UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from _________ to _________
Commission File Number:
La Jolla Fresh Squeezed Coffee Co., Inc.
(Exact name of registrant as specified in its charter)
Washington 33-0758795
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9060 Activity Road, Suite A, San Diego, California 92126
(Address of principal executive offices) (Zip Code)
858.273.5282
(Registrant's Telephone Number, Including Area Code)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date. As of June 30, 2000, there were
31,501,659 shares of the issuer's $.001 par value common stock issued and
outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditors' Report.................................................F-2
Consolidated Financial Statements:
Consolidated Balance Sheet as of June 30, 1999
& June 30, 2000.........................................................F-3
Consolidated Statements of Operations for quarter
ended June 30, 1999 and June 30, 2000...................................F-4
Consolidated Statements of Stockholders' Deficit
for the period from December 31, 1999 to June 30, 2000..................F-5
Consolidated Statements of Cash Flows for period
ended December 31, 1999 through June 30, 2000..........................F-8
Notes to Consolidated Financial Statements..............................F-9
F-1
<PAGE>
LA JOLLA FRESH SQUEEZED COFFEE CO., INC.
(A DEVELOPMENT-STAGE COMPANY)
Unaudited CONSOLIDATED BALANCE SHEET
June 30, 1999 and June 30, 2000
--------------------------------------------------------------------------------
ASSETS
<TABLE>
<CAPTION>
June 30, 2000 June 30, 1999
<S> <C> <C>
Current assets:
Cash $ 226 $ 322
Receivable 3,911 7,359
----------- -----------
Total current assets 4,137 7,681
Property and equipment, net 121,509 59,149
----------- -----------
$ 125,646 $ 66,830
=========== ===========
LIABILITIES & STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 59,309 $ 11,498
Accrued expenses 145,000 25,000
Accrued payroll and related benefits 22,521 9,500
Other liabilities 21,057 0
----------- -----------
Total current liabilities 247,887 45,998
Due to related party 51,047 61,546
----------- -----------
Total liabilities 298,934 107,544
Commitments and contingencies (Note 5)
Stockholders' deficit:
Common stock, $0.001 par value; 50,000,000
shares authorized; 31,501,659 issued and outstanding 31,502 8,879
Additional paid-in capital 5,205,404 1,731,177
Deficit accumulated during the development stage (4,047,069) (1,270,770)
Note receivable from officers (1,363,125) (510,000)
----------- -----------
Total stockholders' deficit (173,288) (40,714)
----------- -----------
$ 125,646 $ 66,830
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
F-3
<PAGE>
LA JOLLA FRESH SQUEEZED COFFEE CO., INC.
(A DEVELOPMENT-STAGE COMPANY)
Unaudited CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the quarter ended
June 30,
2000 1999
------------ ------------
<S> <C> <C>
Net sales $ 5,542 $ B
Cost of sales (2,771) B
------------ ------------
Gross profit 2,771 B
Operating expenses-
Selling, general and administrative 248,909 172,565
Net loss $ (246,138) $ (172,565)
============ ============
Basic and diluted loss per share $ (.008) $ (.008)
============ ============
Basic and diluted weighted average common shares outstanding 30,500,000 20,500,000
============ ============
</TABLE>
The accompanying notes are an integral part of these unaudited
consolidated financial statements
F-4
<PAGE>
LA JOLLA FRESH SQUEEZED COFFEE CO., INC.
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(Continued)
FOR THE PERIOD FROM December 31, 1999
TO June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the Note
Paid-In Development Receivable
Shares Amount Capital Stage From Officer Total
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1999 20,398,486 $ 20,398 $ 4,036,683 $ (3,599,135) $ (510,000) $ (52,054)
------------ ------------ ------------ ------------ ------------ ------------
Shares Issued to Executive for Note 3,487,500 3,488 849,637 (853,125) 0
Share to be Issued Sorisole Merger 3,500,000 3,500 (3,500) 0
Shares Issued or to be Issued for Cash 1,711,026 1,711 165,589 167,300
Net Loss (201,796) (201,796)
------------ ------------ ------------ ------------ ------------ ------------
Balances, March 31, 2000 $ 29,097,012 $ 29,097 $ 5,048,409 $ (3,800,931) $ (1,363,125) $ (86,550)
------------ ------------ ------------ ------------ ------------ ------------
Share to be Issued For Services 175,000 350 34,650 35,000
Shares Issued or to be Issued for Cash 2,229,647 2,230 122,170 124,400
Net Loss (246,138) (246,138)
------------ ------------ ------------ ------------ ------------ ------------
Balances, June 30, 2000 $ 31,501,659 $ 31,677 $ 5,205,229 $ (4,047,069) $ (1,363,125) $ (173,288)
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these unaudited
consolidated financial statements
F-5
<PAGE>
LA JOLLA FRESH SQUEEZED COFFEE CO., INC.
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS FROM DECEMBER 31, 1999
TO June 30, 2000
--------------------------------------------------------------------------------
2nd Quarter 2000 Year to Date
---------------- ------------
Cash flows from operating activities:
Net loss $(246,138) $(447,934)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 8,800 17,578
Changes in operating assets and liabilities:
Accounts receivable 712 (140)
Accounts payable 3,605 47,672
Accrued expenses 66,072 68,713
Accrued payroll and related benefits -- --
Other liabilities 11,473 7,973
--------- ---------
Net cash used in operating activities (155,476) (306 138)
--------- ---------
Cash flows from investing activities-
Purchases of property and equipment (3,924) (36,862)
--------- ---------
Cash flows from financing activities:
Issuance of common stock for cash 124,400 291,700
Issuance of commons stock for services 35,000 35,000
--------- ---------
Net cash provided by financing activities 159,400 326,700
--------- ---------
Net increase in cash (0) (16,300)
Cash at beginning of period 226 16,526
--------- ---------
Cash at end of period $ 226 $ 226
========= =========
Non Cash Financing Activities-
Stock issued to executive for promissory notes $ 0 $ 853,125
========= =========
The accompanying notes are an integral part of these unaudited
consolidated financial statements
F-6
<PAGE>
LA JOLLA FRESH SQUEEZED COFFEE CO., INC.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Note 1 - Organization
La Jolla Fresh Squeezed Coffee Company, Inc., formerly North West Farms, Inc.
("LJFSC"), incorporated in the state of Washington, and its subsidiaries
(collectively the "Company") intends to manufacture, market and distribute
quality cold-brewed coffee liquid extract and gourmet non-alcoholic cold coffee
drinks. The Company since Inception has had no significant operations and,
accordingly, is a company in the development stage.
Stephen's Coffee Co., Inc. ("SCC") was incorporated in the state of California
on August 13, 1993 ("Inception"). SCC is the operating company responsible for
the development of manufacturing methods and products for distribution.
Effective November 1, 1998, SCC was acquired for 1,142,500 shares of common
stock representing approximately 9% of the outstanding voting stock of LJFSC in
exchange for the common stock of SCC. LJFSC has had no significant operations.
For accounting purposes, the combination is treated as a recapitalization of
SCC.
Note 2 - Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements at March 31, 2000 and 1999,
include the accounts of the Company and its subsidiaries. All inter-company
accounts have been eliminated in consolidation.
Basis of Presentation
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has incurred
losses from operations since its inception and requires substantial funds for
its operational activities and sales efforts. These factors raise substantial
doubt about the Company's ability to continue as a going concern. Management is
seeking financing through a private placement of its common stock. There are no
assurances that funds will be available to or, if available, that the Company
will achieve revenues sufficient to meets its cost structure. 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 consolidated financial statements in conformity with
generally 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 the reported amounts of revenues and expenses during
the reported periods. Actual results could materially differ from those
estimates. Significant estimates made by management include, but are not limited
to, the allowance for losses on uncollectible accounts receivable, and the
impairment of long-lived assets.
F-7
<PAGE>
LA JOLLA FRESH SQUEEZED COFFEE CO., INC.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Note 2 - Summary of Significant Accounting Policies, continued
Concentration of credit risk
The Company purchased certain products from two suppliers, which accounted for
approximately 24% and 23% of total purchases during the year ended December 31,
1999. No suppliers represented more than 10% during the year ended December 31,
1998. Management does not believe that the loss of such suppliers could have a
severe impact on the results of operations.
Impairment of Long-Lived Assets
The Company accounts for impairment of long-lived assets under the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of."
This statement requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying amount or fair value less costs to
sell.
Property and Equipment
Property and equipment are depreciated over their estimated useful lives using
the straight-line method over three to seven years. Additions and betterments
are capitalized. The cost of maintenance and repairs is charged to expense as
incurred. When depreciable property is retired or otherwise disposed of, the
related cost and accumulated depreciation are removed from the accounts and any
gain or loss is reflected in operations.
The Company periodically reviews the value of its property and equipment for
impairment whenever events or changes in circumstances indicate that the book
value of an asset may not be recoverable. An impairment loss would be recognized
whenever the review demonstrates that the future undiscounted net cash flows
expected to be generated by an asset from its use and eventual deposition are
less than the carrying amount of the asset. Management believes no permanent
impairment has occurred.
Revenue Recognition
Revenue from coffee products expected to be recognized upon shipment of product.
Estimated returns and allowances are accrued to expenses at the time of sale.
Income Taxes
The Company accounts for income taxes under the provisions of SFAS No. 109,
"Accounting for Income Taxes," whereby deferred tax assets and liabilities are
recognized for the future tax consequences attributable to temporary differences
between bases used for financial reporting and income tax reporting
F-8
<PAGE>
LA JOLLA FRESH SQUEEZED COFFEE CO., INC.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Note 2 - Summary of Significant Accounting Policies, continued
purposes. 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. 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.
Stock-Based Compensation
SFAS No. 123, "Accounting for Stock-Based Compensation," defines a fair value
based method of accounting for stock-based compensation. However, SFAS No. 123
allows an entity to continue to measure compensation cost related to stock and
stock options issued to employees using the intrinsic method of accounting
prescribed by Accounting Principles Board Opinion ("APB") No. 25, "Accounting
for Stock Issued to Employees." Entities electing to remain with the accounting
method of APB No. 25 must make pro forma disclosures of net income (loss) and
earnings (loss) per share, as if the fair value method of accounting defined in
SFAS No. 123 had been applied. Certain options to purchase common stock were
granted to officers in 1999 which value would not be significant since at the
date of grant, the Company would have used the minimum value method of valuing
such stock options under SFAS No. 123.
Loss Per Share
Basic EPS is computed as net income (loss) divided by the weighted average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur from common stock issuable through stock
options, warrants and other convertible securities.
Reporting Comprehensive Income
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income."
This statement establishes standards for reporting the components of
comprehensive income and requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
included in a financial statement that is displayed with the same prominence as
other consolidated financial statements. Comprehensive income includes net
income (loss), as well as certain non-shareholder items that are reported
directly within a separate component of stockholders' equity and bypass net
income (loss). The Company had adopted the provisions of this statement during
the current fiscal year, with no impact on the accompanying consolidated
financial statements.
Disclosures about Segments of an Enterprise and Related Information
In June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information." The provisions of this statement require
disclosures of financial and descriptive information about an enterprise's
operating segments in annual and interim financial reports issued to
stockholders. The statement defines an operating segment as a component of an
enterprise that engages in business activities that generate revenue and incur
expense, whose operating results are reviewed by the chief operating
decision-maker in the determination of resource allocation and assessing
performance, and for which discrete financial information is available. The
Company has adopted the provisions of this statement in 1999 with no impact on
the accompanying consolidated financial statements.
F-9
<PAGE>
LA JOLLA FRESH SQUEEZED COFFEE CO., INC.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Note 2 - Summary of Significant Accounting Policies, continued
Accounting for Derivative Instruments and Hedging Activities
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. Accordingly, the Company will adopt SFAS
No. 133 beginning on January 1, 2000. SFAS No. 133 establishes standards for the
accounting and reporting of derivative instruments and hedging activities,
including certain derivative instruments embedded in other contracts. Under SFAS
No. 133, entities are required to carry all derivative instruments at fair value
on their balance sheets. The accounting for changes in the fair value (i.e.,
gains or losses) of a derivative instrument depends on whether it has been
designated and qualifies as part of a hedging activity and the underlying
purpose for it. The Company does not believe that the adoption of SFAS No. 133
will have a significant impact on the Company's consolidated financial
statements or related disclosures.
Note 3 - Acquisition
As discussed in Note 1, LJFSC entered into an asset purchase agreement with SCC
to acquire all the assets of SCC for 1,142,500 shares of its common stock. Since
the acquisition was treated as a recapitalization of SCC, these shares are
reflected as outstanding since Inception. The shares totaling 11,086,797
retained by the shareholders of LJFSC are considered as issued in connection
with the recapitalization in the accompanying consolidated statements of
stockholders' deficit. LJFSC had no assets nor operations at the date of the
acquisition.
Note 4 - Property and Equipment
Property and equipment consists of the following at June 30, 2000:
Equipment $ 89,496
Furniture and fixtures 3,572
Leasehold improvements 62,252
--------
155,320
Less accumulated depreciation (33,811
--------
$121,509
Note 5 - Commitments and Contingencies
Lessee
The Company is the lessee of office equipment under operating leases typically
for periods of three years. The Company leases its office space under an
operating lease in which the terms are for a period of twenty-one months.
F-10
<PAGE>
LA JOLLA FRESH SQUEEZED COFFEE CO., INC.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Note 5 - Commitments and Contingencies, continued
Litigation
In November 1999, a former director of SCC made a claim against the Company
alleging that certain corporate formalities were not complied with during the
transfer of the assets of SCC entitling the plaintiff to unwind the transfer,
$150,000 in damages and additional shares in the Company. In November 1998, the
Company believed it had settled the matter by the payment of $15,000, the
issuance of 150,000 shares and the director's resignation. The outcome of the
case is uncertain. As such, no provision for loss has been made in the
accompanying consolidated statements of operations.
In November 1999, a shareholder of the Company filed a claim against the Company
alleging similar claims as above, specifically that the transfer of the assets
of SCC was fraudulent and is seeking declaratory relief to unwind the transfer,
and other damages. The outcome of the case is uncertain. As such, no provision
for loss has been made in the accompanying consolidated statements of
operations.
Note 6 - Stockholders' Deficit
During the period from Inception to December 1998, the president and founder of
SCC had personally funded much of the operations. Approximately $468,000 was
contributed to further the research and development of its cold extraction
process and delivery system.
Common Stock Issuances
As discussed in Notes 1 and 3, effective November 1, 1998, NWF issued 1,142,500
shares of its common stock for all the assets subject to liabilities assumed of
SCC. Since the acquisition was treated as a recapitalization of SCC, these
shares are reflected as outstanding since Inception. The shares totaling
11,086,797 retained by the stockholders of NWF are considered as issued in
connection with the recapitalization in the accompanying consolidated statements
of stockholders' deficit.
In 1998, the Company issued 503,571 shares of common stock for $0.35 per share
in a private placement offering for a total of $176,250. In 1999, the Company
sold an additional 496,429 shares of common stock for $0.35 per share pursuant
to such offering for a total of $173,750.
From May to October 1999, the Company received $309,300 from a private placement
offering issuing 475,846 shares of its common stock for $0.65 per share.
An officer purchased shares in February 1999 in exchange for a promissory note
bearing interest at six percent per annum due in 2009 for the 3,400,000 shares.
No payments have been made on the note during 1999 or 2000.
In June 1999, the Company issued 1,000,000 shares of common stock to a third
party in exchange for the development and maintenance of the Company's website.
The services were valued at $650,000 or $0.65 per share and charged to
operations. The Company disputes the transaction due to lack of performance by
the vendor and the Company is currently pursuing cancellation of a portion of
the shares. No adjustment has been made to the accompanying consolidated
financial statements as a result of managements' intent to cancel certain shares
under this arrangement.
F-11
<PAGE>
LA JOLLA FRESH SQUEEZED COFFEE CO., INC.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Note 6 - Stockholders' Deficit, continued
At various times during 1999, the Company issued 446,152 shares of common stock
at $0.65 per share for total proceeds of $290,000. In November 1999, the Company
issued 172,191 shares of common stock at prices ranging from $0.31 to $0.36 per
share for total proceeds of $60,875. In December 1999, the
Company issued 75,000 shares of common stock at $0.40 per share for total
proceeds of $30,000. The price per share of such sales of common stock were
negotiated based on market conditions. All such sales were made to unrelated
parties.
The executive purchased 3,487,500 share in February 2000 in exchange for a
promissory note bearing interest at six percent per annum due in 2010. No
payments have been made on the note during 2000. This shares are outstanding but
not issued as of March 31, 2000.
On February 22, 2000, the Company acquired all the outstanding shares of common
stock of Sorisole Acquisition Corp. ("Sorisole"), a Delaware corporation, from
the shareholders thereof in exchange for 3,500,000 shares of common stock.
Sorisole is a reporting shell corporation and has no assets or liabilities and
no significant operations. This acquisition will be accounted for as a
recapitalization of the Company.
In the 2nd Quarter 2000, the Company issued 2,229,647 shares of common stock at
between $0.04 and $0.17 per share for total proceeds of $124,400. . The price
per share of such sales of common stock were negotiated based on market
conditions. All such sales were made to unrelated parties.
In the 2nd Quarter 2000, the Company issued 175,000 shares of common stock in
return for consulting services. The company prices the services at $0.20 per
share for a charge to expense of $35,000.
Certain of the share identified above have not been issued as of June 30, 2000.
Stock Options
In 1999, the Company adopted the 1999 Incentive Stock Option Plan (the "Plan"),
which authorizes the granting of options to key employees, directors, and/or
consultants to purchase 5,000,000 shares of unissued common stock.
Note 7 - Provision for Income Taxes
The Company's net deferred tax assets at December 31, 1999, consist of net
operating loss carryforwards for federal and state income tax reporting
amounting to approximately $3.6 million and $1.7 million, respectively. At
December 31, 1999, the Company provided a 100% valuation allowance for these net
operating loss carryforwards totaling approximately $1.4 million. The Company's
net operating loss carryforwards will begin to expire in 2019 and 2004 for
federal and state income tax purposes, respectively. The Company recorded no
benefit for income taxes during the periods presented. During the years ended
December 31, 1999 and 1998, the Company's total valuation allowance increased
approximately $1.1 million and $149,000, respectively.
F-12
<PAGE>
LA JOLLA FRESH SQUEEZED COFFEE CO., INC.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
The difference between the tax benefit assuming a Federal income tax rate of 34%
and amounts recorded in the financial statements of zero percent is the result
of the Company recording a 100% valuation allowance for its deferred tax assets.
Note 7 - Provision for Income Taxes, continued
As a result of changes in ownership, the Company's use of net operating loss
carryforwards may be limited by section 382 of the Internal Revenue Code until
such net operating loss carryforwards expire. Deferred tax assets have been
computed using the maximum expiration terms of 20 and 5 years for federal and
state tax purposes, respectively.
F-13
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
This following information specifies certain forward-looking statements of
management of the company. Forward-looking statements are statements that
estimate the happening of future events are not based on historical fact.
Forward-looking statements may be identified by the use of forward-looking
terminology, such as "may", "shall", "will", "could", "expect", "estimate",
"anticipate", "predict", "probable", "possible", "should", "continue", or
similar terms, variations of those terms or the negative of those terms. The
forward-looking statements specified in the following information have been
compiled by our management on the basis of assumptions made by management and
considered by management to be reasonable. Our future operating results,
however, are impossible to predict and no representation, guaranty, or warranty
is to be inferred from those forward-looking statements.
The assumptions used for purposes of the forward-looking statements specified in
the following information represent estimates of future events and are subject
to uncertainty as to possible changes in economic, legislative, industry, and
other circumstances. As a result, the identification and interpretation of data
and other information and their use in developing and selecting assumptions from
and among reasonable alternatives require the exercise of judgment. To the
extent that the assumed events do not occur, the outcome may vary substantially
from anticipated or projected results, and, accordingly, no opinion is expressed
on the achievability of those forward-looking statements. No assurance can be
given that any of the assumptions relating to the forward-looking statements
specified in the following information are accurate, and we assume no obligation
to update any such forward-looking statements.
Our Business. We are a manufacturer and distributor of gourmet cold-brewed
coffee liquid extract, gourmet non-alcoholic cold coffee beverages and flavorant
products. We believe our proprietary cold extraction process and delivery system
provides the institutional and food industry with a convenient gourmet coffee
alternative that reduces labor, waste disposal costs, and production costs.
We believe that our cold-brewed coffee has the advantages of great taste, lower
acidity and oil content, and the convenience of instant liquid coffee. Our
liquid coffee delivery system eliminates the substantial amount of coffee wasted
every year by traditional coffee delivery systems that pre-brew the coffee often
making the coffee burnt, or bitter. Our coffee can also be prepared by simply
adding hot water. We also use a delivery system that requires no brewing; the
coffee is prepared only as needed, which, we believe, lowers labor costs, waste
disposal costs for coffee grains and filters, and costs of wasted coffee
disposed of because it is burnt or bitter. We are currently marketing the
following products:
Javalixir: Food Service & Hospitality. Javalixer will be marketed through trade
shows, Internet, direct sales to opinion leading customers, industry trade
publications and in conjunction with dispensing equipment manufacturers who are
used for turn key solutions for high volume coffee service. We believe that we
can convert existing customers of our competitors because of our convenient
dispensing format. These customers in turn will demand supply of our product
through their existing distribution channels, which, we believe, will force the
distributors to carry our product line.
Javanectar 32-oz. Tetrapak. We intend to market this product through major food
distributing companies such as Starbucks, which supplies the food service
industry. We believe that forming alliances with reputable food brokers will be
key to success in this sector of the market and will allow us to minimize
overhead for sales staff in the initial phases of our sales effort.
2
<PAGE>
10-oz Javanectar / "Frappuccino" style bottled beverage. Because introducing a
product in this category on a national scale is extremely costly, we intend to
initially direct our efforts within the Southern California region through
convenience stores, upscale grocery chains, and deli style restaurants chains.
As we build brand identity throughout Southern California, we anticipate that we
will expand to the east.
Retail Javalixir. We intend to compete with our retail competitors by placing
our products in supermarket in geographic regions that have already accepted the
concept of liquid coffee. We believe that the combination of our high end
packaging, competitive pricing and on-site sampling programs will result in
increased sales. We believe that profitable marketing campaigns we will
undertake. However, we believe this effort will benefit the company in terms of
building brand identity. We believe that brokers of specialty gourmet products
will be instrumental to our success.
We are currently targeting the following markets:
Flavorant and Ingredient business. We are in final negotiations with a leading
marketing consultant in the flavorant and ingredient business, which has secured
a potentially national contract to supply a coffee flavored jelly. We believe
that testing will be initiated with a fortune 20 food company using our extract.
We anticipate that the potential sales through this consultant alone could
consume our total production output.
Retail and wholesale. We have been accepted and are preparing the appropriate
packaging and marketing materials required to place our products with three
leading retailers and wholesalers located primarily in Southern California. We
have engaged a retail marketing consultant who has developed a comprehensive
marketing plan that we believe has great potential to establish our position as
the leading coffee extract.
Military. We have developed an excellent supplier relationship with a branch of
the US military. We are currently developing this relationship to bid and
potentially capture important contracts in the mainstream military supply
system.
European dispensing machine. We are currently involved in testing our extract
with an important European dispensing machine manufacturer. We hope our extract
will be used in their machines which could result in significant sales within
two years.
Results Of Operations
Three Months Ended June 30, 2000 Compared To Three Months Ended June 30, 1999
We have realized revenues of $5,542 from operations for the three months ended
June 30, 2000, compared to $0.00 in three months ended June 30, 1999. We expect
to experience significant revenue growth in the foreseeable future.
Operating expenses increased to $248,909 for the three months ended June 30,
2000, compared to $172,565 in three months ended June 30, 1999.
Liquidity and Capital Resources. As of June 30, 2000, we had cash of $226 and
current assets of $4,137. Our current liabilities are $247,887, the majority of
which was represented by accrued expenses of $145,000.
Management believes that the existing cash and cash expected to be provided by
operating activities will not be sufficient to fund the short term capital and
liquidity needs of our operations. We are currently seeking to raise substantial
equity capital.
Our Plan of Operations for Next 12 Months. We are continuing to review our
business plan and evaluate various opportunities. In order to fund our
operations and adhere to our development, production and marketing schedule, we
anticipate that we will require approximately $2,000,000.00 in working capital
over the next 12 months. No assurance can be given, however, that we will have
access to additional cash in the future, or that funds will be available on
acceptable terms to satisfy our cash requirements.
Our success is materially dependent upon our ability to satisfy additional
financing requirements. We are reviewing our options to raise substantial equity
capital. We cannot presently estimate when we will begin to realize positive
gross revenue. In order to satisfy our requisite budget, management has held and
continues to conduct negotiations with various investors. We anticipate that
these negotiations will result in additional investment income for us. To
develop, promote and conduct our operations and achieve and maintain
competitiveness, we anticipate that we will need to raise significant capital.
Such capital may be raised through public or private financing as well as
borrowing and other sources. There can be no assurance that funding for our
operations will be available under favorable terms, if at all. If adequate funds
are not available, we may be required to curtail operations significantly or to
obtain funds by entering into arrangements with collaborative partners or others
that may require us to relinquish rights to certain products and services that
we would not otherwise relinquish.
Item 3. Defaults Upon Senior Securities
None
3
<PAGE>
Item 4. Submission of Matters to Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
27 Financial Data Schedule
4
<PAGE>
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 in the City of San Diego, California, on August 11, 2000.
La Jolla Fresh Squeezed Coffee Co., Inc.,
a Washington corporation
By: /s/ Kurt B. Toneys
----------------------------------------
Kurt B. Toneys
Its: President, Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
La Jolla Fresh Squeezed Coffee Co., Inc.,
By: /s/ Stephen Corey August 11, 2000
-----------------------------------
Stephen Corey
Its: Secretary, Vice President and Director
