.
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This discussion should be read in conjunction with the information in the
financial statements of the Company and notes thereto appearing elsewhere.
Overview
The Havana Group, Inc. is a consumer catalog and Internet business
specializing in smoking pipes, tobaccos, cigars and related accessories. We are
the manufacturer and sole distributor of the "Magic Inch" and "Aerosphere"
smoking pipe systems, and the sole distributor of "Carey Honduran" lines of
proprietary hand made cigars. Our products are offered through our Carey's
Smokeshop catalog. Carey Tobacco Club is also offered through the catalog, which
is a monthly program of tobacco shipments to Club members. During December 1997
we opened, and have since been developing, our Havana Group retail store. In
June of 1999, we developed and launched our web site www.smokecheap.com as a new
distribution outlet.
Acquisition of Phillips and King International, Incorporated
On August 4, 2000, the Company entered into an agreement with John S.
Parker, Priscilla H. Parker, Jerold E. Christensen and Linda L. Christensen (the
"Sellers") and acquired 100% of the capital stock of Phillips and King
International, Incorporated ("P&K") in exchange for (i) 450,000 restricted
shares of the Company's Common Sock with piggy-back registration rights,(ii)
$900,000 in cash which was paid directly to P&K and (iii) assumption of
liabilities. Contemporaneous with the acquisition of P&K, the Company entered
into 90-day transitional consulting contracts with John S. Parker and Jerold E.
Christensen and agreements not to compete for a period of two years.
P&K was organized in 1906 by Mr. Harry Phillips. P&K is a wholesale
distributor of tobaccos, cigars, pipes and related smoking products. P&K sells
tobacco products to retail shops and it has approximately 3,000 accounts. The
method of sale is by direct contact and P&K employs nine sales representatives
in its business. The assets of P&K acquired by Havana will continue to be
utilized in the same line of business as that conducted before the transaction.
P&K's principal assets include, without limitation, inventories, written lists
and accounts receivable.
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1999.
Net sales for the quarter ended September 30, 2000 were $2,550,083, an
increase of $2,183,761 from the same quarter last year. The increase is due to
the acquisition, effective August 4th, 2000 of Phillips and King, International
(P&K) and the consolidation of their financial results into the Havana Group.
Total sales for P&K for calendar year 1999 were $13,868,624. Sales of P&K for
the period August 4, 2000 through September 30, 2000 were $2,072,269.
Cost of sales increased from 58.9% of net sales in 1999 to 75.5% in 2000
due to a significant margin difference between Havana and P&K. P&K operates on a
significantly higher volume, lower margin basis.
Selling expenses were 6.4% of sales for the third quarter of 2000 compared
with 23.5% of sales in the third quarter of 1999. The reduced selling expense in
2000 resulted from the P&K acquisition as P&K is not a direct marketer, but
utilizes a small sales staff and an annual catalog, thereby resulting in lower
selling costs in comparison to sales.
For the third quarter of 2000, general and administrative expenses were
$422,324 or 16.6% of sales, compared to $115,966 or 31.7% of sales during the
same quarter in 1999. The increase of $306,358 was due to the acquisition of
P&K, while the general and administrative expenses as a percentage of
consolidated sales were significantly lower than the same quarter of 1999.
Income from operations for the third quarter of 2000 was $39,807, or 1.6%
of sales, as compared to an operating loss of $51,496, or 14.1% of total sales
in 1999. The improvement of $91,303 was due to the acquisition of P&K and the
related additional sales and margin dollars.
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1999
Net sales for the nine months ended September 30, 2000 were $3,474,323
compared with $997,456 for the comparable period in 1999. The increase is due to
the acquisition of P&K as described above. In addition to the increased levels
of sales resulting from the P&K acquisition, Havana sales increased $404,598 or
40.6% for the nine months ended September 30, 2000 compared to same period in
the prior year. This increase is due to increased popularity of the
make-your-own cigarette products and flavored cigarette tobacco.
Cost of sales increased to 69.6% of sales in 2000 from 54.9% in 1999
primarily due to the margin differences discussed above. Selling expenses
decreased from 26.5% of net sales in 1999 to 11.2% in 2000 due to the
acquisition of P&K as described above. For the nine months ended September 30,
2000, general and administrative expenses amounted to $740,520 or 21.3% of net
sales, compared with $263,040, or 26.4% of net sales, for the same period last
year. The change is due to the acquisition of P&K as described above.
The operating loss for the first nine months of 1999 was $77,227, or 7.7%
of net sales, as compared to an operating loss of $75,800, or 2.2% of net sales,
for the first nine months of 2000. This improvement was due to the acquisition
of P&K, as more fully described above.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES.
At September 30, 2000, our accumulated deficit increased $100,005 from
December 31, 1999 because of the net loss. In addition to the net loss, cash was
used by operating activities primarily due to increases in receivables of
$246,950 and inventories of $464,002. These changes, along with the effect of
other changes in current assets and non-cash charges resulted in total cash used
by operating activities of $656,936. Cash was used by investing activities in
the amount of $59,750, for the acquisition of property and equipment. The
Company's financing activities consisted of a decrease in amounts due to
affiliates of $146,401, payments on debt acquired of $292,354 and the sales of
common stock amounting to $342,056.
On October 16, 2000, P&K closed on a three-year asset based working capital
credit facility with Wells Fargo Business Credit, Inc. in the total amount of
$2,000,000. At the time of the closing, availability under the credit facility
was approximately $1,200,000. In order to improve cash flow by $20,000 per
month, certain long-term debt obligations were refinanced using proceeds from
the credit facility. The Havana Group, Inc. is a corporate guarantor of the
credit facility.
At September 30, 1999, our accumulated deficit increased $32,972 from
December 31, 1998 because of the net loss.
In addition to the net loss, cash was used by operating activities
primarily due to increases in inventories by $179,660 and increases in deferred
advertising expense by $83,659. Other increases in current assets were accounts
receivable increase of $5,974 and an increase in prepaid expense of $32,630.
Cash uses were somewhat offset by non-cash charges of $42,917 for depreciation
and amortization, and an increase in accounts payable of $129,663.
Cash was used by investing activities in the amount of $117,727, primarily
as a result of our investment in the Company's Web Site development.
The Company's financing activities consisted of a decrease in amounts due
to affiliates, which were reduced by $129,695 during the first nine months of
1999.
Overall, we expect to meet our current cash needs through our ongoing
operations, and from our present working capital position and funds borrowed
under our Phillips & King credit facility.
<PAGE>
FORWARD LOOKING STATEMENTS AND ASSOCIATED RISKS
Management's discussion and analysis contains forward-looking statements,
which reflect Management's current views and estimates of future economic
circumstances, industry conditions, company performance and financial results.
These forward-looking statements are based largely on the Company's expectations
and are subject to a number of risks and uncertainties, many of which are beyond
the Company's control. Actual results could differ materially from these forward
looking statements as a result of changes in the trends in the tobacco or cigar
retail and mail order industry, government regulations imposed on the tobacco
industry, competition, availability and price of goods, credit availability,
printers' schedules and availability, and other factors. Any changes in such
assumptions or factors could produce significantly different results.
<PAGE>
PART II. OTHER INFORMATION
(a) Exhibits filed as part of this report:
27. Financial Data Schedule
Signature
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.
The Havana Group, Inc.
DATE:
/s/ Stephen Musin
Stephen Musin, Vice President
and Chief Financial Officer
