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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
SEPTEMBER 30, 1997
JAVA CENTRALE, INC.
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(Exact Name of Registrant as Specified in its Charter)
CALIFORNIA 1-12932 68-0268780
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(STATE OR OTHER (COMMISSION (I.R.S. EMPLOYER
JURISDICTION OF FILE NUMBER) IDENTIFICATION
Incorporation) Number)
1610 ARDEN WAY, SUITE 145 SACRAMENTO, CALIFORNIA 95815
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (916) 568-2310
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ITEM 5. OTHER EVENTS
1. PRIVATE OFFERING OF COMMON STOCK AND WARRANTS.
In August of 1997, the Company retained E. C. Capital Ltd. ("ECC"), a New
York based investment banking firm, to raise equity capital in a two-stage
private offering (the "ECC Offering"). In both stages, the Company would issue
to investors Units consisting of 250,000 shares of Company Common Stock, 250,000
"A" Warrants, and 250,000 "B" Warrants. The "A" Warrants have a term of two
years from the date of issuance and may be exercised to purchase shares of
Company Common Stock at a per share exercise price of $0.16, while the "B"
Warrants have a three-year term and may be exercised to purchase shares of
Company Common Stock at a price per share of $0.20. The offering price for each
full Unit, in both stages of the ECC Offering, is $25,000. ECC undertook to
place 25 Units in the first stage of the ECC Offering, and 35 Units in the
second and final stage.
Under the terms of the Warrants, and as described in the offering
documents, none of the Warrants will be issued unless, on or prior to October
31, 1997, the Board of Directors and shareholders of the Company have
approved three significant changes in the Company's current capital structure
and organization: a one-for-ten reverse split of the Company's outstanding
shares of Common Stock (the "Reverse Stock Split"); an increase in the
authorized number of shares of Common Stock (on a post-Reverse Stock Split
basis) to 50,000,000 shares; and a change in the Company's state of
incorporation from California to Delaware, including a change in the
Company's name from Java Centrale, Inc. to Paradise Bakery & Cafe, Inc
(collectively, the "Proposals"). These three Proposals are being placed
before the shareholders at the 1997 Annual Meeting. Unless all three
proposals are approved by the shareholders at the Annual Meeting the "A" and
"B" Warrants will not be issued and ECC will not pursue the second stage of
the ECC Offering.
In the first stage of the ECC Offering, ECC undertook to sell up to 25
Units. This stage is now substantially complete, and as of October 1, 1997, a
total of 21 Units, including an aggregate of 5,250,000 shares of Common Stock
and (provisionally) Warrants to purchase an additional 10,500,000 shares, have
been sold for a total amount (after payment of expenses, including placement
agent fees) of $448,350. In the event that (a) the above-described Proposals are
proved by the shareholders, (b) the remainder of the Units being offered in this
first stage of the ECC Offering are sold, and (c) all of the Warrants are
accordingly issued and subsequently exercised in accordance with their terms,
the Company would receive (again, net of expenses) approximately $2,137,000 upon
exercise of the Warrants sold and to be sold in this first stage of the ECC
Offering. Thus if all the Warrants are issued and exercised, the Company will
have sold an aggregate of 18,750,000 (pre-Reverse Stock Split) shares of Common
Stock, directly and through the exercise of the Warrants, in exchange for net
proceeds of approximately $2,671,000.
If the shareholders approve all three of the Proposals, and the second
stage of the ECC Offering takes place, ECC will attempt to place an additional
35 Units, including the same numbers of shares of Common Stock and "A" and "B"
Warrants as were sold in the first stage. Although the Company has no reason to
believe ECC will not be successful in conducting the second stage of the ECC
Offering, there can be no assurance that ECC will be able to locate investors to
fully subscribe
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the second stage. If, however, ECC does successfully place all 35 Units in the
second stage of the ECC Offering, an aggregate of 8,750,000 (pre-Reverse Stock
Split) shares of Common Stock, and Warrants to purchase an additional 17,500,000
shares, will be sold for a total amount (after payment of expenses, including
placement agent fees) of approximately $750,400. In the event that all the
Warrants offered in the second stage are subsequently exercised in accordance
with their terms, the Company would receive (again, net of expenses)
approximately $2,992,000 upon exercise of the Warrants sold in the second stage.
Thus in the aggregate the Company would be selling 26,250,000 (pre-Reverse Stock
Split) shares of Common Stock, directly and through the exercise of the
Warrants, in exchange for net proceeds of approximately $3,743,000.
None of the securities sold in the ECC Offering have been registered with
the Securities and Exchange Commission. The Company has agreed to file, during
November of 1997, and maintain effective for two years, a registration statement
covering the shares sold in the ECC Offering and the shares underlying the
Warrants. The Company has also agreed that, for every month that the
registration statement is not effective beginning with March, 1998, it would
issue the investors free of cost an additional number of shares equal to ten
percent of the shares they had purchased originally in the ECC Offering. The
investors (and also Company officers and directors) have agreed not to sell
their shares or warrants without the prior written consent of ECC for one year.
Until the Company files its registration statement, an investor may not sell any
shares acquired in the ECC Offering unless the investor also sells all of the
Warrants which the investor acquired therein.
In connection with the ECC Offering, the Company has agreed to pay ECC a
10% commission on all sales of Units and a 3% non-accountable expense
reimbursement. In addition, if all three of the Proposals described above are
approved by the shareholders, the Company must issue to ECC 2,500,000 "A"
Warrants and 2,500,000 "B" Warrants as partial compensation for its efforts in
completing the first stage of the ECC Offering, and an equal number of Warrants
in connection with the second stage, for a total of 10,000,000 warrants in all.
The Company has also agreed to retain ECC as an advisor for the next three years
at a fee of $3,000 per month, and to pay ECC a 5% warrant solicitation fee for
any of the investor warrants which are exercised (that fee has been included in
the calculations of net proceeds set forth in the preceding paragraphs). The
Company also agreed not to raise debt or equity financing during this three-year
period other than with consent of ECC, and to allow an ECC designee, upon
request, to observe all meetings of the Company's Board of Directors. Finally,
all of the Company's officers and directors have executed lock-up agreements
with ECC whereby they have agreed not to transfer, assign, sell, or otherwise
dispose of any of their Company shares, except with the consent of ECC, until at
least one year after the effective date of the registration statement referred
to above.
2. APPOINTMENT OF NEW CHIEF FINANCIAL OFFICER.
Effective as of September 30, 1997, Steven J. Orlando, the Company's Vice
President and Chief Financial Officer, resigned from the Company in order to
pursue other opportunities. He will, however, continue to consult with the
Company from time to time on particular projects, as requested.
The Board of Directors of the Company has appointed Jeffrey W. Dudley, MS,
C.P.A., to replace Mr. Orlando as the Company's Vice President and Chief
Financial Officer, effective as of
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October 1, 1997. Prior to joining the Company, Mr. Dudley was the Chief
Financial Officer of Greenhorn Creek Associates, LP, a California limited
partnership engaged in residential real estate and golf course development, from
January to October of 1997. From July through December of 1996, Mr. Dudley acted
as an independent consultant, reporting to the Controller, for A. Teichert &
Sons, Inc., a California-based construction company, where he was responsible
for financial reporting and management of the budgeting process, among other
duties. In May and June of 1996, Mr. Dudley was a consultant for HiTec Sports
USA, Inc., a California-based distributor of outdoor footwear. From November of
1994 through April of 1996, Mr. Dudley was the Chief Financial Officer for Jason
& Son, Inc., a manufacturer and distributor of snack foods. Mr. Dudley was with
KPMG Peat Marwick from January of 1991 through November of 1994, first as an
assistant accountant and beginning in January of 1993 as a Supervising Senior
Accountant. Mr. Dudley is a member of the American Institute of Certified Public
Accountants and the California Society of Certified Public Accountants. He
received a Master of Science degree in Accountancy from California State
University, Sacramento, in 1991.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
JAVA CENTRALE, INC.
By: /S/ GARY C. NELSON
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Gary C. Nelson
Its President
Date: October 1, 1997
