JAVA CENTRALE INC /CA/, 10-K, 1997-07-18

JAVA CENTRALE INC /CA/
10-K, 1997-07-18
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
(FEE REQUIRED)

For the fiscal year ended March 31, 1997 or

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
(NO FEE REQUIRED)

For the transition period from: to

Commission file number: 1-12932

JAVA CENTRALE, INC.
--------------------
(Exact number of Registrant as specified in its charter)

California 68-0268780
------------------------------- ------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.

1610 Arden Way, Suite 145, Sacramento, California 95815
------------------------------------------------- ----------
(Address of principal executive officers) (Zip Code)

Registrant's telephone number, including area code: (916) 568-2310

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, no
par value

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed under 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 the filing
requirements for the past 90 days. Yes X No
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the Registrant's common stock held by non-
affiliates as of June 30, 1997(based on the closing sale price of the Common
Stock on the National Association of Securities Dealers Automated Quotation
System) was $3,173,256.

As of June 30, 1997 there were outstanding 15,599,015 shares of the
Registrant's Common Stock.

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TABLE OF CONTENTS

Page
PART I ----

Item 1. Description of Business 3
Item 2. Description of Property 21
Item 3. Legal Proceedings 22
Item 4. Submission of Matters to a Vote of Securities Holders 23

PART II

Item 5. Market for the Company's Common Equity
and Related Stockholder Matters 24
Item 6. Selected Financial Data 25
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 26
Item 8. Financial Statements and Supplementary Data 36
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 64

PART III

Item 10. Directors and Executive Officers of the Registrant 64
Item 11. Executive Compensation 67
Item 12. Security Ownership of Certain Beneficial Owners and
Management 71
Item 13. Certain Relationships and Related Transactions 75

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K 77

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PART I

Item 1. DESCRIPTION OF BUSINESS

(a) GENERAL DEVELOPMENT OF BUSINESS.

Java Centrale, Inc., a California corporation (the "Company"), began
operations on March 5, 1992, and operated as a development stage enterprise
through the end of its fiscal year ended March 31, 1993, and commenced principal
operations as of April 1, 1993, at which time it had operating two franchised
cafes. At March 31, 1996, the Company was operating 36 Company-owned cafes, four
Company-owned carts, 53 franchisee-owned cafes, eight franchisee-owned carts,
and had an additional 89 signed agreements for as-yet-unopened franchisee-owned
cafes.

At March 31, 1997, the Company was operating 17 Company-owned cafes, 55
franchisee-owned cafes, eight franchisee-owned carts, and had an additional 36
signed agreements for as-yet-unopened franchisee-owned cafes. During the year
ended March 31, 1997, 11 Franchise Agreements have been terminated and refunded
by the Company prior to the opening of the cafe primarily as a result of the
franchisee's inability to select an acceptable location in a timely manner. The
Company terminated three Franchise Agreements due to the transfer of ownership
to three new franchisees. The Company had nine franchisee-owned cafes close and
three Company-owned cafes and one Company-owned cart close in fiscal year ended
March 31, 1997 due to lack of financial and operational performance. The Company
also discontinued the franchising of carts and will allow the current
franchisees to operate the existing eight carts in the California locations.

ACQUISITIONS AND JOINT VENTURES

On November 14, 1994, the Company entered into a ten-year Joint Venture
Formation Agreement with Banyan Capital, Limited Partnership, a Delaware Limited
Partnership, Java Southeast Partners, L.P., a Delaware limited partnership
("CoffeeCo"), and Java Southeast, Inc., a Delaware corporation (the "Joint
Venture"), for the development of a minimum of 50 cafes in the State of Florida
over a five-year period, and for rights to other markets on the Eastern
Seaboard. Under the terms of the agreement, the Company expected to contribute
up to 227,983 shares of its newly issued Common Stock to the Joint Venture, in
exchange for up to 18.3% of the Joint Venture's outstanding shares. All Company
shares that were issued as part of this transaction would be subject to various
restrictions on transfer. In exchange for a per cafe fee and an ongoing
management fee, the Joint Venture obtained an exclusive license for the Florida
market. The Company and Coffee Co completed the initial phase of the Joint
Venture in July 1995 and the

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Company contributed 89,428 common shares and expected to contribute the
remaining shares prior to the end of the agreement. The Joint Venture had
opened three cafes as of March 31, 1997. The Company advanced $200,000 to the
Joint Venture in December 1995, and an additional $27,500 in June 1996. The
Company received $6,145 in royalties through April of 1996, and $155,000 of the
area development fee as of June 30, 1996. No additional fees were received
since June of 1996.

In March 1997, the Company, Banyan Capital, CoffeeCo, and the Joint Venture
mutually agreed to terminate the Company's participation in the Joint Venture
agreement pursuant to a settlement agreement under which: (a) the Company
exchanged its shares in the Joint Venture for the return of the 89,428 shares it
contributed to the Joint Venture, (b) the Company converted its $200,000 note
from the Joint Venture into additional shares in the Joint Venture, which it
retained, (c) the Company reaquired its development rights for the State of
Florida and all other markets originally granted to the Joint Venture, and (d)
the Joint Venture retained ownership of the three cafes it had opened. The
Company recorded a net loss of $256,865 on the termination of the Joint Venture
agreement.

On March 30, 1995, the Company completed its acquisition of substantially
all of the assets of Oh La La!, Inc., a Delaware corporation headquartered in
Northern California. At the time of this transaction, Oh La La! was the Debtor-
in-Possession in a Chapter 11 bankruptcy proceeding. The assets purchased
included tenant improvements, equipment, and goodwill. The purchase price for
the acquired assets were $2,104,000 and liabilities in the amount of $113,000
were assumed as part of the transaction.

In December of 1996 the Company sold the assets of Oh La La! to Good
Food Fast Companies, Inc. "GFF" for $1,250,000 in cash, 233,333 shares of
preferred stock and $750,000 in notes receivable due in 1999. On March 31,
1997 the Company agreed with GFF to exchange $250,000 of the convertible note
receivable for the assumption of certain liabilities of the Company, exchange
233,333 preferred shares for 233,333 shares of common stock, accelerate a
payment of $145,000 due under the note receivable to May 1997 and converted
the remaining $355,000 balance of the note into 40,000 shares of GFF common
stock. The common shares of GFF at March 31, 1997, have been valued at $2.00
per share based on the fair value of such shares. The Company recognized an
aggregate loss of $304,638 from the sale of Oh La La! and the subsequent
conversion of the note receivable into common shares. As of March 31, 1997,
following the related conversions, the Company owned approximately 30% of the
outstanding common shares of GFF. The Company did not recognize any earnings
from GFF under the equity method of accounting due to immateriality.

On December 31, 1995, the Company acquired 100% of the outstanding shares
of Paradise Bakery, Inc., for $5,375,000 cash and $1,350,000 notes payable of
which $385,000 represented an amount due from Founders Venture, Inc. prior to
the Founders Venture merger. Paradise Bakery, Inc., operates seven Company-
owned bakery/cafes and 44 franchisee-owned bakery/cafes.

On January 17, 1996, the Company merged into Paradise Bakery, Inc., 100% of
the outstanding shares of Founder Ventures, Inc., for 431,853 common shares of
the Company. Founder Venture, Inc., operated eight franchisee-owned Paradise
bakery/cafes prior to the merger.

On January 17, 1996, the Company acquired certain assets of Venture 88,
Inc., for 74,073 shares of the Company and $153,929 assumption of liabilities
and issued $46,071 in notes payable. The assets acquired were for three
franchisee-owned Paradise bakery & cafes prior to the acquisition.

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The Company's revenues are currently derived primarily from Company-owned
facilities, initial franchise fees, franchise royalties and product overrides on
sales to its franchisees. Franchise fees range from $15,000 to $35,000 per
cafe. The Company is entitled to 4-6% of the gross receipts from each
franchised cafe and 2-10% of the gross receipts from each franchised cart.
Product overrides amount to 10% of the total purchases by its franchisees of
coffee from the Company's contract roaster.

FINANCIAL STATUS OF THE COMPANY

The Company has never earned a profit in any fiscal year. Since its
incorporation in 1992, the Company's operations have required (rather than
provided) cash every year. In order to meet these cash requirements, the
Company has from time to time sold common stock, borrowed short-term money,
sold company assets and issued convertible debt. The Company recorded a loss
in the development stage during its first fiscal year of operation and since
principal operations commenced and has recorded a loss for the fiscal years
ended March 31, 1993, 1994, 1995, 1996 and 1997. The net loss for fiscal
1997 was $5,326,192. There can be no assurance that losses will not continue,
or that the Company as currently constituted will become profitable in the
future. As of March 31, 1997, the Company had an accumulated deficit of
$13,438,422. In the fiscal year ended March 31, 1997, the Company sold
assets, raised debt and equity, and reduced expenses to meet its ongoing
liquidity needs. Currently the Company has a material working capital
shortfall.

During fiscal 1997 and to date, the Company has been operating at a loss
primarily due to its administrative overhead and the under performance of the
cafes in its Java Centrale system. Commencing in April 1996. The Company
instituted a plan to reduce its administrative expenses, but this plan has not
been successful enough to cause the Company to become profitable. Further, the
Company's Java Centrale system has in general not grown as fast or proved to be
as profitable as expected, and the Company has experienced higher than
anticipated expenses in pursuing the development of these cafes and in the
closing of certain outlets in this system.

The Company's continuing operating losses have left it in a materially weak
cash-flow position, one effect of which has been that the Company has been
unable to develop its more profitable Paradise Bakery system as rapidly and
extensively as it has planned to do.

The Company's financing plan over the last year to meet its ongoing
liquidity needs has been to raise new equity through private placements,
refinance or obtain new debt funding and sell assets of the Company's operation.
The Company is maintaining its financing plan of seeking new equity, obtaining
or refinancing debt and pursuing the sale of assets related to the Company's
operation. In February 1997, the Company hired an outside advisor to assist
with the refinancing of the debt or the raising of new equity and to date there
has been no financing completed. As of June 30, 1997, the Company is in
negotiations with various parties and no certainty can be given as to the
ultimate outcome of these discussions.

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placements will continue to be available to the Company in the future.
Consequently, under current circumstances the Company does not anticipate that
it will be able to continue existing operations in the future unless it can
obtain new short-term or long-term financing, raise new equity or make a
significant sale of assets. A special committee of the Company's Board of
Directors has been constituted in order to evaluate a number of options for the
resolution of its immediate and long-term financial needs, including among other
potential alternatives the sale of its Java Centrale and/or Paradise Bakery
systems, obtaining a long-term loan secured by its Paradise Bakery assets, a
private and/or public sale of Company stock and/or other securities, and a
strategic merger. Some of the alternatives currently being studied by the
Company's Board of Directors might result in a change in the management and/or
control of the Company. However, no final resolution of these issues has yet
been arrived at.

NASDAQ SMALL CAP LISTING RISKS

The Company's common stock is currently listed for trading on the NASD
SmallCap Market. The NASD requires listed companies to meet certain corporate
governance and shareholder voting rights standards. Although the Company and
its common stock currently meet all of the above maintenance criteria and
standards, there can be no assurance that such criteria will continue to be met
in the future. In addition, the NASD has proposed certain changes in its
listing and maintenance criteria, which the Company may or may not be able to
meet in the future.

The NASD has published for comment a number of possible changes to its
listing and maintenance criteria for companies quoted on the NASDAQ SmallCap
Market. If adopted in final form, the proposed changes are currently scheduled
to go into effect during the 4th Quarter of 1997 or 1st quarter of 1998.

The NASD's current proposal would, among other things, require that the
minimum bid price for any stock quoted on that market would be $1.00; if the
minimum bid price for a listed company's stock should drop below $1.00 for a
material period of time, it would become eligible for delisting from the NASDAQ
SmallCap Market List. Current NASD rules provide that one or the other (but not
necessarily both) of the following criteria must be met: either (a) the minimum
bid price for the Company's common stock must be at least $1.00 per share, or
alternatively (b) the aggregate market value of the Company's public float must
be at least $1,000,000 and the Company must have at least $2,000,000 in combined
capital and surplus. The Company believes that it meets the current listing
criteria. For the entire period between January 1, 1997 and June 30, 1997, the
daily low price bid per share for the company's common stock ranged from a low
of $0.19 to a high of $0.69. Therefore, if the NASD's current proposals are
adopted without change and the minimum bid prices for the Company's common stock
does not remain above $1.00, the Company may need to consider effectuating a
reverse stock split or taking some other corporate action in order to be
confident of its continuing ability to meet the NASD's new minimum bid
requirements in this respect.

Another of the criteria currently being proposed by the NASD is that
companies having securities listed on the SmallCap Market maintain at least one
of the following: either (a) net tangible assets of $2,000,000, or (b) a market
capitalization of $35,000,000, or ( c) annual net income for two of the previous
three years of at least $500,000. The Company currently does not meet any of
these tests described in the proposed rules. The Company will need to raise
additional

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equity to meet this proposed change.

In addition, there can be no assurance that the maintenance requirements
ultimately adopted by the NASD will not be stronger, or otherwise different,
than those currently being proposed, or that the Company will be able to meet
any such other criteria if adopted by the NASD. If the Company is unable to
substantially improve the minimum bid price for its Common Stock or effectuate a
reverse stock split, or meet the minimum net tangible assets of $2,000,000, or
if other criteria are adopted by the NASD which are more restrictive than those
currently proposed, the Company's common stock could ultimately be delisted from
the NASDAQ SmallCap Market List. In such an event, the trading market for its
Common Stock would immediately become far less liquid that it is at present.

(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.

Not applicable.

JAVA CENTRALE COFFEE CAFES

The Company has found it difficult to recruit franchisees for the Java
Centrale system. This difficulty is driven by the lack of sufficient quantities
of suitable sites to grow the system along with the historical performance of
the Java Centrale system. The lack of inventory of suitable sites is the result
of the demand for similar sites by other specialty coffee and other specialty
food operators. The Company intends to continue the franchising of the Java
Centrale system despite the highly competitive environment in which Java
Centrale cafes operate.

Each Java cafe offers over 40 different varieties of whole bean and fresh
ground coffee--made from carefully selected gourmet coffee beans, slowly roasted
and blended to Java's proprietary specifications, and containing 100% class one
Arabica mild high-grown hard beans. In addition to selling numerous coffees and
other specialty beverages, the cafes also sell coffee-making equipment and
accessories such as brewers, espresso makers, grinders, mugs and carafes.

The Company's coffee products appeal to the tastes of today's specialty
coffee consumers--who are better educated, more affluent, prefer high quality
and good value, consider gourmet coffee an affordable luxury.

The Company is one of many regional specialty coffee operators. Although
the concept has reached a level of recognition in the Los Angeles area the other
Java Centrale cafe locations have been developed on an individual basis in a
number of cities in five other states and are therefore recognized only in their
immediate area. The overall result is minimal recognition and market share
versus the larger regional and national operators.

Java Centrale cafes offer convenient and comfortable indoor and outdoor
seating which

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encourages the customers to relax and enjoy their visit to the cafe during
business hours, evenings, or on weekends. This attracts customers into Java
Centrale cafes during various parts of the day when they might not otherwise
frequent the cafe exclusively for coffee. Although this multi-use philosophy
does differentiate the Java Centrale concept, it is still in direct competition
with any outlet that serves specialty coffee and other operators, in or out of
the coffee segment, who offer similar food items.

Java Centrale's menu offers a wide selection of coffee beverages and
gourmet complementary food selections, along with take-home whole-bean coffees.
The food menu items are prepared fresh to order and are presented attractively.
The presence of complementary food items gives the consumer multiple reasons to
frequent the cafes. The availability of whole bean coffees, brewed coffees and
espresso based beverages, breakfast pastries, lunch time sandwiches and salads
along with late night dessert offerings brings the consumer back to the cafe
more often and at times of the day when they might not frequent the cafe if it
offered coffees exclusively.

PARADISE BAKERY CAFES

On December 31, 1995, the Company acquired 100% of the outstanding stock of
Paradise Bakery, Inc., a Delaware corporation, operating seven Company-owned and
44 franchisee-owned bakery/cafes. Additionally, on January 1, 1996, the Company
acquired 10 Paradise Bakery franchisee-owned bakery/cafes in two separate
agreements. The Company believes that the acquisition of Paradise Bakery will
allow the Company to further enhance the Company's expansion strategy by
franchising and developing Paradise Bakery.

Paradise Bakery has cafes at 49 locations in Hawaii, California, Arizona,
Oregon, Washington, Colorado, Oklahoma and Texas. Of these, 16 are company-owned
and 33 are franchised. Highly visible sites in upscale markets include the
Phoenix Airport, Scottsdale Fashion Square, Ala Moana Center in Hawaii, and in
the ski resorts of Aspen and Snowmass. Franchisee-owned cafes seek to capture
"prime" high-traffic locations such as shopping mall, airports, and upscale
recreational/tourist areas.

The Paradise Bakery concept has limited competition in the upscale bakery
cafe market. The Paradise brand name is well established and synonymous with
quality baked fresh baked goods.

Freshly baked cookies, muffins and croissants have been the signature
products at Paradise Bakery cafes. Paradise Bakery also offers brownies,
cinnamon rolls and other bakery goods. All bakery goods are made from scratch,
baked on the premises throughout the day to ensure freshness, and are made from
the highest quality ingredients. Paradise Bakery cafes also feature freshly
made specialty sandwiches, entree salads, pasta salads, and soups. A recent
addition to the menu mix is the new "Coffees of Paradise" program which was
instituted after the purchase of Paradise Bakery by the Company. The products
offered under this new banner are quality-brewed coffees and espresso based
specialty coffee beverages such as lattes, cappuccinos and espressos. These
products are an integral part of the overall positioning of the concept, as they
address the customer's desire to eat healthy food, which is served quickly.

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The Paradise Bakery cafe is a proven concept with limited competition in
the upscale bakery cafe market. The concept is now properly positioned to take
advantage of the significant growth opportunities in both traditional as well as
non-traditional sites nationwide. To exploit those opportunities the "new
generation" Paradise Bakery model was developed with the objective of expanding
the current site criteria and actively target the over 766 shopping malls with
Gross Leasing Area greater than or equal to 800,000 sq. ft. in the United
States. The Company will use its existing developer relationships, a
professional food court site selection company, to continue to select future
sites. The first two new generation Paradise Bakery cafes were developed and
opened, in cooperation with an existing franchisee of Paradise Bakery, in
Littleton, Colorado, and at the Southwest Airlines terminal in the Phoenix
Airport. Paradise Bakery's "new generation" Paradise Bakery cafes have a new
upscale design and an improved and expanded menu. In addition to mall locations,
the cafe's new design will work well in power centers, office buildings,
airports, as well as university and college campuses.

INDUSTRY OVERVIEW

JAVA CENTRALE COFFEE CAFES

Although the coffee market is huge and continues to grow at a strong rate,
the competition in the industry has increased significantly and has made it more
difficult for the smaller companies, such as Java Centrale, to obtain favorable
new locations and to operate profitably. Annual U.S. coffee sales have now
reached $8 billion. Specialty coffee consumption has increased 30% per year for
the last three years. Find/SVP, a leading research organization, forecasts 20%
to 25% compounded annual growth rates in sales of specialty (gourmet) coffee for
many years to come. The Specialty Coffee Association trade group estimates that
"coffee bar" outlets like those in the Java Centrale system will more than
double from about 4,500 recently to over 10,000 by the year 2000. The growth of
specialty coffee sold for home consumption has continued in the 1990's, with
sales projected to double to an estimated $3 billion by 1999. In 1983, gourmet
coffee accounted for 10% of the total U.S. coffee market. Today, it accounts
for an approximate 30% share of the coffee market. It is projected that by the
end of the decade, it will account for 50% of all coffee sales.

The Company believes that the increasing popularity of specialty coffees
over the last several years can be attributed to five major factors which have
led to the transformation of specialty coffee from a highly specialized and
small segment of the coffee industry in the United States to an independent and
growing sector of the market. These five major factors are: (1) the trend toward
healthy eating, including the reduced consumption of alcoholic beverages, (2)
the availability of automatic drip coffee makers for the home, (3) the rising
price of regular coffee, (4) the rise of the gourmet foods market, and (5)
several technological innovations, including improved decaffeination methods and
the introduction of the one-way valve for coffee packaging, which allows carbon
dioxide to escape but does not permit oxygen to enter, thereby stretching the
shelf life of coffee from just a few days to nearly one year.

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PARADISE BAKERY CAFE

In the on-premises baking portion of the food industry, where Paradise
is well positioned; industry experts expect robust growth of 25% to 30%.
That is one of the highest growth rates in the entire food service industry.
The Gallup Organization, in a special report prepared for the International
Dairy-Deli-Bakery Association in 1995, confirmed that there had been strong
growth in the consumption of sweet goods, such as cookies, muffins, and
danish or pastries, between 1990 and 1995.

COMPANY STRATEGY

The Company's strategic objectives are to expand the Java Centrale system
of coffee cafes by opening new franchisee-owned operations in selected
locations in the Western United States, and to develop the Paradise Bakery
system into the leading North American bakery/cafe company serving fresh baked
goods by opening new Company-owned and franchised locations in the United States
and Canada. The Company plans to achieve this goal by selling only the highest
quality products, producing a superior level of customer service, and
establishing a high degree of customer loyalty and repeat business. Each of the
above elements of the Company's strategy is discussed below.

HIGHEST QUALITY COFFEE. The Company believes that its specifications for
the selection, roasting and delivery of its coffee beans and beverages are among
the highest in the coffee industry. However, due to the competitive nature of
this industry and the importance placed on this type of proprietary information
independent proof of this assertion is not available to the Company. The Company
believes that its roasting specifications for each variety of Arabica bean which
it offers provide for roasting of the bean to the degree that accentuates the
character of the individual coffee. Certain coffees have a tendency to have
more fragile characteristics that need to be roasted lighter in order to protect
the integrity of that particular variety, while other coffees having stronger
characteristics that overpower subtle nuances within that variety are enhanced
by a darker level of roasting. Since coffee beans are an agricultural product
that varies from season to season and from farm to farm, the Company reviews its
roasting specifications regularly and, if necessary, modifies those
specifications in order to bring each variety of coffee bean to its optimum
flavor potential.

PRODUCT IS THE CONCEPT. The foundation of Paradise's Bakery business is
its deliciously fresh products, which consist of bakery items, sandwiches and
salads. Paradise Bakery uses only the finest ingredients in preparing its food
products. In order to enhance a quality image, we use well-known brands as in
selected products. Each day our cookies, muffins, and brownies are prepared
from scratch. Our pastries, cinnamon rolls, pecan rolls, bagels and croissant
products are baked on premise daily. All Paradise Bakery fresh baked menu items
are preservative-free and many are approved by the American Heart Association.
Paradise Bakery features certain bakery products that are low in fat, yet rich
in nutrients with no artificial flavors or colors. Our sandwiches and salads
are made to order. Our customer easily understands the price value
relationship, since

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we serve generous portions at reasonable prices.

CUSTOMER SERVICE. A basic premise of the Company's business philosophy is
that it serves many customers on many different levels. The Company views its
vendors and suppliers as one level of customers, its franchises and Company
facility managers as another level of customers, and the end consumer/customer
as a third level customer who benefits from the relationships between the
Company and all of its levels of customers. Therefore, the Company provides the
same type of attention and service to each of these levels as would be expected
by the end consumer/customer of the Company's products.

MERCHANDISING AND MARKETING. The Company has a comprehensive
merchandising, marketing and image program featuring its logo and trademarks on
its signs, cafe interiors, cups, bags, packaging, promotional pieces and
literature. The program is designed to create a distinctive brand image and
brand awareness as well as provide the consumer with repeat customer incentives.
The Company has wide range of literature that gives the customer a source for
information about the origins and characteristics of coffees, as well as
grinding, brewing and storing methods and techniques that the Company believes
will result in the best coffee beverages.

SITE SELECTION. The Company's goal in cafe site selection is to locate its
cafes in high-traffic, high-visibility locations within areas that have
appropriate demographics, other retail business use and residential backup.

EXPANSION/ACQUISITION. The Company's strategy is to expand the Paradise
Bakery/Cafe system through new franchised and/or Company owned locations both in
the eastern and western parts of the United States and also to continue the
development of the Java Centrale coffee cafes through only franchisee-owned
locations primarily in the Western United States. The Company does not intend
to complete any additional acquisitions.

SOURCING. The Company currently obtains its coffees pursuant to the
Producer Agreement between the Company and Coffee Bean International ("CBI"), an
independent roaster. Pursuant to the Producer Agreement, several different
varieties of green coffee beans are purchased, roasted, packaged and shipped by
CBI in accordance with the Company's specifications specifically detailed in the
Producer Agreement. All green beans purchased in accordance with the Producer
Agreement are of the Arabica species and the Company believes that the Arabica
beans, which are purchased pursuant to the Producer Agreement, are among the
best available from each producing region.

RETAIL SALES. The Company sells over 40 different varieties of whole bean
and fresh ground coffees together with rich flavorful brewed coffees, espresso
beverages, Italian sodas and other upscale beverages, through its system of
Company-operated and franchised European style gourmet coffee cafes, carts and
kiosks.

THE COMPANY OPERATIONS OF CAFES AND KIOSKS

Distribution of the Company's products is done exclusively through a system
of Company-operated and franchised cafes and kiosks under the two brand names.
As of March 31, 1997, the Company had franchise agreements for cafe franchises
and 8 cart franchise locations in 11 states of which 55 franchisee-owned cafes
and 8 franchisee-owned carts were in operation. The following

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table represents the Company's operations:

Operating Units as of March 31, 1997

Cafe Cart/Kiosks
Company Franchised Company Franchised
- ---------------------------------------------------------------------------
Java Centrale 1 22 0 8

Oh La La! - - - -

Paradise Bakery 16 33 - -
- ---------------------------------------------------------------------------
Total 17 55 0 8

Operating Units as of March 31, 1996

Cafe Cart/Kiosks
Company Franchised Company Franchised
- ---------------------------------------------------------------------------
Java Centrale 8 20 1 8

Oh La La! 10 - 3 -

Paradise Bakery 18 33 - -
- ---------------------------------------------------------------------------
Total 36 53 4 8

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Operating Units as of March 31, 1995
Cafe Cart/Kiosks
Company Franchised Company Franchised
- ---------------------------------------------------------------------------
Java Centrale 1 11 3 11

Oh La La! 10 - 3 -

Paradise Bakery - - - -
- ---------------------------------------------------------------------------
Total 11 11 6 11

As of March 31, 1997, the Company had received an aggregate $1,899,629 in
cash representing initial fees under its franchise agreements, and is entitled
to receive an additional $170,000 in cash fees when it completes its obligations
under such agreements, which obligations are expected to be completed no later
than December of 1999. The Company's revenues are currently derived primarily
from Company-owned facilities, initial franchise fees, franchise royalties,
equipment sales, and product overrides on sales to its franchisees.

DEVELOPMENT TIME. After the signing of a franchise agreement for a
particular location or locations, the amount of time necessary to develop that
location and eventually open and operate the cafe or kiosk varies depending on
several factors including site selection, preparation and approvals of plans,
acquisition of necessary permits, length of construction period and whether the
training of the employees will take place on-site or off-site. Based on the
Company's experience to date, the average development time of a single-unit cafe
franchise has been 4 to 8 months.

In addition to these development factors, multi-unit franchisees are
obligated under their franchise agreements to build cafes based on a three to
five year development schedule in which the majority of the locations are opened
in the first half of the development schedule. In the case of multi-unit
developments, it is necessary to develop real estate relationships that are
likely to provide more than one desirable location and, therefore, extra time
and care is devoted to contracting with the right firm for that purpose in the
market in question. This recruiting process could require an additional thirty
to sixty days. In the case of a single unit franchise where the territory is a
subset of the larger market, the Company typically selects the most experienced
commercial real estate firm that specializes in retail locations in that defined
area. All of these factors affect the Company's ability to open cafes within a
specific time frame. Although the development of a single franchised or
Company-owned cafe will always be subject to these timing factors, the number of
cafes opened in any given month or year will increase dramatically as additional
franchises are sold and leases for Company locations are signed.

PRODUCT MIX. The Company's Java Centrale cafes sell over 40 different
varieties of whole bean and fresh ground coffees together with rich flavorful
brewed coffees, espresso beverages, Italian sodas and other upscale beverages.
The Company's cafes offer six brewed coffees daily: one light and one dark
varietal, a Java Centrale House Blend, a varietal decaffeinated coffee, a
flavored coffee, and a flavored decaffeinated coffee. In addition, the Company
has developed its own line of contemporary espresso based beverages which are
designed to appeal primarily to younger

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customers and women. In addition to selling numerous coffees and other
specialty beverages, the cafes offer the consumer a wide selection of gourmet
sandwiches, salads, soups, pastries and desserts as well as coffee-making
equipment and accessories such as brewers, espresso makers, grinders, mugs and
carafes.

The Company's Java Centrale kiosks offer the full range of espresso based
specialty beverages and Italian sodas offered in the Company's cafes, as well as
brewed coffees and a selection of morning pastries.

Paradise Bakery has developed a brand identity of quality over its 20 years
of existence. It uses only the finest ingredients in preparing all food
products.

Freshly baked cookies, muffins and croissants have been, and will remain,
the signature products at Paradise's cafes.

Since its inception, Paradise has been offering its customers the highest
quality products at reasonable prices. Strategically, the concept appeals to an
audience that is seeking high quality, freshly prepared bakery
products--cookies, muffins, croissants, brownies, cinnamon rolls and other
bakery goods made from scratch on the premises. Most items are baked throughout
the day to reinforce our commitment to fresh baked products.

Our cafes also feature freshly made specialty sandwiches, entree salads,
pasta salads, and soups. These products are an integral part of the overall
positioning of the concept, as they address the customer's desire to eat healthy
food, which is served quickly.

The Paradise Bakery menu has evolved over the years in order to meet the
changing lifestyles of our customers. For example, to satisfy health-conscious
customers, Paradise offers many pastry and food items, which are low in fat.
Paradise's re-designed and expanded menu has been an overwhelming success with
both existing and new customers alike.

PRICING. The Company prices its coffees, menu items and retail goods at or
above the prevailing high-end prices for these items in each of its markets. The
products offered by the Company are of the highest quality and would command a
premium price based on value alone. Additionally, the Company's research on
specialty consumers has shown that they expect to pay a higher price for
specialty food and beverage products and look with suspicion on products, even
products of high quality, that are priced below the market. This strategy
differentiates the Company from many of its retail competitors that are required
to compete on a PRICE ONLY basis. The Company believes that this pricing
strategy assures that necessary margins are protected and thereby allows the
Company and its franchisees to focus primarily on product quality and service to
earn and retain customers.

DESIGN. The Company's Java Centrale cafes are designed to provide the
customer with a modern, comfortable and convenient cafe and meeting place with a
European flair. The design uses a combination of primary colors that give the
cafes a different and distinctive look when compared with the facilities of the
Company's competitors. The Company believes that the distinctive look of its
cafes will help the consumer to more readily remember its name and its products,
thereby

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resulting in a higher level of repeat customer business for its cafes.

The Company's Paradise Bakery cafe design has evolved over the years always
adapting to the ever-changing consumer needs. Presently, the majority of the
Paradise cafes have a design of a tropical theme utilizing the color palette of
light blue, pink and white. The attractive cafe designs and functional building
plans are an integral part of the Paradise success formula. These designs
provide an exciting environment that supports product display, encourages
impulse sales and provides color efficiency.

Paradise has upgraded its design to meet today's consumer demands for novel
food products and services to meet their constantly evolving needs and tastes.
The most recent design change reflects a more open, unique eating experience at
Paradise by enabling the customer to come into a tantalizing theater brimming
with irresistible foods and beverages. The color palette is changing to light,
effervescent, bright fruit and vegetable colors, such as mango, lemon, grape,
tomato, and avocado. Other changes include extensive use of product display,
fresh food graphics, and enhanced graphic communication system. The cafes with
this new design have been well accepted by the customers.

To emphasize its baked from scratch method of product preparation, the
ovens are now located in the front of the house in full customer view allowing
them to observe the high quality baked items being prepared fresh throughout the
day. The sandwich making station has been redesigned into a "display kitchen"
type of preparation area where customers can see their sandwiches being made
from wholesome breads and other fresh ingredients. The internally lighted
bakery displays are made of a marble like material whose quality and beauty
helps draw the customers attention to the fresh baked products offered for sale.

SUPPLIES. The Company and its franchisees purchase their food, beverages
and supplies only from Company-approved suppliers. All products must meet the
standards and specifications set by the Company. Management of the Company
constantly monitors the quality of the coffee, food, beverages and other
supplies provided to the cafes, carts and kiosks. The Company has been
successful in negotiating national distribution and price concessions from
suppliers for bulk purchases of coffee, food and paper supplies used by the
Company's system of cafes, carts and kiosks. The Company believes that these
arrangements have achieved cost savings, improved quality and consistency and
helped decrease volatility of coffee, food and supply costs. The Company
believes that essential coffee, food and beverage products are available or,
upon short notice, could be made available from alternate qualified suppliers.

MANAGEMENT AND EMPLOYEES. Each Company-owned or franchised cafe employs an
average of approximately 15 hourly employees, most of whom work part-time. The
management staff of a typical cafe operated by the Company consists of a general
manger, an assistant manager and one crew leader. A typical franchised location
is managed directly by the franchisee and an assistant manager and one crew
leader. Company cafe managers report to a district manger, while franchised
locations work in conjunction with one of the Company's franchise field
representative. The district mangers or franchise field representatives are
responsible for assuring compliance with the Company's products and facilities'
standards and supervising and assisting in the implementation of the Company's
local cafe marketing programs.

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TRAINING. The Company's Java Centrale cafe training program has two parts.
The first part is an intensive two-week program at the Company's training
facility in Folsom, California consisting of both classroom and on-the-job
training. The classroom training includes such topics as the origins of coffee,
coffee comparisons, food safety and sanitation, employment laws and regulations,
interviewing and hiring of employees, and systems to control both food and labor
costs. The on-the-job training concentrates on using the grinding, brewing and
espresso making equipment, preparing and serving the various brewed coffees and
espresso beverages, and preparing and serving the various menu items. In all
cases, the in-cafe training emphasizes the importance of fast and friendly
customer service.

The second part of the training takes place at the cafe prior to opening.
The Company's training team works with the franchisee or Company-owned cafe
manager over a thirteen-day period to prepare the facility for business and
train the opening crew. The schedule provides for one day of staging and
planning, eight days of crew orientation and training, one day working with
management to take the beginning inventory and prepare the cafe for business,
and the first three days of operations.

The Company's franchise field representatives generally visit each
franchised cafe on a monthly basis. The franchise field representative acts as
a business consultant to franchisees in an effort to ensure that each cafe and
cart is providing the highest quality products and fast, friendly service. In
addition, the field representative assists in developing business and marketing
plans, as well as in the training and development of the franchisee's staff. In
effect, the franchise field representative acts as the communication link
between the Company and each franchisee. The Company plans to have a ratio of
one field representative for each 15 to 20 franchised cafes and carts.

The Paradise training program currently consists of four weeks at a company
cafe in southern California and an additional two weeks of pre-opening and
opening training at the franchised cafe location.

Franchisees receive extensive training covering all aspects of cafe
operation at the training location in southern California. The training takes
place in a fully functional cafe where the franchisee receives operations
manuals and hands-on experience. Training continues with on-site assistance in
the cafe, including setup and planning for the grand opening. Training never
ends, as the Company always strives to deliver better products and service.
Paradise Bakery & Cafe field support representatives work with the franchisee on
a regular basis to help refine and improve their local operations.

ADVERTISING AND PROMOTION. The Company instills in each new franchisee's
mind that while quality baked goods and food is the heart and soul of the
system, marketing is the lifeblood of the business. Repetition, in fact, builds
reputation. The Company strives to teach them how to be 1% better than the
competition in 100 different ways. The goal is to increase the levels of
customer awareness and in turn the customer counts through a consistent
advertising campaign that promotes the location and the quality bakery and food
products offered by the Company.

The Company has not collected any advertising funds from the Java Centrale
franchisees

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and is currently discussing with the franchisees the establishment of a
advertising fund.

Through a cooperative effort between the advertising department and the
outside advertising resources, Paradise Bakery & Cafe expands consumer awareness
of its products, enhances system-wide identity and increases sales.

The Company currently collects $164 per month from each Paradise Bakery
location. The advertising funds are being used to develop point of sale material
and local promotion.

FRANCHISE OPERATIONS

STRATEGY. The Company's growth strategy is to develop franchised cafes for
Paradise Bakery in key metropolitan markets and continue franchising the Java
Centrale coffee cafes primarily in the Western United States. Based upon the
Paradise Bakery's operating history to date, the Company believes that it can
continue to attract financially and personally qualified franchisees based on
the strength of its cafe and Paradise bakery/cafe concepts. The majority of the
Java Centrale locations have not had a profitable operating history and the
Company expects it to be difficult to attract franchisees.

AGREEMENTS. The Company offers single unit Franchise Agreements and multi-
unit Area Development Agreements. The single unit Franchise Agreement grants to
the franchisee an exclusive license to operate a cafe at a specified location in
accordance with the Company's terms and conditions and to utilize the Company's
trademarks, service marks and other rights of the Company relating to the sale
of its items. The term of a Franchise Agreement for a cafe is ten years,
renewable at the option of the franchisee for successive five-year periods, if
certain conditions pertaining to such renewal are met. The Area Development
Agreement grants to the franchisee the right to develop and open a specified
number of cafes in a defined geographic area within a limited period of time and
thereafter to operate each cafe in accordance with the terms and conditions of
the Franchise Agreement executed for each cafe location.

Either party may terminate a Franchise Agreement, or an Area Development
Agreement by giving notice of default in the event the other party breaches or
fails to comply with any of the terms, covenants, conditions or restrictions
applicable to such party, or if such party breaches any warranty or
representation contained in the Franchise Agreement or the Area Development
Agreement. The Company may also terminate a Franchise Agreement or an Area
Development Agreement without notice for several reasons, including among
others, the franchisee's bankruptcy or insolvency, cessation of business,
committing a default within 12 months of curing the same default or committing
repeated defaults, whether or not such defaults are cured after notice. The
franchisee may also terminate a Franchise Agreement in the event there is a
permanent and incurable inability of the Company or an authorized supplier to
supply the products required to be furnished under the Franchise Agreement or in
the event there is a supply interruption that lasts more than 180 days.

Although franchise fees are payable to the Company upon the execution of a
single-unit Franchise Agreement or an Area Development Agreement, the Company
only recognizes such fees as revenue when all material services or conditions
relating to the sale of the franchise have been

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substantially performed or satisfied by the Company. See "Note B of Notes to
Financial Statements".

FRANCHISE FEES AND ROYALTIES

CAFES. Under the Company's current Franchise Agreement for cafes, each
franchisee is generally required to pay a franchise fee of $35,000. The
franchise fee is generally paid to the Company upon the execution of the
Franchise Agreement and is non-refundable. If the franchisee thereafter
executes another Franchise Agreement for an additional cafe at a different
location, the franchisee is generally required to pay a franchise fee of $15,000
for each such additional cafe location, which franchise fee is non-refundable.
If a franchisee purchases an area pursuant to an Area Development Agreement, the
franchisee must pay an Area Development Fee of $5,000 for each cafe to be
developed in accordance with the Agreement's development schedule. The Area
Development Fee is paid to the Company in full upon the execution of the Area
Development Agreement and is not refundable. In addition to the Area
Development Fee, the Company is entitled to receive a Cafe Fee for each cafe
location to be opened under the terms of the Agreement. The first Cafe Fee of
$20,000 is due upon execution of the Area Development Agreement and is non-
refundable. The subsequent Cafe Fees of $10,000 per location are due when
leases are signed and are non-refundable.

The rights of each cafe, whether opened on an individual basis or by an
area franchise, include the right to operate satellite locations within the
exclusive territory of that cafe. Satellite locations are kiosk or counter
operations located in self-contained facilities where full cafe operation is not
feasible. Facilities occupied by one of franchisee's satellite locations are
governed by the existing Franchise Agreement, and once opened are considered a
part of the franchised business. The Company is generally entitled to a
satellite location opening fee of $3,500 which is paid to the Company upon
approval of the satellite location and is non-refundable.

Each cafe franchisee is generally required to pay the Company on a
weekly/monthly basis a 4%-6% royalty on cafe or satellite location gross
receipts (not including sales tax) and to pay on a weekly basis 2% of the cafe's
gross receipts (not including sales tax) to the Company's national advertising
fund after the Company has 25 cafes in operation, whether Company-owned or
franchised. Each cafe franchisee is also required to spend 2% of its gross
receipts (not including sales tax) on local cafe marketing.

FRANCHISEE SUPPORT SERVICES

SITE SELECTION. The Company assists the franchisee with site selection for
cafes. Through the Company's network of commercial real estate site selectors,
the Company often finds a site that meets its demographic criteria before the
franchisee. In any case, the franchisee and the Company must mutually approve
each site before a lease is signed.

CONSTRUCTION AND EQUIPMENT. The Company as of April 1996, discontinued
operation of the turn-key construction and equipment option to franchisees. The
Company will offer a selected national equipment supplier and assist in the
construction solutions. The Company believes that the change to an outside
third party will allow the franchisee to build the cafe at the best price and
value.

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FIELD SUPPORT. The Company maintains a staff of well-trained and
experienced franchise field representatives who help to train franchisees and
assist them in opening new cafes and who monitor the operations of existing
locations. These services are provided as part of the Company's franchise
program.

MARKETING AND ADVERTISING SUPPORT. The Company provides franchisees with a
full range of marketing materials and consumer literature. The Company
regularly prepares and provides to franchisees feature promotions relating to a
specific coffee, beverage, food or retail item. These items, in conjunction
with the Company's Local Cafe Marketing Manual, provide the core of the
marketing and advertising support system. The franchise field representative
and the Company's marketing department work with the franchisee to implement and
monitor the effectiveness of the various promotions.

COMPETITION

The Company's whole bean coffees compete directly against specialty coffees
sold at retail through supermarkets specialty retailers and a growing number of
specialty coffee stores. The Company's coffee beverages compete directly
against all restaurant and beverage outlets that serve coffee and a growing
number of espresso stands, carts, and stores. Both the Company's whole bean
coffees and coffee beverages compete indirectly against all other coffees on the
market. The Company believes that its customers choose among retailers
primarily on the basis of quality and convenience, and to a lesser extent, on
price.

Management believes that supermarkets pose the greatest competitive
challenge in the whole bean coffee market, in part because supermarkets offer
customers the convenience of not having to make a separate trip to the Company's
stores. A number of nationwide coffee manufacturers, such as Kraft, General
Foods, Procter & Gamble and Nestle are distributing premium coffee products in
supermarkets and those products may serve as substitutes for the Company's
coffees. Regional specialty coffee companies, such as Green Mountain Coffee,
Inc., Hillside Coffee and Starks, also sell whole bean coffees in supermarkets.

In addition, the Company competes for whole bean coffee sales with other
franchise operators and locally owned specialty coffee stores. There are a
number of competing specialty coffee retailers with significantly more locations
than the Company, such as Starbucks Corporation, which has a total of 1100+
retail stores and licensed airport stores located in the United States and
Canada, Gloria Jean's Coffee Bean Corp., a franchisor of approximately 250+
specialty coffee stores located primarily in shopping malls throughout the
United States, Barnie's Coffee and Tea Co., a franchisor with approximately 90
locations in the United States, and The Coffee Beanery Ltd., a franchisor of
specialty coffee stores which operates approximately 165 locations in the United
States.

The Company's primary competitors for beverage sales are restaurants,
shops, and street carts. The competition in the beverage market is significant
and there are numerous competitors with substantially greater financial
operating and marketing resources than the Company.

The Company competes with fast food chains, major restaurant chains and
other food

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service related franchisors for franchisees of its cafes, carts and kiosks.
Many franchisors have greater market recognition and greater financial,
marketing and human resources than the Company.

The Paradise concept has limited competition in the upscale bakery cafe
segment. As noted by the Fessel International market study commissioned by the
Company, Paradise has no direct competition in its targeted niche. Paradise
does not directly compete with the other food court operators and usually does
not encounter those concepts that it does compete with in food court situations.

Paradise indirectly competes with a variety of fast service food concepts,
some of which are located in covered malls. Some competition comes from
concepts, such as, Au Bon Pain, which is a bakery/cafe concept, or
sandwich/salad concepts, such as Wall Street Deli, that are closely located to a
particular Paradise. Other types of competitors are strictly bakery products
driven, such as, Cinnabon and Mrs. Fields. What sets Paradise apart from most
competitors are menu mix, positioning, and value.

GOVERNMENT REGULATION

The Company is subject to Federal Trade Commission ("FTC") regulation and
state laws, which regulate the offer and sale of franchises. The Company is
also subject to a number of state laws which regulate substantive aspects of the
franchisor-franchisee relationship. The FTC's Trade Regulation Rule on
Franchising (the "FTC Rule") requires that the Company to furnish to prospective
franchisees a franchise offering circular containing information prescribed in
the FTC Rule.

State laws that regulate the offer and sale of franchises and the
franchisor-franchisee relationship presently exist in a substantial number of
states. Such laws generally require registration of the franchise offering with
state authorities and regulate the franchise relationship by, for example,
requiring the franchisor to deal with its franchisees in good faith, prohibiting
interference with the right of free association among franchisees, limiting the
imposition of standards of performance on a franchisees and regulating
discrimination against franchisees in charges, royalties or fees. Although such
laws may restrict a franchisor in the termination of a franchise agreement by,
for example, requiring "good cause" to exist as a basis for the termination,
advance notice to the franchisee of the termination provides an opportunity to
cure a default and a repurchase of inventory or other compensation, these
provisions have not had, and are not expected to have, a material effect on the
Company's franchise operations. The Company is not aware of any pending
franchise legislation, which in its view is likely to significantly affect the
operations of the Company. The Company believes that its operations comply in
all material respects with the FTC Rule and the applicable state franchise laws.

Each Company-owned and franchised cafe and kiosk is subject to licensing
and regulation by a number of governmental authorities, which may include
health, sanitation, safety, fire building and other agencies in the state and
municipality in which the cafe or kiosk is located. Additionally, the food
service industry in general is subject to extensive federal, state and local
government regulations relating to the development and operation of food service
outlets, including laws and

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regulations relating to building and seating requirements, the preparation and
sale of food, cleanliness, safety in the work place and accommodations for the
disabled. The Company-owned and franchised cafes which are currently operating
are subject to various federal, state and local laws and regulations, including,
without limitation, the Fair Labor Standards Act, the Americans With
Disabilities Act, the Department of Agriculture, the Food & Drug Administration,
and various state agencies. Difficulties in obtaining or failure to obtain the
required licenses or approvals could adversely affect currently operating cafes
and could delay or prevent the development of a new cafe or kiosk in a
particular area or location.

The Company is also subject to federal and state environmental regulations,
but, to date, these regulations have not had and are not expected to have in the
future, any material effect on the Company's operations. More stringent or
varied requirements of local governmental authorities with respect to zoning,
land use and environmental matters could delay or prevent the development of a
new cafe or kiosk in a particular area or location.

The Company is also subject to state and federal labor laws that govern its
relationship with its employees, such as minimum wage requirements, overtime and
working conditions, citizenship requirements and prohibitions against
discrimination. Significant numbers of the Company's food service and
preparation personnel are paid at rates governed by the federal minimum wage
laws. Accordingly, further increases in the minimum wage will increase the
Company's labor costs.

TRADEMARKS

The Company has registered the Java Centrale name and the Paradise Bakery
name and their logos with the United States Department of Commerce Patent and
Trademark Office. The Company currently uses a variety of other trademarks,
which it expects to file applications for registration beginning in December of
1996. These trademarks are "Centrale Royale", "The Daily Brews", "For the Luv-
a-Java", "Java Jive", "Nice 'n Iced", "Splendid Blended" , "Cookie Munchers
Paradise", "Paradise Bakery", "Paradise Bakery Unique Quality", "Cookie
Muncher's Paradise A Unique Bakery", "Paradise Bakery & Cafe", and "Chip
Munchers".

EMPLOYEES

As of March 31, 1997, the Company had 10 full time salaried employees and 8
hourly employees at its headquarters location in Sacramento, California.
Additionally as of such date, the Company also employed 35 salaried employees
and 234 hourly employees in its operations. None of the Company's employees is
represented by a labor union and the Company considers relations with its
employees to be generally good.

(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES

Not Applicable.

ITEM 2. DESCRIPTION OF PROPERTY

The Company leases 7768 square feet of office space in Sacramento,
California, which it utilizes for its corporate headquarters. The Company has a
lease for the facility, which expires in

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August of 2001.

The Company assumed leases for 29,999 square feet as part of the Paradise
Bakery Company operation in California and Texas. These leases expire from 1997
to 2005.

The minimum aggregate rental for all these properties is $1,382,666.

ITEM 3. LEGAL PROCEEDINGS

On December 11, 1995, Coffee Centrale, Inc., a franchisee of the Company in
Dallas, Texas, and its owners Diana and Iosif Etinger (together, the
"plaintiffs") sued the Company in the 44th Judicial District Court of Dallas
County, Texas. The Plaintiffs allege that the Company committed fraud and
violated the Texas Business Opportunity Act by knowingly misrepresenting
material facts concerning the Plaintiff's franchisee and committing other
misleading or deceptive acts, breached its fiduciary duty in connection with the
Plaintiffs' entry into a lease agreement for the premises committed
discriminatory pricing by paying a lower price and/or receiving rebates for
brand name products not available to the Plaintiffs, causing the Plaintiffs to
receive a different price than similarly situated Company franchisees for a like
kind or quality of goods. Relief sought in this suit includes unspecified actual
damages and punitive damages in excess of $2,000,000. The Company, which has
denied the allegations, has filed a related action against Coffee Centrale, Inc.
in the Federal District Court in Sacramento, California, alleging breach of the
franchise agreement. Although the proceedings are still at an early stage, no
depositions have yet been taken in the Texas case, and therefore no prediction
may be made as to its outcome, the Company's management believes that the
Plaintiff's claims are without substantial merit, and on that basis believes
that the ultimate disposition of this litigation will not have a material
adverse effect on the Company's financial condition or operating results.

On June 27, 1997 Mr. Peter Merganthaler, an individual resident of the
State of Florida, filed suit against the Company in the 15th Judicial Circuit
Court in Palm Beach Country, Florida alleging breach of two 1995 financial
consulting agreements. The relief sought by Mr. Merganthaler includes payment
of approximately $30,000 in consulting fees, $20,000 in out of pocket expenses
and $500,000 in commissions on private placements of the Company's Common Stock.
The Company believes that the Company has substantial defenses to all of the
claims asserted by Mr. Merganthaler, and it intends to deny the allegation made
in his complaint. On that basis, the Company believes that the ultimate
disposition of this lawsuit will not have a material adverse effect on the
Company's financial condition or operating results.

On March 30, 1995, the Company issued to Oh La La!, Inc, Debtor-in
Possession, a promissory note in principal amount of $932,342 ("the "Note").
The Note was convertible into shares of the Company's common stock, at its
option and under certain circumstances. In September of 1995 the Company
notified representatives of PSSS, Inc., successor in interest to Oh La La!,
Inc., that the required circumstances had been met and that it intended to
convert the note into shares of its common stock, and a number of shares
sufficient to convert the outstanding principal balance of the Note was
delivered to representatives of PSSS, Inc. In November of 1996, PSSS, Inc.
notified the Company that it rejected the September 1995 conversion because
the shares delivered to it were not sufficient to convert the
then-outstanding interest due on the Note, and on May 28, 1997, PSSS, Inc.
sent Java a formal demand letter for the immediate payment of the

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<PAGE>

principal amount of the Note plus $122,602.97 in accrued interest to date of
such letter. To date, there has been no formal resolution of the claim asserted
by PSSS, Inc. The Company's management believes that the Company has
substantial defenses to the claim that the September 1995 conversion was
ineffective, and on that basis believes that the ultimate disposition of the
claims asserted by PSSS, Inc. in this matter will not have a material adverse
effect on the Company's financial condition or operating results.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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PART II

ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS

The Company's Common Stock is its only class of equity securities
outstanding. The Common Stock is listed for trading on the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") Small Cap List,
under the symbol "JAVC." The following table sets forth, for the calendar
quarterly periods indicated, the range of high and low sale prices for the
Common Stock as reported by NASDAQ since January 1, 1995.

High Low
----- -----
1995
First Quarter $2.63 $1.63
Second Quarter $3.13 $1.00
Third Quarter $8.75 $2.50
Fourth Quarter $5.44 $2.00

1996
First Quarter $3.25 $1.56
Second Quarter $1.63 $ .75
Third Quarter $1.63 $ .50
Fourth Quarter $1.00 $ .50

1997
First Quarter $ .69 $ .44
Second Quarter (through July 10, 1997) $ .50 $ .19

At June 30, 1997, there were 165 holders of record of the Company's Common
Stock. The Company has never paid a cash dividend on its Common Stock, and does
not anticipate paying any dividends in the immediately foreseeable future. As a
California corporation, the payment of dividends by the Company is limited by
California law and subject to the discretion of its Board of Directors. With
certain exceptions, a California corporation may not pay a dividend to its
shareholders unless its retained earnings equal at least the amount of the
proposed dividend. California law further provides that, in the event that
sufficient retained earnings are not available for the proposed distribution, a
corporation may nevertheless make a distribution to its shareholders if it meets
the following two generally stated conditions: (a) the corporation's assets
equal at least 1.25 times its liabilities, and (b) the corporation's current
assets equal at least its current liabilities, or if the average of the
corporation's earnings before taxes on income and before interest expense for
the two preceding fiscal years was less than the average of the corporation's
interest expense for such fiscal years, then the corporation's current assets
must equal at least 1.25 times its current liabilities.

24
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth the selected operating results and balance
sheet data of the Company for the periods and as of the dates indicated. The
selected financial data was derived from the Company's financial statements
which have been audited by Grant Thornton LLP, independent certified public
accountants, and should be read in conjunction with such financial statements
and related notes and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this Form 10-K.

STATEMENT OF OPERATIONS DATA:

Year Ended March 31
-----------------------------------------------------
1997(3) 1996(1)(2) 1995
-----------------------------------------------------
<S> <C> <C> <C>
Revenues $ 14,808,888 $ 9,554,800 $ 1,775,670
Operating expenses 19,735,293 13,592,885 3,810,807
------------ ------------ ------------
Operating loss (4,926,405) (4,038,085) (2,035,137)
Debt conversion expense - - (118,953)
Interest Income (expense), net (399,787) 71,659 259,907
------------ ------------ ------------
Net loss $( 5,326,192) $(3,966,426) $(1,894,183)
------------ ------------ ------------
------------ ------------ ------------
Loss per equivalent common
share (1) (2) $ (.46) $ (.61) $ (.42)
------------ ------------ ------------
------------ ------------ ------------
Common stock and
equivalent
common shares
outstanding
--weighted average 11,540,800 6,526,377 4,488,532
------------ ------------ ------------
------------ ------------ ------------

BALANCE SHEET DATA:
March 31,
---------------------------------
1997 1996
Working capital (deficit) $ (2,856,439) $ (312,601)
Total assets $ 11,017,990 $16,732,067
Notes payable $ 344,349 $ 4,800,215
Common stock $ 18,507,874 $15,493,137
Accumulated deficit $(13,438,422) $(8,112,230)
</TABLE>

___________________
(1) For the year ended March 31, 1996, the Company completed 12 months of
operation from the Oh La La! acquisition dated March 31, 1995.

(2) For the year ended March 31, 1996, the Company's results include three
months of operation from the Paradise Bakery acquisitions dated December
31, 1995. (See footnotes E of the Notes to Consolidated Financial
Statements.)

(3) For the year ended March 31, 1997, the Company sold the Oh La La! Division
in December 1996. (see footnote F of the Notes to Consolidated Financial
Statements.)

25
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

GENERAL

The Company began operations on March 5, 1992, and operated as a
development stage enterprise through the end of its fiscal year ended March 31,
1993. As a development stage enterprise, the Company focused its efforts on
financial planning, raising capital, research and development, establishing
sources of supply, developing markets, organizing the corporation, acquiring
assets, and developing its business plan. During this time, the Company
completed the filing of its Uniform Franchise Offering Circulars. The Company
also opened its training facility in Folsom, California, which is now being used
to provide training to franchisees and their key employees in the operations of
franchisee-owned Java Centrale cafes.

During fiscal 1997 and to date, the Company has been operating at a loss
primarily due to its administrative overhead and the under performance of the
cafes in its Java Centrale system. Commencing in April 1996. The Company
instituted a plan to reduce its administrative expenses, but this plan has
not been successful enough to cause the Company to become profitable.
Further, the Company's Java Centrale system has in general not grown as fast
or proved to be as profitable as expected, and the Company has experienced
higher than anticipated expenses in pursuing the development of these cafes
and in the closing of certain outlets in this system.

The Company's financing plan over the last year to meet its ongoing
liquidity needs has been to raise new equity through private placements,
refinance or obtain new debt funding and sell assets of the Company's
operation. The Company is maintaining its financing plan of seeking new
equity, obtaining or refinancing debt and pursuing the sale of assets related
to the Company's operation. In February 1997, the Company hired an outside
advisor to assist with the refinancing of the debt or the raising of new
equity and to date there has been no financing completed. As of June 30,
1997, the Company is in negotiations with various parties and no certainty
can be given as to the ultimate outcome of these discussions.

The Company's continuing operating losses have left it in a materially
weak cash-flow position, one effect of which has been that the Company has
been unable to develop its more profitable Paradise Bakery system as rapidly
and extensively as it has planned to do.

26
<PAGE>

Since April of 1996, the Company has relied on a series of short-term
loans from Alta Petroleum, Inc. in the aggregate amount of $775,000, sale of
assets totaling $1,321,000 and the raising of $900,000 in equity to finance
its continuing cash flow shortfalls. (See "Certain Transactions," below.)
There can be no assurance that any similar financing, asset sales or equity
placements will continue to be available to the Company in the future.
Consequently, under current circumstances the Company does not anticipate
that it will be able to continue existing operations in the future unless it
can obtain new short-term or long-term financing, raise new equity or make a
significant sale of assets. A special committee of the Company's Board of
Directors has been constituted in order to evaluate a number of options for
the resolution of its immediate and long-term financial needs, including
among other potential alternatives the sale of its Java Centrale and/or
Paradise Bakery systems, obtaining a long-term loan secured by its Paradise
Bakery assets, a private and/or public sale of Company stock and/or other
securities, and a strategic merger. Some of the alternatives currently being
studied by the Company's Board of Directors might result in a change in the
management and/or control of the Company. However, no final resolution of
these issues has yet been arrived at.

As of March 31, 1997, the Company had operating 17 Company-owned locations
and 63 franchisee-owned locations, as compared to 40 Company-owned locations,
and 61 franchisee-owned locations as of March 31, 1996, and 17 Company-owned
locations and 22 franchisee-owned locations as of March 31, 1995.

The Company entered into agreements with franchisees to open 26 cafes
during the year ended March 31, 1997, as compared to entering into agreements
with franchisees to open 33 cafes during the year ended March 31, 1996. The
Company entered into agreements to open 22 cafes and six carts during the year
ended March 31, 1995.

The Company opened seven franchisee-owned cafes, and no Company-owned
cafes, during the fiscal year ended March 31, 1997, as compared to opening 16
franchisee-owned cafes and two Company-owned cafes during the year ended March
31, 1996. The Company opened 11 franchisee-owned cafes and eight franchisee-
owned carts during the fiscal year ended March 31, 1995.

The Company closed two Company-owned cafes, one Company-owned cart and 9
franchisee-owned cafes in the fiscal year ended March 31, 1997 as compared to
one franchisee-owned cafe close in the fiscal year ended March 31, 1996 and one
in the fiscal year 1995. These cafes closed primarily due to poor financial
performance.

The Company sold six Company-owned locations to franchisees and acquired
no cafes during the fiscal year ended March 31, 1997, as compared to selling
no Company-owned locations, acquiring five cafes from franchisees, which were
operated as Company-owned cafes after the acquisition, and selling two
Company-owned carts for the year ended March 31, 1996, and none for the year
ended March 31, 1995. As part of these cafe acquisitions, the Company also
reacquired the rights to open 58 cafes in California, Nevada, Illinois, and
other eastern states. The Company acquired the cafes for sale by franchisees
and have re-franchised three Company-owned cafes to new franchisees and plans
to re-franchise the remaining cafes. The cafes were experiencing financial
and operational difficulties under the franchisee management. As part of the
acquisition the Company canceled receivables from the franchisees related to
equipment purchased by the two

27
<PAGE>

of the franchisees to open the cafes.

The Company sold three Company-owned cart locations to a licensee and
sold the development rights to South Korea during the fiscal year ended March
31, 1997 as compared to none for the fiscal years ended 1996 and 1995.

The Company entered into three management agreements with two
franchisees to operate Company-owned cafes during the year ended March 31,
1997, as compared to none for fiscal year ended March 31, 1996 and 1995.
During the year ended March 31, 1997, the Company terminated two management
agreements. One agreement was terminated due to the sale of the location to
a franchisee and one agreement was as a result of financial difficulties.
During the fiscal years ended March 31, 1996 and 1995 no management
agreements were entered into.

On November 14, 1994 the Company entered into a Joint Venture Formation
Agreement with Banyan Capital, Limited Partnership for the development of 50
cafes in the State of Florida over a five-year period, and for rights to
other markets on the Eastern Seaboard. The Joint Venture Formation Agreement
and related transactions was completed in July 1995 and as of March 31, 1996,
there were three cafes operating under this agreement. In March 1997 the
Company and Java Southeast terminated this joint venture agreement whereby
the Company reacquired the franchise rights to the State of Florida. The
three open cafes will be de-imaged by December 1997.

On March 30, 1995, the Company completed its acquisition of
substantially all of the assets of Oh La La!, Inc., a Delaware corporation
headquartered in Northern California. At the time of this transaction, Oh La
La! was the Debtor-in-Possession in a Chapter 11 bankruptcy proceeding. The
assets purchased included tenant improvements, equipment, and goodwill. The
purchase price for the acquired assets were $2,104,000 and liabilities in the
amount of $113,000 were assumed as part of the transaction.

On December 31, 1995, the Company acquired 100% of the outstanding stock
of Paradise Bakery, Inc. At the time of the acquisition, Paradise Bakery had
seven Company-owned and 44 franchisee-owned bakery/cafes operating in nine
states. On January 1, 1996, the Company acquired through a merger with
Founders Venture, Inc., eight franchisee-owned bakery/cafes operating in
Texas. On January 1, 1996, the Company acquired through an asset purchase
agreement three franchisee-owned bakery/cafes operating in Northern
California. Immediately following these three acquisitions, the Company was
operating 18 Company-owned and 33 franchisee-owned bakery/cafes. These
acquisitions of Paradise bakery/cafe locations will represent a significant

28
<PAGE>

portion of the Company's revenues and operations.

RESULTS OF OPERATIONS

The Company's revenues are currently derived primarily from
Company-owned locations, initial franchise fees, resulting from cafe
openings, franchise royalties, equipment sales, and product overrides on
sales to its franchisees. Franchise fees range from $15,000 to $25,000 per
cafe. The Company is entitled to 4%-6% of the gross receipts from each
franchised cafe and 2%-10% of the gross receipts from each franchised cart.
Product overrides range from 3% to 10% of the total purchase of coffee from
the Company's contract roaster.

FISCAL 1997 AS COMPARED TO FISCAL 1996

Total Company revenues for the fiscal year ended March 31, 1997 totaled
$14,809,000, as compared to $9,555,000 for the year ended March 31, 1996, an
increase of $5,254,000, or 55%. The principal components of this increase
were:

The Company's revenues from Company-owned retail operations increased by
$5,229,000, or 69%, to $12,814,000 for the fiscal year ended March 31, 1997,
from $7,585,000 for the fiscal year ended March 31, 1996. This increase
resulted primarily from an increase of $6,682,000, in revenues from operating
the acquired Paradise Bakery Company-owned locations for 12 months during the
fiscal year ended March 31, 1997 as compared to operating the acquired Paradise
Bakery Company-owned locations for three months during the fiscal year ended
March 31, 1996. Additionally, revenues declined from prior years as a result
of the sale of the Oh La La! Division in December 1996 and the sale and
closure of Company-owned cafes for approximately $1,450,000.

Revenues from the Company's franchising operations increased $144,000, or
36% to $539,000 for the fiscal year ended March 31, 1997, from $395,000 for the
fiscal year ended March 31, 1996. This increase is a result of the following
recognized franchise fees: $128,000 associated with the opening of five Java
Centrale franchisee-owned cafes and two Paradise Bakery franchisee-owned cafes,
$117,000 associated with the sale of two Company-owned Paradise Bakery cafes to
one franchisee and three Company-owned Java Centrale cafes to two franchisees,
$10,000 associated with the transfer of ownership of two Java Centrale
franchisee-owned locations, $45,000 forfeited fees associated with four Java
Centrale franchisees and one Paradise Bakery franchisee, $140,000 in forfeited
franchise fees directly related to the termination of the joint venture
agreement, and $83,129 associated with the licensing rights agreement to South
Korea for the fiscal year ended March 31, 1997, as compared to the recognition
franchise fees during the fiscal year ended March 31, 1997 of: $330,000
associated with opening 15 franchisee-owned Java Centrale cafes and $64,788 in
association with forfeited Java Centrale franchise fees.

Revenues from the Company's royalties increased $811,000 or 154%, to
$1,336,000 for the fiscal year ended March 31, 1997, from $525,000 for the
fiscal year ended March 31, 1996. This increase resulted primarily from the
royalties associated with the franchise operation of Paradise Bakery for the 12
months during the fiscal year ended March 31, 1997 as compared to three months
during the fiscal year ended March 31, 1996, amounting to $675,000 along with
the additional franchisee-owned locations operating during the 1997 fiscal year
as compared to 1996.

29
<PAGE>

Revenues from the Company's equipment sales decreased $929,000, or 88%, to
$121,000 for the fiscal year ended March 31, 1997 from $1,050,000 for the fiscal
year ended March 31, 1996. This decrease resulted primarily from discontinuing
the sale of equipment directly to franchisees in May of 1996.

Total expenses for the year ended March 31, 1997 were $19,735,000, an
increase of $6,142,000 or 45%, over expenses of $13,593,000 for the year ended
March 31, 1996. The principal components of the increase in expenses resulted
from:

The cost of food and beverage, labor, and operating costs for the Company's
retail operations increased $5,015,000, for the year ended March 31, 1997, to
$12,518,000, as compared to $7,503,000 for the year ended March 31, 1996. The
increase resulted primarily from an increase in expenses of $6,108,000
associated with operating the Paradise Bakery locations for 12 months during the
fiscal year ended March 31, 1997 as compared to three months for the fiscal year
ended March 31, 1996, in addition to a decrease of $1,093,000 in operating costs
associated with the sale of three Company-owned Java Centrale cafes, two
Company-owned Paradise Bakery cafes and the sale of the Oh La La! locations in
December 1996.

The Company's cost of equipment decreased by $889,000, or 86%, in the year
ended March 31, 1997, to $149,000, as compared to $1,038,000 for the year ended
March 31, 1996. This increase resulted primarily from discontinuing the sale of
equipment directly to franchisees in May of 1996.

Selling, general, and administrative expenses increased $416,000, or 10%,
during the year ended March 31, 1997, to $4,603,000 from $4,187,000 during the
1996 fiscal year. This increase results from; increases in general and
administration expenses associated with the operation of the Paradise Bakery
locations for 12 months for the fiscal year 1997 as compared to three months for
the fiscal year 1996 totaling $739,000, the recognition of expense for the re-
design of the Paradise Bakery cafe concept totaling $76,000 and decreased
expenses in the fiscal year 1997 resulted from consulting expenses reduced by
$264,000, personnel costs reduced by $365,000, advertising and marketing
expenses reduced by $334,000 and merger expenses decreased a total of $40,000.
Additionally other increases in general and administrative expenses are legal
and accounting increased $217,000, as a result of expenses associated with
capital raising activities and settlements, fees and expenses associated with
the issuance of common stocks of $39,000.

For the year ended March 31, 1997, the Company had an operating loss of
$4,926,405, a net loss of $5,326,192, and a loss per share of $.46, as
compared to an operating loss of $4,038,000, a net loss of $3,966,000, and a
loss per share of $.61 for the fiscal year ended March 31, 1996. The
increased operating loss of $888,000 is primarily a result of higher general
and administrative expenses as described above totaling $416,000, a loss of
$275,000 relating to the conversion of a note receivable into common shares,
settlement expenses relating to two franchisees and a former employee of
Paradise Bakery amounting to $336,000, increased bad debt expenses of
$398,000 resulting from certain franchisee related notes and royalties, a
loss from the termination of the joint venture in Florida totaling $257,000,
virtually the same expense relating to the closure of cafes at $413,000 for
each fiscal year, and higher depreciation and amortization expenses
associated with the acquisition of Paradise Bakery totaling $205,000. The
operating loss improved this fiscal year as compared to last fiscal year as a
result of higher operating margins associated with the operations of
Paradise Bakery for 12 months for the fiscal year ended 1997 as compared to
three months for the fiscal year ended 1996 amounting to $752,000, lower
losses for the operations of Java Centrale totaling

30
<PAGE>

$180,000 and higher depreciation and amortization expenses associated with the
acquisition of Paradise Bakery totaling $205,000.

The increased net loss of $1,360,000 is a result of the above increased
operating loss of $888,000, and an increase in interest expense and fees
associated with the Company's financings of $545,000.

FISCAL 1996 AS COMPARED TO FISCAL 1995

Total Company revenues for the fiscal year ended March 31, 1996 totaled
$9,555,000, as compared to $1,776,000 for the year ended March 31, 1995, an
increase of $7,779,000, or 438%. The principal components of this increase were
increased revenues amounting to $6,249,000 from the Oh La La! purchased
locations and the acquisition of the Paradise Bakery operations as of December
31, 1995.

The Company's revenues from Company-owned retail operations increased by
$7,108,000, to $7,585,000 for the fiscal year ended March 31, 1996 from $477,000
for the fiscal year ended March 31, 1995. This increase resulted primarily from
$3,424,000 in revenues recognized with the acquisition of the Oh La La!
locations and $2,826,000 in revenues recognized with the acquisition of the
Paradise Bakery locations. Additionally there was an increase of $858,000 or
180% in revenues from the addition of five Company-owned Java Centrale locations
during the 1996 fiscal year.

Revenues from the Company's franchising operations slightly decreased
$3,000, or 1% to $395,000 for the fiscal year ended March 31, 1996, from
$398,000 for the fiscal year ended March 31, 1995, resulting from a decrease in
forfeited franchise fees recognized by the Company during the 1996 fiscal year
of $49,000, as compared to $79,000 received during the 1995 fiscal year.

Revenues from the Company's royalties increased $327,000 or 165%, to
$525,000 for the fiscal year ended March 31, 1996, from $198,000 for the fiscal
year ended March 31, 1995. This increase resulted primarily from the royalties
associated with the acquisition of Paradise Bakery amounting to $196,000 and the
opening of 15 new franchisee-owned locations during the 1996 fiscal year.

Revenues from the Company's equipment sales increased $348,000, or 50%, to
$1,050,000 for the fiscal year ended March 31, 1996 from $702,000 for the fiscal
year ended March 31, 1995. This increase resulted primarily from an increase of
15 franchisee-owned cafe locations opened during the 1996 fiscal year, as
compared to the 11 franchisee-owned cafe locations opened during fiscal 1995.
The Company sells the equipment required to substantially all of its franchisee-
owned locations.

Total expenses for the year ended March 31, 1996 were $13,593,000, an
increase of $9,782,000, or 257%, over expenses of $3,811,000 for the year ended
March 31, 1995. The principal components of the increase in expenses resulted
from $7,126,000 in operating expenses associated with the acquisition of the Oh
La La! locations and the acquisition of Paradise Bakery. Additionally, the
increase resulted from the Company recognizing during the fiscal year end 1996,
a one-time non-recurring expense of $453,000 relating to the issuance of shares
below market

31
<PAGE>

pursuant to a consulting agreement to develop acquisitions, franchising
opportunities and consult regarding investment relation matters for the Company.
Additionally, there was an increase in the cost of equipment, selling, general
and administrative expenses, depreciation and amortization and other operating
costs from the addition of Oh La La! and Paradise Bakery.

The cost of food and beverage, labor, and operating costs for the Company's
retail operations increased $6,862,000, for the year ended March 31, 1996, to
$7,503,000, as compared to $641,000, for the year ended March 31, 1995. The
increase resulted primarily from $5,197,000 in operating costs associated with
the acquisition of the Oh La La! locations and the acquisition of the Paradise
Bakery locations. Additionally, an increase of $1,288,000 in operating costs
associated with the addition of six Company-owned Java Centrale cafes during the
1996 fiscal year as compared to the 1995 fiscal year.

The Company's cost of equipment increased by $263,000, or 34%, in the year
ended March 31, 1996, to $1,038,000, as compared to $775,000 for the year ended
March 31, 1995. This increase resulted primarily from the growth in the
Company's opening seven additional franchisee-owned locations during the year.

Selling, general, and administrative expenses increased $1,910,000, or 81%,
during the year ended March 31, 1996, to $4,261,000 from $2,351,000 during the
1995 fiscal year, primarily because of higher expenses associated with legal,
accounting, consulting, investor relations, and higher expense relating to
franchise recruitment, training, and support, and overall administration
salaries relating to the acquisition of Oh La La! and Paradise Bakery.
Additionally, the increase resulted from the Company recognizing during the
fiscal year end 1996, a one-time non-recurring expense of $453,000 relating to
the issuance of shares below market pursuant to a consulting agreement to
develop acquisitions, franchising opportunities and consult regarding investment
relation matters for the Company.

For the year ended March 31, 1996, the Company had an operating loss of
$4,038,000, a net loss of $3,966,000, and a loss per share of $.61, as compared
to an operating loss of $2,035,000, a net loss of $1,894,000, and a loss per
share of $.42 for the fiscal year ended March 31, 1995. The increased operating
loss and net loss primarily resulted from higher expenses associated with the
Java Centrale system, increased administrative salaries, legal, accounting,
consulting and investor relations, depreciation and amortization, and increased
expenses associated with franchisee recruitment, support and training and the
recognition of $410,000 in losses associated with cafe and cart closures.
Additionally, the increase resulted from the Company recognizing during the
fiscal year end 1996, a one-time non-recurring expense of $453,000 relating to
the issuance of shares below market pursuant to a consulting agreement to
develop acquisitions, franchising opportunities and consult regarding investment
relation matters for the Company.

32
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company's initial capitalization was obtained through the issuance of
2,500,000 shares of no par common stock for $10,000 on March 5, 1992. In
addition, the Company issued 2,950,000 shares of Series A cumulative preferred
stock, in exchange for 2,950,000 shares of no par cumulative preferred stock,
which were subscribed for on March 5, 1992 for proceeds of $590,000, on
March 12, 1993. On March 30, 1993, the Company sold 5,000,000 shares of no par
value redeemable Series B cumulative preferred stock for $1,000,000. The
proceeds from the issuance of all such stock were used for capital acquisitions
and operating costs of the Company during its development stage. On
May 19, 1994, the Company raised $7,288,000 in net proceeds from an initial
public offering of 1,500,000 shares of common stock. Of the 4,291,820 shares
outstanding after the offering, 855,300 were placed in escrow and are subject to
an Escrow Agreement which provides for the release of such shares on or before
March 31, 1999, with earlier release based upon the financial performance of the
Company. See Item 12 "Security Ownership of Certain Beneficial Owners and
Management -- Escrow Agreement," below.

The Company used a portion of the proceeds from the initial public offering
to repay long term debt, purchase equipment and furniture, support the operating
losses in developing the Company's operating system, and pay $500,000 as part of
the purchase price to acquire the operating assets of Oh La La!, Inc.

On July 15, 1994, the Company paid a 25% stock dividend on its Common Stock
to shareholders of records on June 30, 1994. Prior to the issuance of the
dividend, employees and officers of the Company holding securities, including
warrants and options, waived their rights to receive the stock dividend and also
waived the impact such stock dividend would have on any options or warrants held
by the security holders, including, but not limited to, any anti-dilution
provisions relating to such options and warrants.

In the 1996 fiscal year the Company issued 1,604,692 common shares for
$3,540,722 in proceeds in a series of private placements. The Company also
issued convertible debt in three separate private transactions totaling
$3,500,000. As of March 31, 1996, none of the convertible debt was converted
into the Company's common stock. During the fiscal year ended March 31, 1997
$2,054,150 convertible debt had been converted into 3,311,183 shares of the
Company's common stock .

From April1, 1997, to July 10, 1997, an additional $445,750 has been
converted into 2,386,226 shares. Additionally, in July 1997, the Company has
agreed to restructure the remaining portion of the unconverted note totaling
$1,000,000, into a note due no later than January 1998, pledging of the Paradise
Bakery, Inc. shares as collateral and added $250,000 to the balance of the note
to eliminate the conversion feature of the note.

The Company used $5,375,000 of the cash raised through the private
transactions to acquire 100% of the common stock in Paradise Bakery, Inc., on
December 31, 1995. Additionally, as part of the acquisition of Paradise Bakery,
Inc., the Company issued notes to the seller in the amount of $1,350,000. The
Company also issued notes in the amount of $46,071 to the sellers and assumed
$97,950 in debt obligation associated with the asset purchase of the three
Paradise Bakery locations.

33
<PAGE>

The Company assumed bank debt in the amount of $1,085,000 and $24,535 in lease
obligations associated with the merger of Founders Venture, Inc., into Paradise
Bakery, Inc.

As of March 31, 1996, the Company had received $144,839 in partial funding
of a lease commitment amounting to $240,000. The Company has received the
remaining portion of this commitment by June 30, 1996 for equipment cost of
Company-owned Java Centrale cafes.

During fiscal year ended March 31, 1997, the Company sold a total of
1,538,462 shares of its common stock in two private placements, for net proceeds
of $900,000 to fund continuing operations.

As part of the purchase price for the assets of Oh La La! acquired by
the Company on March 31, 1995, the Company issued to Oh La La!, Inc. a note
payable of $745,874, and assumed liabilities for tenant improvement loans
related to the properties acquired of $113,306. In January of 1996, the
Company converted a note payable of $745,874 into 234,000 shares of common
stock pursuant to the terms of the note associated with the acquisition of Oh
La La!. In December of 1996, the Company sold the assets of Oh La La! to Good
Food Fast Companies Inc. "GFF" for $1,250,000 in cash, 233,333 shares of
preferred stock and $750,000 in notes receivable due in 1999. On March 31,
1997, the Company agreed with GFF to exchange $250,000 of the convertible
note receivable for the assumption of Oh La La!, the Company and GFF entered
into an agreement whereby GFF assumed certain liabilities of the Company,
exchange 233,333 preferred shares for 233,333 shares of common stock,
accelerate a payment of $145,000 due under the note receivable to May 1997
and convert the remaining $355,000 balance of the note to 40,000 shares of
GFF common stock. The common shares of GFF at March 31, 1997, have been
valued at $2.00 per share based on the fair value of such shares. The
Company recognized an aggregate loss of $304,638 from the sale of Oh La La!
and the subsequent conversion of the note receivable into common shares. As
of March 31, 1997, following the related conversions, the Company owned
approximately 30% of the outstanding-common shares of GFF. The Company did
not recognize any earnings from GFF under the equity method of accounting due
to inmateriality.

In April 1996, the Company completed a financing for $400,000, which
pledged the assets of Oh La La!. This note was paid from the proceeds of the
cash portion on the sale of Oh La La! in December 1996.

In May 1996, the Company completed the sale of two Company-owned Paradise
Bakery cafes to a franchisee for proceeds of $280,000, which were applied to the
note due Sanwa Bank from the merger of Founders Venture, Inc.

In July 1996, the Company borrowed $350,000 under a note due in April 1997.
This note was paid with the proceeds of the long-term debt in November 1996,
when the Company completed a financing of $779,000 in long-term debt, pledging
the assets of Paradise Bakery. Although the Company is currently in default of
certain financial covenants under this note, it is current with the required
monthly payments under the note. The Company also used proceeds of the $779,000
to pay a note due Chart House Enterprises in the amount of $330,000.

As of March 31, 1996, the Company had no line of credit available to it and
as of March 31, 1997 had the $175,000 management line of credit available to it.
In July 1996, Baycor, Gary

34
<PAGE>

Nelson, President and Chief Executive Officer, and Steven J. Orlando, Chief
Financial Officer, agreed to loan the Company $175,000 from time to time as
needed until April 1997, when the line of credit will be due and payable. The
lenders would receive a general lien on Java Centrale assets and will be at an
interest rate of principal plus 2% per annum. In replacement of the line of
credit, in April of 1997 Gary Nelson advanced the Company $50,000 and Steven
Orlando deferred $28,000 in salary due from December 1996 through April 1997 and
Baycor deferred the receipt of salary and expenses, without interest, during the
1997 fiscal year. The maximum deferral for Baycor was $145,041 as of January
31, 1997, and the amount remaining unpaid as of June 30, 1997 was $93,633 and
$64,952 at March 31, 1997.

35
<PAGE>

At the Company's current level of development, it does not generate net
cash from operations. To fund its operations, the Company requires either
additional financing, significant sales of additional franchises, or a
substantial increase in its network of Company-owned cafes and carts. The
Company incurred a net loss of $3,966,000 and used net cash of $2,391,000 in
operating activities for the year ended March 31, 1996 and incurred a net loss
of $5,326,192 and used net cash of $3,062,279 in operating activities for the
year ended March 31, 1997.

The Company had developed a specific operating plan to meet the ongoing
liquidity needs of the Company's operations both for the year ended March 31,
1997, and thereafter. During the fiscal year ended March 31, 1997, the Company
reduced administrative salaries, certain employee benefit costs, and marketing
expenses. The Company also sold 20 of its existing Company-owned cafes and
carts for proceeds of $1,321,000 in cash and is actively pursing the sale of
additional assets. Despite the sale (and possible future sales) of these
assets, the Company does intend to operate Company-owned locations. The
Company also completed a number of debt financings totaling $1,729,000 and the
sale of equity for $900,000 to meet its ongoing liquidity needs in the fiscal
year ended March 31, 1997.

Based on the Company's current cost structure and other expense
calculations, and the Company's current and anticipated revenue streams,
including sales of new Java Centrale franchises and the operating income
expected to be produced by the Company's Paradise Bakery system, the Company
cannot estimate that it will break even on cash flow in the current fiscal
year. The Company does not expect to achieve profitability until after March
31, 1998, and then only if the Company's growth projections can be met and
its cost structure remains stable. There can be no assurance that enough new
franchises will be sold to provide the necessary liquidity, or that the
Company's liquidity goals will be reached in the immediate future if ever.
The Company has certain debt obligations that are in default for
non-compliance with financial covenants and non-payment to the scheduled
payments. These obligations have been classified as currently due in the
financial statements and the Company cannot make any assurances as to the
ultimate disposition of these debt obligations which total approximately
$1,150,000 as of July 1997. The Company's plan of operation to provide
ongoing liquidity continues to include the sale of certain operating assets,
the active pursuit of debt and equity and the restructure of debt. The
Company can not make any assurance that this plan will be achieved.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

36
<PAGE>

The following 29 pages contain the Company's audited balance sheets as of
March 31, 1997 and 1996, and the related statements of operations, stockholders'
equity (deficit), and cash flows for the years ended March 31, 1997, 1996, and
1995. No supplementary data is required to be filed by the Company by Section
302 of Regulation S-K.

<PAGE>

FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

JAVA CENTRALE, INC.,
AND SUBSIDIARY

March 31, 1997, 1996 and 1995

<PAGE>

CONTENTS

Page

CONSOLIDATED FINANCIAL STATEMENTS

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 40

CONSOLIDATED BALANCE SHEETS 42

CONSOLIDATED STATEMENTS OF OPERATIONS 43

CONSOLIDATED STATEMENT OF STOCKHOLDERS' 44
EQUITY (DEFICIT)

CONSOLIDATED STATEMENTS OF CASH FLOWS 45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 47

39
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors and Stockholders
JAVA CENTRALE, INC. AND SUBSIDIARY

We have audited the accompanying consolidated balance sheets of JAVA
CENTRALE, INC. (A CALIFORNIA CORPORATION) and Subsidiary as of March 31, 1997
and 1996, and the related consolidated statements of operations,
stockholders' equity (deficit), and cash flows for the years ended March 31,
1997 and 1996 and 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Java Centrale,
Inc. and Subsidiary as of March 31, 1997 and 1996, and the consolidated
results of their operations and their consolidated cash flows for the years
ended March 31, 1997, 1996, and 1995 in conformity with generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note C to the
financial statements, the Company has experienced recurring net losses from
operations and has a net loss of approximately $5,300,000 for the year ended
March 31, 1997 and as of that date, the Company's current liabilities
exceeded its current assets by approximately $2,900,000. At March 31, 1997,
the Company is in default under a note agreement and is not in compliance
with certain debt agreement covenants which could result in the notes
becoming due and payable on demand. The Company's plan in regard to these
matters are also described in Note C. The accompanying financial statements
do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or the amounts and classifications
of liabilities should the Company be unable to continue as a going concern.

GRANT THORNTON LLP

Sacramento California
July 8, 1997

<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

March 31,
<TABLE>
<CAPTION>

ASSETS
1997 1996
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 350,608 $ 1,182,078
Notes receivable - current 448,369 485,751
Accounts receivable (net of allowance of
$176,223 in 1997 and $58,000 in 1996) 591,536 405,574
Inventories 314,342 417,780
Prepaid expenses and other 397,322 595,285
------------- -------------
Total current assets 2,102,177 3,086,468

NOTES RECEIVABLE 989,603 1,298,574
PROPERTY AND EQUIPMENT, NET 2,781,158 5,737,980
INTANGIBLE ASSETS 4,040,845 5,526,203
DEFERRED CHARGES AND OTHER 316,775 670,658
NOTES RECEIVABLE-OFFICER 240,766 235,201
INVESTMENT IN JOINT VENTURE - 176,983
INVESTMENT 546,666 -
------------- -------------
$ 11,017,990 $ 16,732,067
------------- -------------
------------- -------------

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable $ 1,123,573 $ 1,807,136
Accrued liabilities 620,424 726,244
Due to related parties 44,295 22,637
Current maturities of long-term debt 1,945,488 746,785
Convertible debt 1,197,068 -
Current capital lease obligations 27,768 96,267
------------- -------------
Total current liabilities 4,958,616 3,399,069

DEFERRED REVENUES 576,000 1,003,500
LONG-TERM DEBT - 1,171,161
CONVERTIBLE DEBT 248,682 3,500,000
CAPITAL LEASES 95,667 129,054
OTHER LIABILITIES 69,573 148,376

STOCKHOLDERS' EQUITY:
Series B Redeemable Preferred Stock, $.01 per share
per annum cumulative, convertible, no par
25,000,000 shares authorized - -
Common stock, no par, 25,000,000 shares authorized,
issued and outstanding shares; 13,743,804 - 1997
and 8,533,587 - 1996 18,507,874 15,493,137
Accumulated deficit (13,438,422) (8,112,230)
------------- -------------
5,069,452 7,380,907
------------- -------------
$ 11,017,990 $ 16,732,067
------------- -------------
------------- -------------
</TABLE>

The accompanying notes are an integral part of these statements.

41
<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

Year ended March 31,
<TABLE>
<CAPTION>

1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
Revenue:
Company cafe sales $ 12,813,423 $ 7,585,190 $ 476,859
Franchise operations 538,629 394,788 398,000
Royalties 1,335,616 524,635 198,413
Sales of equipment and supplies 121,220 1,050,187 702,398
------------- ------------- ------------

Total revenue 14,808,888 9,554,800 1,775,670

Cost of company sales:
Food and beverage 4,451,072 2,597,238 222,857
Labor 4,643,875 2,714,067 265,075
Direct and occupancy 2,705,026 1,742,044 72,999
Cost of equipment and supplies 148,857 1,038,497 774,984
Depreciation 573,495 227,631 34,865
Other 144,637 222,000 45,256
------------- ------------- -------------

Total cost of company sales 12,666,962 8,541,477 1,416,036
------------- ------------- -------------
General and administrative expenses 4,602,667 4,187,049 2,351,025
Depreciation and amortization 584,873 380,159 43,746
Loss associated with cart and cafe closures 413,043 410,200 -
Bad debt expense 472,011 74,000 -
Settlement expense 336,000 - -
Loss on conversion of note receivable 275,000
Loss on joint venture 256,816 - -
Loss on sale of cafes 127,921 - -
------------- ------------- -------------
Operating loss (4,926,405) (4,038,085) (2,035,137)
------------- ------------- -------------
Other income (expense):
Interest expense (662,084) (117,284) (7,247)
Interest income 113,168 98,295 216,842
Debt conversion expense - - (118,953)
Other income 149,129 90,648 50,312
------------- ------------- -----------
Net loss $ (5,326,192) $ (3,966,426) $ (1,894,183)
------------- ------------- -------------
------------- ------------- -------------

Net loss per weighted average equivalent
common share outstanding $ (.46) $ (.61) $ (.42)
------------- ------------- -------------
------------- ------------- -------------
Equivalent common shares outstanding 11,540,800 6,526,377 4,488,532
------------- ------------- -------------
------------- ------------- -------------

</TABLE>

The accompanying notes are an integral part of these statements.

42
<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Three years ended March 31, 1997, 1996 and 1995

Preferred Stock Common Stock Accumulated
------------------------- ------------------------
Shares Amount Shares Amount (Deficit) Total
------------ ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balances, March 31, 1994 5,000,000 $ 1,000,000 3,016,820 $ 600,000 $ (2,251,621) $ (651,621)

Initial public offering of
common stock, net
of expenses - - 1,500,000 7,288,407 - 7,288,407

Conversion of Series B
preferred stock to
common stock (5,000,000) (1,000,000) 200,000 1,000,000 - -

Debt conversion expense - - - 118,953 - 118,953

Shares issued for
acquisition - - 600,000 569,500 - 569,500

Net loss - - - - (1,894,183) (1,894,183)
------------ ------------- ------------ ------------ ------------ ------------
Balances, March 31, 1995 - - 5,316,820 9,576,860 (4,145,804) 5,431,056

Shares issued for cafe
purchases - - 279,721 466,168 - 466,168

Warrants converted to
common stock - - 300,000 120,000 - 120,000

Note payable converted to
common stock - - 234,000 748,800 - 748,800

Shares issued for acquisitions - - 505,926 467,477 - 467,477

Shares issued for private
offerings, net of expenses - - 1,604,692 3,540,722 - 3,540,722

Shares issued for joint
venture investment - - 89,428 120,166 - 120,166

Shares issued for consulting
expenses - - 203,000 452,944 - 452,944

Net loss - - - - (3,966,426) (3,966,426)
------------ ------------- ------------ ------------ ------------ ------------
Balances, March 31, 1996 - - 8,533,587 15,493,137 (8,112,230) 7,380,907

Conversion of convertible notes - - 3,311,183 1,850,552 - 1,850,552

Shares issued for private
offerings, net of expenses - - 1,538,462 900,000 - 900,000

Warrants converted to
common stock - - 250,000 62,500 - 62,500

Shares issued for consulting
expenses - - 200,000 50,000 - 50,000

Warrants issued for consulting
expenses - - - 240,351 - 240,351

Warrants issued in connection
with debt - - - 31,500 - 31,500

Shares canceled for joint
venture investment - - (89,428) (120,166) - (120,166)

Net loss - - - - (5,326,192) (5,326,192)
------------ ------------- ------------ ------------ ------------ ------------
Balances, March 31, 1997 - $ - 13,743,804 $ 18,507,874 $ (13,438,422) $ 5,069,452
------------ ------------- ------------ ------------ ------------ ------------
------------ ------------- ------------ ------------ ------------ ------------
</TABLE>

The accompanying notes are an integral part of this statement.

43
<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year ended
March 31,
------------------------------------------------------
1997 1996 1995
-------------- ------------- --------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (5,326,192) $ (3,966,426) $ (1,894,183)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 1,158,368 607,790 78,293
Loss on conversion of note receivable 275,000 - -
Loss on joint venture 256,816 - -
Settlement expense 150,000 - -
Loss on sale of cafes 127,921 - -
Debt conversion expense - - 118,953
Loss associated with cart and cafe closures 413,043 410,200 -
Stock issued for consulting expenses 188,497 452,944 -
Warrants issued in connection with debt 31,500 - -
Changes in operating assets and liabilities:
Inventories (44,063) (20,410) (61,722)
Deposits and prepaid expenses 125,442 (318,478) (217,457)
Accounts payable and accrued liabilities (924,075) 512,923 288,704
Payable to related parties 16,093 (221,668) (8,492)
Deferred revenue (417,500) 314,500 18,000
Accounts receivable (276,948) 21,768 (111,283)
Notes receivable 962,237 200,718 (228,776)
Deferred charges and other assets 248,555 (523,570) 143,936
Other liabilities (26,973) 138,376 -
----------- ------------ ------------
Net cash used in operating activities (3,062,279) (2,391,333) (1,874,027)

Cash flows from investing activities:
Proceeds from cafe sales 1,321,100 - -
Purchase of furniture and equipment (313,446) (1,432,166) (333,074)
Increase in intangible assets (15,001) (2,225) -
Investment in joint venture - (13,404) -
Cash paid for net assets acquired and other
acquisition expenses - (5,554,427) (676,170)
----------- ------------ ------------
Net cash provided by (used in) investing activities 992,653 (7,002,222) (1,009,244)

Cash flows from financing activities:
Proceeds from issuing convertible debt - 3,500,000 -
Proceeds from issuing common stock, net 900,000 3,540,722 7,288,407
Proceeds from notes payable 1,729,000 - -
Repayments of notes payable (1,361,695) (494,206) (678,000)
(Payments) proceeds from capital lease obligations (91,649) 144,839 -
Proceeds from warrant conversions 62,500 120,000 -
----------- ------------ ------------
Net cash provided by
financing activities 1,238,156 6,811,355 6,610,407
----------- ------------ ------------
Net (decrease) increase in cash (831,470) (2,582,200) 3,727,136

Cash and cash equivalents, beginning of period 1,182,078 3,764,278 37,142
----------- ------------ ------------
Cash and cash equivalents, end of period $ 350,608 $ 1,182,078 $ 3,764,278
----------- ------------ ------------
----------- ------------ ------------
</TABLE>

44
<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year ended
March 31,
----------------------------------------
1997 1996 1995
---------- --------- --------
Cash paid for:
Income taxes $ 1,600 $ - $ -
Interest $ 438,707 $ 55,006 $ 7,247

NON-CASH TRANSACTIONS:

During the year ended March 31, 1997, the Company issued 200,000 shares of
common stock valued at $50,000 pursuant to a consulting agreement. The
Company recognized consulting expense of $50,000 as a result of issuance
of these shares.

During the year ended March 31, 1997, the Company issued warrants valued at
$240,351 pursuant to consulting agreements. The Company recognized
consulting expense of $138,497 as a result of issuance of these warrants.

Supplemental Noncash Investing Activities:

Proceeds from cafe sales for the year ended March 31, 1997:

Fixed assets, net 1,220,063
Accounts receivable 41,252
Inventory 59,785

Net cash proceeds $1,321,000

The accompanying notes are an integral part of these statements.

<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 1997, 1996 and 1995

NOTE A - ORGANIZATION AND NATURE OF BUSINESS

Java Centrale, Inc. (the Company) operates under the brand names of Java
Centrale and Paradise Bakery (Paradise), a wholly owned subsidiary of the
Company, (acquired in December 1995). Java Centrale is primarily in the
business of selling gourmet coffee products along with breakfast and lunch
items. Paradise is primarily in the business of selling freshly baked
cookies, muffins, croissants and provides a full lunch menu. Java Centrale
operates franchisee owned locations and Paradise operates both company and
franchisee owned locations.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the preparation
of the accompanying consolidated financial statements of the Company
follows.

1. PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary. All significant intercompany transactions
are eliminated.

2. REVENUE FROM FRANCHISE SALES

REVENUE FROM AREA FRANCHISE SALES - Franchise fee revenue and costs are
recognized on a pro rata basis as each unit is opened and all material
services or conditions relating to those units have been substantially
performed or satisfied by the Company.

REVENUE FROM INDIVIDUAL FRANCHISE SALES - Franchise fee revenue and costs
from individual franchise sales is recognized when all material services or
conditions relating to the sale have been substantially performed or
satisfied by the Company and the store is opened.

REVENUE FROM EQUIPMENT SALES - Revenue from equipment sales is recognized
when the equipment is delivered to the franchisee.

ROYALTY REVENUE - Royalty revenue is recorded as earned in accordance with
specific terms of each franchisee agreement.

3. INVENTORIES

Inventories, consisting principally of franchise related supplies and
equipment, are stated at the lower of cost (first-in, first-out method) or
market.

46
<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

March 31, 1997, 1996 and 1995

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

4. PROPERTY AND EQUIPMENT

Property and equipment is stated at cost less accumulated depreciation and
amortization. Depreciation and amortization of property and equipment is
computed using the straight-line method over the estimated useful life of
the asset or the lease term, where applicable, whichever is less.

The estimated lives used in determining depreciation and amortization are:

Tenant improvements 6.5 - 10 years
Machinery and equipment 6 - 10 years
Furniture and fixtures 3 - 10 years

5. INTANGIBLE ASSETS

Intangible assets consist of goodwill and organizational costs. All
intangible assets are amortized on a straight line basis over the
following years:

Goodwill 15 years
Organizational costs 5 years

The carrying value of intangible assets is periodically reviewed by the
Company based on the expected future undiscounted operating cash flows of
the related business unit. Based upon its most recent analysis, the
Company believes that no material impairment of intangible assets exist at
March 31, 1997.

6. INCOME TAXES

The Company utilizes an asset and liability approach in accounting for
income taxes. This approach requires the recognition of the deferred tax
liabilities and assets for the expected future tax consequences of
temporary differences between the financial statement carrying amounts and
tax basis of assets and liabilities. Deferred tax assets and liabilities
are reflected at currently enacted income tax rates applicable to the
period in which the deferred tax assets or liabilities are expected to be
realized or settled. As changes in tax laws or rates are enacted, deferred
tax assets and liabilities are adjusted through the provision for income
taxes.

7. CASH AND CASH EQUIVALENTS

For purpose of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with maturities of three months or
less to be cash equivalents.

47
<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

March 31, 1997, 1996 and 1995

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

8. RECLASSIFICATIONS

Certain reclassifications were made to the 1996 and 1995 financial
statements in order to be in conformity with the 1997 presentation.

9. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of financial instruments, including cash, accounts
receivable, accounts payable and short-term debt approximated fair value as
of March 31, 1997 and 1996 because of the relatively short maturity of
these instruments. The carrying value of long-term debt approximated fair
value as of March 31, 1997 and 1996 based upon current market rates for the
same or similar debt issues. As of March 31, 1997, notes receivable with a
carrying value of $1,886,538 had an estimated fair value of $1,850,700
based upon current market rates for notes with similar terms and credit
quality. As of March 31, 1996, notes receivable with a carrying value of
$2,019,526 had an estimated fair value of $1,897,000 based upon current
market rates for notes with similar terms and credit quality.

10. ESTIMATES USED IN FINANCIAL REPORTING

In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and revenues and expenses during the reporting period.
Actual results could differ from those estimates.

The allowances for losses on impaired notes receivable and accounts
receivable are estimates for which there is at least a reasonable
possibility of a change within one year of the balance sheet date and that
could have a material effect on the financial statements.

11. STOCK-BASED COMPENSATION

In October 1995, the Financial Accounting Standards Board (FASB) issued
SFAS No. 123, "Accounting for Stock Based Compensation." This statement
requires entities to disclose the fair value of their employee stock
options, but permits entities to continue to account for employee stock
options under Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees." The Company has determined
that it will continue to use the method prescribed by APB Opinion No. 25,
which recognizes compensation cost to the extent of the difference between
the quoted market price of the stock at the date of grant and the amount an
employee must pay to acquire the stock. The Company grants stock options
to employees with an exercise price equal to the Company's quoted market
price of the stock at the date of grant. Accordingly, no compensation
cost is recognized for stock option grants. Disclosure requirements in
accordance with SFAS No. 123 are included at note Q.

<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

March 31, 1997, 1996 and 1995

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

12. LOSS PER SHARE

Loss per common share is based upon the weighted average number of common
and common equivalent shares outstanding.

For all periods presented, the options, warrants and Series B preferred
stock are anti-dilutive. Accordingly, only the common shares outstanding
are included in the computation of weighted average shares outstanding, and
no fully diluted loss per share is presented.

13. ADVERTISING

All costs related to marketing and advertising are charged to operations in
the year incurred and totaled $165,194, $420,000 and $423,000 for the years
ended March 31, 1997, 1996 and 1995, respectively.

14. FUTURE EFFECT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings per Share (SFAS No.
128). SFAS No. 128 replaces the presentation of primary earnings per share
(EPS) with a presentation of basic EPS. It also requires dual presentation
of basic and diluted EPS on the face of the income statement for all
entities with complex capital structures and requires a reconciliation of
the numerator and denominator of the basic EPS computation to the numerator
and denominator of the diluted EPS computation. Provisions of SFAS No. 128
are effective for periods ending after December 15, 1997. The potential
impact of adopting SFAS No. 128 is expected to be immaterial.

NOTE C - REALIZATION OF ASSETS

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of
the Company as a going concern. However, the Company has incurred
recurring net losses from operations and a net loss of approximately
$5,300,000 for the year ended March 31, 1997. In addition, the Company has
used, rather than provided, cash in its operations. At March 31, 1997, the
Company is in default under a note agreement and is not in compliance with
certain debt agreement covenants which could result in the notes becoming
due and payable on demand. These notes have been classified as current in
the consolidated balance sheet.

49
<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

March 31, 1997, 1996 and 1995

NOTE C - REALIZATION OF ASSETS - CONTINUED

In view of the matters described in the preceding paragraph, recoverability
of a major portion of the recorded asset amounts shown in the accompanying
balance sheet is dependent upon continued operations of the Company, which
is dependent upon the Company's ability to meet its financing requirements
on a continuing basis and to succeed in its future operations. The
financial statements do not include any adjustments relating to the
recoverability of recorded assets that might be necessary should the
Company be unable to continue in existence.

To meet its liquidity needs and continue existing operations, the
Company plans on obtaining new long-term financing, raising new equity
or making a significant sale of assets. However, the Company cannot
make any assurances that their plan will be achieved.

NOTE D - FRANCHISE OPERATIONS

At March 31, 1997, the Company has commitments from franchisees for 36
franchisee owned cafes and carts which are not yet operational. Under
these commitments, the Company has received $520,000 in nonrefundable
deposits, and notes receivable of $80,000. No revenues have been
recognized in the financial statements related to the cafes and carts not
yet operational. The notes receivable do not bear interest, and are due
within twenty-four months of the note date.

Related to these commitments, the Company has deferred revenues of $576,000
at March 31, 1997, which will be recognized when the Company completes its
initial commitments to the franchisees and the franchisee owned store is
open for business.

Under the franchise agreement, the Company receives an override on sales of
various coffee products to its franchisees. The Company, under a producer
agreement, currently purchases all of its coffee products from one vendor.
However, management believes that other sources of coffee products are
readily available and that no economic dependency on one vendor exists.

NOTE E - SIGNIFICANT ACQUISITIONS

On December 31, 1995, the Company acquired 100% of the outstanding shares
of Paradise Bakery, Inc., (Paradise), pursuant to the terms of a Stock
Purchase Agreement dated December 14, 1995 between the Company and Chart
House Enterprises, Inc. (Seller). Paradise's operations consist of seven
bakery/cafe operations located in California and 44 franchised bakery/cafe
operations located in California, Washington, Oregon, Arizona, Colorado,
Oklahoma, Texas, Hawaii and Ontario, Canada. The locations will continue
to be operated under the name of Paradise Bakery.

50
<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

March 31, 1997, 1996 and 1995

NOTE E - SIGNIFICANT ACQUISITIONS - CONTINUED

The purchase price approximated $6,725,000, consisting of $5,375,000 in
cash and $1,350,000 in a note payable.

The transaction was accounted for as a purchase. The purchase price was
allocated to the fair value of Paradise's assets and liabilities and the
excess of $3,691,649 was allocated to goodwill. The goodwill will be
amortized on the straight-line method over a period of 15 years. The
depreciable assets will be depreciated over the remaining useful life on a
straight-line basis. The assets and liabilities will be held in Paradise
Bakery, Inc., as a wholly-owned subsidiary of the Company.

On January 17, 1996, the Company merged with Founders Ventures, Inc.
(Founders) pursuant to the terms of a merger agreement dated December 15,
1995. The consideration paid by the Company consisted of 431,853 shares of
the Company.

The transaction was accounted for as a purchase. The purchase price was
allocated to the fair value of Founder's assets and liabilities and the
excess of $626,741 was allocated to goodwill. The goodwill will be
amortized on the straight-line method over a period of 15 years. The
depreciable assets will be depreciated over the remaining useful life on a
straight-line basis. The assets and liabilities will be held in Paradise
Bakery, Inc., a wholly-owned subsidiary of the Company.

NOTE F - DISPOSAL OF ASSETS

On December 13, 1996, the Company sold all operating locations of their Oh
La La! Division pursuant to the terms of an asset purchase agreement. The
assets sold consisted of 11 Oh La La! cafes and carts located in San
Francisco, California, the leases associated with each location, related
equipment, inventory, accounts receivable and deposits.

The consideration received for the sale of Oh La La! consisted of 233,333
shares of the purchaser's preferred stock, $1,250,000 in cash and $750,000
in a convertible note receivable. The preferred stock was issued with
certain conversion rights into common shares, an 8% cumulative dividend and
certain covenants and restrictions. The convertible note calls for 9%
interest paid monthly with the principal due in three years and certain
conversion rights into common shares. On March 31, 1997, the preferred
stock and note receivable were converted to common shares (see Note J).

On November 14, 1994 the Company entered into an agreement with Banyan
Capital, Limited Partnership, Java Southeast Partners, L.P., and Java
Southeast, Inc. to develop the Florida market. Pursuant to the terms of
the agreement, the Company issued 89,428 shares of common stock in exchange
for 18.3% of the joint venture's outstanding shares.

51
<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

March 31, 1997, 1996 and 1995

NOTE F - DISPOSAL OF ASSETS - CONTINUED

The joint venture agreement was terminated effective March 1997. The
Company canceled 89,428 shares of common stock and recognized a loss on
investment of $256,816.

During the year ended March 31, 1997, the Company sold six Java
Company-owned cafes and two Paradise Company-owned cafes to franchisees.
The Company is in the process of assigning an equipment lease in the
amount of $90,275 to the purchaser of a Java cafe pursuant to the
purchase agreement. Until the assignment process is complete, the
Company is still liable for the lease payments.

NOTE G - PROPERTY AND EQUIPMENT

Property and equipment at March 31, consist of the following:

1997 1996
------------ ------------
Office furniture and equipment $ 384,460 $ 361,873
Tenant improvements 2,044,554 3,196,634
Cafe equipment 1,243,470 2,798,701
------------ ------------
3,672,484 6,357,208

Less accumulated depreciation and
amortization (891,326) (619,228)
------------ ------------
$ 2,781,158 $ 5,737,980
------------ ------------
------------ ------------

NOTE H - NOTES RECEIVABLE

Notes receivable at March 31, consist of the following:

1997 1996
------------ ------------
Equipment billings receivable (net of
allowance of $51,800 in 1997) $ 6,381 $ 317,880
Advertising fees receivable 9,399 60,000
Franchise fees receivable 80,000 286,000
Notes from franchisees 1,197,192 920,445
Note from joint venture - 200,000
Note from sale of Oh La La! 145,000 -
------------ ------------
1,437,972 1,784,325
Less current portion 448,369 485,751
------------ ------------
$ 989,603 $ 1,298,574
------------ ------------
------------ ------------

Management has determined that approximately $844,500 of the notes from
franchisees are impaired according to SFAS 114, ACCOUNTING BY CREDITORS
FOR IMPAIRMENT OF A LOAN. Notes from franchisees are recorded net of an
impairment reserve of $156,000.

52
<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

March 31, 1997, 1996 and 1995

NOTE I - INTANGIBLE ASSETS

Intangible assets at March 31, 1997 consist of the following:

Accumulated
Cost Amortization Net
------------ ------------ ------------
Goodwill $ 4,408,195 $ 367,350 $ 4,040,845
Organizational cost 31,123 31,123 -
------------ ------------ ------------
Total $ 4,439,318 $ 398,473 $ 4,040,845
------------ ------------ ------------
------------ ------------ ------------

Intangible assets at March 31, 1996 consist of the following:

Accumulated
Cost Amortization Net
------------ ------------ ------------
Goodwill $ 5,575,006 $ 143,338 $ 5,431,668
Organizational cost 35,658 31,123 4,535
License rights 100,000 10,000 90,000
------------ ------------ ------------
Total $ 5,710,664 $ 184,461 $ 5,526,203
------------ ------------ ------------
------------ ------------ ------------

NOTE J - INVESTMENT

In conjunction with the sale of Oh La La! (see note F), the Company
received 233,333 shares of the purchaser's convertible preferred stock
and a convertible note receivable in the amount of $750,000. On March
31, 1997, the Company and the purchaser agreed that the Company would
cancel $250,000 of the note for the assumption of certain liabilities
of the Company, accelerate the payment of $145,000 to May 1997 and
exchange the remaining note of $355,000 and the convertible preferred
stock for 273,333 shares of the purchaser's common stock. The Company
recognized a loss on the exchange and conversion of the note receivable
in the amount of $275,000. Fair value of the common stock at the date
of conversion was determined through recent common stock issuances of
the purchaser to third parties.

At March 31, 1997, the Company's investment consists of a 30 percent
interest in Good Food Fast Companies (GFF). At this date, GFF's total
assets, liabilities and net income for the three months then ended were
approximately $4,500,000, $3,000,000 and $21,000, respectively, based on
information provided by GFF. The Company's Chairman of the Board was a
director of GFF until his resignation from the GFF board on June 6, 1997.

53
<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

March 31, 1997, 1996 and 1995

NOTE K - ACCRUED LIABILITIES

Accrued liabilities at March 31, consist of the following:

1997 1996
----------- ----------
Accrued payroll $ 133,640 $ 243,948
Accrued payroll taxes 74,997 142,973
Settlement expense 170,000 -
Accrued interest 100,936 11,074
Other 140,851 328,249
----------- ----------
$ 620,424 $ 726,244
----------- ----------
----------- ----------

NOTE L - RELATED PARTIES

Baycor Venture, Inc. (Baycor) is a wholly owned subsidiary of Baycor
Capital Inc., of Alberta, Canada which owns several other Canadian
corporations. A principal shareholder of Baycor Capital, Inc. is Chairman
of the Board of the Company. The individual was paid $75,000, $94,328 and
$99,603 under the terms of an employment agreement during the years
ended March 31, 1995, 1996 and 1997, respectively. The Company also
reimburses Baycor for travel and entertainment expenses incurred by
officers of Baycor on behalf of the Company. At March 31, 1997 and
1996, the Company owed Baycor $44,295 and $22,637, respectively, for
expenses reimbursement and compensation.

During the year ended March 31, 1997, the Company received a bridge loan
from Alta Petroleum, Inc. (Alta). Alta Petroleum, Inc.'s vice president is
a board member of the Company. The balance outstanding at March 31, 1997
is $300,000, which is due May 31, 1997. Subsequent to year end, the
Company received an additional $275,000.

At March 31, 1997 and 1996, the Company had notes receivable outstanding
of $185,000 from Baycor and $39,900 and $50,200, respectively, from a
vice president of the Company.

NOTE M - LONG-TERM DEBT

Long-term debt at March 31, consists of the following: 1997 1996
Note payable to Chart House Enterprises, Inc. ---- ----
The note bears interest at ten percent per
annum and is payable interest only for the
first twelve months beginning February 1, 1996,
and thereafter principal payments shall be
payable in eight equal quarterly payments in
amounts sufficient to fully amortize the entire
principal balance over a period of eight
quarters. The note is collateralized by
franchisee note receivables. The Company was in
default as of March 31, 1997. $ 836,282 $ 965,000

<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

March 31, 1997, 1996 and 1995

NOTE M - LONG-TERM DEBT - CONTINUED

1997 1996
------- ------
Note payable to Chart House Enterprises, Inc.,
due April 30, 1997. The note bears interest
at ten percent per annum and is payable
quarterly in arrears. The note is
collateralized by certain Company owned
stores. - 385,000

Loan payable to Sanwa Bank, due March 31, 1996.
The loan bears interest at 9.3125% and is
collateralized by certain Company owned stores. - 350,000

Tenant improvement loans with terms calling for
monthly principal and interest payments over
a period ranging from one to ten years with
interest rates ranging from 7.5 to 11 percent. 88,836 217,946

Note payable to Alta Petroleum, related party,
due May 31, 1997. The note bears interest
at 14% and is collateralized by all Paradise
Bakery, Inc. shares. This balance is outstanding
as of July 8, 1997. 300,000 -

Loan payable to Imperial Business Credit, Inc.
The note bears interest at 12.551% per annum.
Payments of $20,304 are due monthly. The loan is
collateralized by all equipment, receivables and
inventory of the Paradise Company owned stores.
The loan is subject to certain requirements and
covenants of which the Company is not in
compliance. 720,370 -
---------- -----------
1,945,488 1,917,946

Less current maturity 1,945,488 746,785
---------- -----------
---------- -----------
$ - $ 1,171,161
---------- -----------
---------- -----------

55
<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

March 31, 1997, 1996 and 1995

NOTE N - PREFERRED STOCK

The Company has authorized 25,000,000 shares of no par Series B Redeemable
Preferred Stock (Series B). Holders of Series B stock are entitled to
receive dividends and any other distribution when and as declared by the
Board of Directors of the Company out of the assets of the Company that are
legally available therefore, at the rate of $0.01 per share per annum and
no more, prior to the payment of any distributions to holders of the Common
Shares. Dividends on the Series B stock shall be payable semi-annually on
September 30 and March 31 of each year. In the event of any liquidation,
dissolution, or winding up of the Company, either voluntarily or
involuntarily, the holders of Preferred Stock shall receive an amount equal
to $.20 per share and all accrued and unpaid dividends, before any amount
shall be paid to the holders of the Common Shares.

The holders of Series B stock shall be entitled to vote only upon failure
of the Company to pay dividends if the Company is legally entitled to make
such payment. The Series B stock shall be convertible and may also be
redeemed at any time after March 31, 1995, at the request of the holder or
the Company, at an amount equal to 110% of the contributed capital per
share of Preferred Stock plus all accrued and unpaid dividends. In
addition, on or before March 31, 1995, the Company may redeem the Series B
stock at an amount equal to 115% of contributed capital per share plus all
accrued and unpaid dividends in the event of a change of control of the
Company or a public offering of the Common Shares. There was no Preferred
Stock issued or outstanding at March 31, 1996 and 1997.

NOTE O - CONVERTIBLE DEBT

The Company issued through private placements, convertible notes in the
amount of $3,500,000. The first note in the amount of $2,000,000 is due on
December 15, 1997 with interest payable quarterly beginning on March 15,
1996 at the rate of 8% per year. The note is convertible into common stock
of the Company after February 28, 1996 under certain terms and conditions.
As of March 31, 1997, $900,000 had been converted into 1,276,593 common
shares, leaving convertible notes payable of $1,100,000.

The second series of notes in the amount of $1,500,000 are due on January
29, 1998 with interest payable quarterly beginning on March 15, 1996 at the
rate of 8% per year. These are convertible into common stock of the
Company after April 12, 1996 under certain terms and conditions. As of
March 31, 1997, $1,154,250 had been converted into 2,034,590 common shares,
leaving convertible notes payable of $345,750.

The investors have the option to convert any part of the outstanding and
unpaid principal amount of the notes at any time, or from time to time, at
the conversion price stipulated in the note agreement.

56
<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

March 31, 1997, 1996 and 1995

NOTE P - STOCKHOLDERS' EQUITY

1. STOCK SPLIT

On June 8, 1994, the Company declared a five-for-four stock split effected
in the form of 25% stock dividend on its Common Stock, without par value,
to be payable on July 15, 1994 to shareholders of record on June 30, 1994.
On or prior to June 10, 1994, employees and officers holding securities,
including warrants and options, waived their rights to receive the stock
split and also waived the impact such stock split would have on any options
or warrants held by the security holders, including, but not limited to,
any anti-dilution provisions relating to such options and warrants. All
references in the financial statements to number of shares and per share
data of the Company's common stock have been adjusted as appropriate to
reflect this stock split.

2. ESCROW AGREEMENT

Certain stockholders, directors and officers of the Company (the "Security
Holders") placed an aggregate of 855,300 of their currently outstanding
Company shares in escrow (the "Escrowed Shares") in connection with the
Company's public offering of its Common Stock in May of 1994. The Escrow
Agreement provides that the Escrowed Shares be released to the Security
Holders if the Company achieves certain earnings requirements during the
fiscal years ended March 31, 1995, 1996, 1997 and 1998. The Company has
not achieved the requirements during its 1995, 1996 or 1997 fiscal years.
In the event that the Company does not meet any of the earnings
requirements by March 1998, all of the escrowed shares shall be released in
March 1999. If any Security Holder exercises warrants or options to
acquire additional Common shares of the Company ("Additional Shares"), one-
third of such Additional Shares must be placed in escrow and will be
released pursuant to the Escrow Agreement as if they were Escrowed Shares.

NOTE Q - STOCK OPTIONS AND WARRANTS

1. INCENTIVE STOCK OPTION PLAN

Effective November, 1993, the Company adopted a Stock Option Plan (the
"1993 Plan") under which options to purchase a maximum of 1,250,000 shares
of Common Stock may be granted to selected officers, directors and key
full-time salaried employees of the Company. Under the 1993 Plan, options
may, at the discretion of the Board of Directors, be granted either as
Incentive Stock Options (as defined in the Internal Revenue Code of 1986,
as amended) or as Nonstatutory Stock Options. The options will have an
exercise price of not less than the fair market value of the Common Stock
on the date the option is granted and, unless otherwise provided by the
Board of Directors, will vest over a five-year period, with

57
<PAGE>

20% of the shares exercisable at the end of each year the grantee has
completed as a director or employee of the Company.

<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

March 31, 1997, 1996 and 1995

NOTE Q - STOCK OPTIONS AND WARRANTS - CONTINUED

The fixed stock option plan is accounted for under APB Opinion No. 25
and related Interpretations. Accordingly, no compensation cost has been
recognized for the plan. Had compensation cost for the plan been
determined based on the fair value of the options at the grant dates
consistent with the method of SFAS No. 123, the Company's loss and net
loss per share would have been increased to the pro forma amounts
indicated below.

1997 1996
------------- -------------

Net loss As reported $ (5,326,192) $ (3,966,426)
Pro forma $ (5,718,452) $ (4,083,046)
Net loss As reported $(.46) $ (.61)
per share Pro forma $(.50) $ (.63)

The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following
weighted-average assumptions used for grants in the years ended March 31,
1997 and 1996: expected volatility of 80 percent; risk-free interest rate
of 6.05 and 5.8 percent, respectively; and expected lives of 1.5 and 1.0
years, respectively.

On July 31, 1996, the Company modified the exercise price of all
outstanding options from $1.75 - $2.00 per share to $.75 per share. Also
on July 31, 1996, the Company canceled the stock options under the 1993
Plan for certain directors and officers and issued 1,200,000 warrants
to those individuals. The warrants are included in the table below.

A summary of the status of the Company's fixed stock option plan and
warrants issued to directors and officers as of March 31, 1997 and 1996
and changes during the years then ended are presented below.

1997 1996
--------------------------- -----------------------------
WEIGHTED Weighted
AVERAGE Average
EXERCISE Exercise
SHARES PRICE Shares Price
---------- ----------- ----------- ---------------
<S> <C> <C> <C> <C>
Outstanding at beginning of year 1,100,000 $ 1.89 298,750 $ 2.56
Granted
Options 1,183,500 $ .75 1,100,000 $ 1.89
Warrants 1,200,000 $ .75 - $ -
Exercised - $ - - $ -
Forfeited (1,241,000) $ 1.76 (298,750) $ 2.56
------------ ---------
Outstanding at end of year 2,242,500 $ .75 1,100,000 $ 1.89

</TABLE>

<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

March 31, 1997, 1996 and 1995

NOTE Q - STOCK OPTIONS AND WARRANTS - CONTINUED

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Options and warrants
exercisable at year end 1,719,014 $ .75 87,000 $1.89
Weighted-average fair value of
options and warrants granted
during the year $ .20 $ .62

</TABLE>

The following information applies to options and warrants issued to
directors and officers outstanding at March 31, 1997:

Number outstanding 2,242,500
Range of exercise prices $ .75
Weighted-average exercise price $ .75
Weighted-average remaining life 3.25

2. WARRANTS

In July 1993, the Company granted warrants to purchase 225,000 shares of
common stock at $1.60 per share to management consultants. The warrants
expire at the end of five years.

In May 1994, the Company granted warrants to purchase 150,000 shares of
common stock at $9.90 per share to the underwriter group involved with
the initial public offering.

In July 1995, the Company granted warrants to purchase 682,000 shares of
common stock at $2.58 per share for consulting services. The warrants
expired on July 2, 1997.

In August 1995, the Company granted warrants to purchase 150,000 shares
of common stock at $1.50 per share for consulting services. The warrants
expire in August 2002.

In January 1996, the Company granted warrants to purchase 100,000 shares
of common stock at $2.75 per share for consulting services. The warrants
expire in January 2001.

In July 1996, the Company granted warrants to purchase 300,000 shares of
common stock at a resulting exercise price of $.28125 per share. The
warrants were granted in conjunction with a debt issuance and they expire
June 30, 2000.

In September 1996, the Company granted warrants to purchase 769,230
shares of common stock at $1.25 per share in conjunction with a stock
subscription agreement. The warrants expire September 23, 1998.

In October 1996, the Company granted warrants to purchase 50,000 shares
of common stock at a resulting exercise price of $.28125 per share. The
warrants were granted in conjunction with a debt issuance and they expire
June 30, 2000.

<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

March 31, 1997, 1996 and 1995

NOTE Q - STOCK OPTIONS AND WARRANTS - CONTINUED

In February 1997, the Company issued the following warrants for consulting
services:

(a) warrants to purchase 300,000 shares of common stock at 60
percent of the prior day's closing bid price per share and
warrants to purchase 300,000 shares of common stock at 75
percent of the prior day's closing bid price per share; these
warrants are effective for 120 days, and 525,000 of such
warrants were exercised subsequent to March 31, 1997.

(b) warrants to purchase 600,000 shares of common stock at $.75 per
share effective for 120 business days following the exercise or
expiration of all of the warrants described in (a), above.

(c) warrants to purchase 600,000 shares of common stock at $.75 per
share effective for 120 business days following the exercise or
expiration of all of the warrants described in (b), above.

NOTE R - LEASE COMMITMENTS, RENT EXPENSE, AND DEPOSIT

The Company has entered into a five and one-half year lease of office
space for its corporate headquarters commencing on March 31, 1996, and
ending July 31, 2001.

Future minimum rents are as follows for each of the years ending March 31,:

Capital Operating
Lease Lease
------------- --------------

1998 $ 42,240 $ 1,408,740
1999 42,240 1,258,921
2000 42,240 1,165,787
2001 38,720 896,444
2002 - 590,201
Thereafter - 768,784
------------ -------------

Future minimum lease payments 165,440 $ 6,088,877
-------------
-------------

Amounts representing interest 42,005
------------

Present value of minimum lease payments $ 123,435
------------
------------

<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

March 31, 1997, 1996 and 1995

NOTE R - LEASE COMMITMENTS, RENT EXPENSE, AND DEPOSIT - CONTINUED

All amounts due under capital lease obligations are for cafe equipment
with a net book value of approximately $123,000.

In addition to minimum rents, the Company is required to pay its share of
taxes, insurance, common area maintenance, and percentage rents of 1% to
2% of sales.

Rent expense included in these financial statements for facilities leased
by the Company is $1,970,428, $1,214,064, and $114,090 for the applicable
years ended March 31, 1997, 1996 and 1995, respectively.

NOTE S - INCOME TAXES

As of March 31, 1997, the Company has accumulated net operating losses of
approximately $12,800,000. These losses can be carried forward and
applied against future income of the Company for federal and state income
tax purposes. The net operating losses will begin to expire in 2008 for
federal purposes and in 2002 for state purposes, if not previously
utilized. For state income tax purposes, the use of the net operating
loss is limited to approximately 50% of the federal net operating loss.
Under U.S. tax rules, the Company, as a result of the Paradise
acquisition is subject to certain limitations as to the use of net
operating losses in any one year. A valuation allowance totally offsets
the balance of the deferred tax asset related to these net operating
losses, as it is more likely than not that the Company will not realize
the deferred tax assets.

1997 1996
--------------- --------------
Deferred tax assets:
Net operating losses $ 5,120,000 $ 2,800,000
Temporary differences:
Franchise fees collected 208,000 287,000
Depreciation and other 40,000 20,000
Valuation allowance (5,368,000) (3,107,000)
-------------- --------------

$ - $ -
--------------- ---------------
--------------- ---------------

<PAGE>

JAVA CENTRALE, INC., AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

March 31, 1997, 1996 and 1995

NOTE T - COMMITMENTS

The Company has employment agreements with five key employees, with
annual salary requirements totaling $460,000. Annual increases are tied
to economic indicators, and include potential bonuses at the discretion
of the Board of Directors.

The Company is involved in litigation in the normal course of business.
Management believes that such litigation is without merit and the
disposition of such litigation would not have a material effect on the
Company.

NOTE U - SIGNIFICANT FOURTH QUARTER ADJUSTMENTS

As of March 31, 1997, an adjustment of approximately $375,000 was
recorded to establish an allowance for uncollectible accounts, $191,000
of which is related to events that occurred in the fourth quarter.

During the year ended March 31, 1997, the Company issued warrants in
connection with consulting services. The fair value of the warrants was
determined to be approximately $250,000. An adjustment of approximately
$140,000 and $110,000, respectively, was made as of March 31, 1997 to
record consulting and prepaid expenses relating to this amount. Warrants
with a fair value of $71,600 were issued in the fourth quarter and are
included in the above amount.

As of March 31, 1997 the Company recorded an adjustment to the value of
the 233,333 shares of GFF preferred stock in the amount of approximately
$230,000 (see Note J).

As of March 31, 1997, an adjustment of $113,000 was recorded to amortize
deferred debt issuance costs as a result of the debt not being converted.
This amount is included in interest expense.

NOTE V - SUBSEQUENT EVENTS

In May 1997, the Company closed its Java Centrale Palo Alto location. An
impairment write-down of approximately $283,000 was recorded for this
location as of March 31, 1997.

In July 1997, the Company agreed to restructure $1,000,000 of the
convertible debt into a note due no later than January 1998. The shares of
Paradise Bakery, Inc. were pledged as collateral and an additional $250,000
was added to the balance of the note to eliminate its conversion feature.

<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not Applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
<S><C>
NAME AGE POSITION WITH COMPANY

Richard D. Shannon 51 Director, Chairman of the Board

Gary C. Nelson 54 Director, President and Chief Executive Officer

Bradley B. Landin 46 Senior Vice President Operations

Thomas A. Craig 64 Vice President -- Marketing and Real Estate

Steven J. Orlando 46 Vice President, Chief Financial Officer and Secretary

Kevin R. Baker 48 Director

Lyle P. Edwards 49 Director

</TABLE>

RICHARD D. SHANNON has been a Director of the Company since its incorporation
in March 1992 and became Chairman in January 1994. Mr. Shannon also served
as Secretary of the Company from its inception until January 1994. Mr.
Shannon currently devotes approximately 80% of his time to his duties with
the Company. In February 1990, Mr. Shannon, together with Kevin R. Baker,
also a Director of the Company, founded Baycor Capital Inc. ("Baycor
Capital"), a private merchant bank based in Calgary, Canada. Baycor Capital
owns 100% of the issued and outstanding shares of Baycor Ventures, the
largest single shareholder of the Company. Mr. Shannon is also the President
of Baycor Ventures. Mr. Shannon is a director of a number of privately held
companies in Canada. During the period 1978 through 1989, Mr. Shannon
practiced law at Burnet, Duckworth & Palmer, a Calgary-based law firm, which
operated joint venture offices in Ottawa, New York, Hong Kong, London and
Geneva. Mr. Shannon graduated from the University of Alberta, Canada where
he obtained a BA in Economics and an LLB from the Faculty of law.

<PAGE>

GARY C. NELSON, a founding shareholder of the Company, has been a Director,
President and Chief Executive Officer of the Company since its incorporation
in March 1992. During the period from November 1991 until the Company's
incorporation in March 1992, Mr. Nelson devoted his time to the planning
development and initial funding of the Company's incorporation and
commencement of operations. From September 1990 through October 1991 Mr.
Nelson was both Senior Vice President and President International Division
and a founding shareholder of CNY International, a company, which was formed
to acquire and operate the retail businesses of American Confectionery
Corporation. From March 1990 until August 1990, Mr. Nelson was Vice
President of American Confectionery Corporation, a company which both owned
and franchised over two hundred candy and yogurt outlets. From February 1983
until February 1990 Mr. Nelson was a founding shareholder and served as
President and Chief Executive Officer of publicly traded J. Higby's, Inc. and
its privately held predecessor, Gamma Industries, whose business was
franchising J. HIGBY'S YOGURT AND TREAT SHOPPES in the United States and
internationally in Canada and five countries in southeast Asia. Mr. Nelson
holds a BA in Business Administration from the California State University.

BRADLEY B. LANDIN, a founding shareholder has been a Director and Vice
President Operations of the Company since its incorporation in March 1992.
From September 1990 until February 1992, Mr. Landin was Vice President
International Division of CNY International, a company that was formed to
acquire and operate the retail businesses of American Confectionery
Corporation. From March 1990 through August 1990, Mr. Landin was Vice
President International Development of American Confectionery Corporation,
which both owned and franchised over two hundred candy and yogurt outlets.
From September 1986 until February 1990, Mr. Landin held various positions
with publicly traded J. Higby's Inc., the franchisor of J. HIGBY'S YOGURT AND
TREAT SHOPPES where he was responsible for franchised and company-owned
operations, product development, store planning and turn-key construction and
equipment programs. Mr. Landin did undergraduate work in business at both
Loyola University in Chicago and the University of Wisconsin, Green Bay
Campus.

THOMAS A CRAIG, a founding shareholder, has been Vice-President--Marketing
and Real Estate of the Company since its incorporation in March 1992. Mr.
Craig has 29 years of experience in advertising, design, marketing and real
estate. From November 1987 until the incorporation of the Company in March
1992, he was associated with Century 21, a real estate brokerage firm in
Carmichael, California specializing in the sale and leasing of new and
existing commercial properties. From May 1962 through July 1987 Mr. Craig
served as president of two advertising and marketing firms located in
Sacramento, California. Mr. Craig is a graduate of the Hollywood Center of
Art and Design in Hollywood, California.

STEVEN J. ORLANDO has been the Company's Chief Financial Officer since July
of 1994. Since 1988, Mr. Orlando has acted as a business consultant to
various companies in the Sacramento and Los Angeles, California areas and
served as the President of RJN Enterprises, a private investment company.
From 1977 to 1988, Mr. Orlando was the Chief Financial Officer for Sierra
Spring Water Company, a publicly traded bottled water company based in
Sacramento, California, with operations in several regions around the
country. Mr. Orlando received a B.S degree in accounting from California
State University, Sacramento, in 1974, and has been a Certified Public
Accountant since 1977. In addition to his responsibilities with the Company,
Mr. Orlando also

<PAGE>

serves as a director of and consultant to various companies, including RJN
Enterprises, a private investment company based in Sacramento, California,
and Pacific Crest Capital, a Thrift and Loan Company based in Los Angeles,
California.

KEVIN R. BAKER has been a Director of the Company since its incorporation in
March 1992. Since February 1990, Mr. Baker has been the President of Baycor
Capital, a private merchant bank based in Canada, which is the parent
corporation of Baycor Ventures, the majority shareholder of the Company.
Baycor Capital holds interests in a diversified portfolio of companies and
assets in Canada and the United States. During the period 1971 to January
1990, Mr. Baker practiced law at MacKimmie Matthews and Burnet, Duckworth &
Palmer, two law firms in Calgary, Canada. Mr. Baker is a director of a
private number of companies in Canada. Mr. Baker is also a principal in a
number of ventures in the oil and gas, real estate, oil field service and
hospitality industries. Mr. Baker also owns an 850-seat restaurant in
Calgary that has been in operation for more than 20 years. Mr. Baker
graduated from the University of Alberta, Canada where he obtained a BA in
Economics and an LLB from the Faculty of Law.

LYLE EDWARDS, is a businessman involved in the ownership and operation of a
number of real estate and other business ventures in Canada and the United
States. Mr. Edwards serves as a director of a number of privately held
companies in Canada and the United States and is also director of one
publicly listed company in Canada. Since 1987, Mr. Edwards has been Chief
Executive Officer of Westwood Financial Services, Ltd. During the period
1974 through 1987, Mr. Edwards served as an officer, director and ultimately
President of Highfield Corp., Ltd., a major diversified investment
corporation operating offices in several of the major cities in Western North
America. Mr. Edwards was admitted to the Canadian Institute of Chartered
Accountants and was associated with Deloite Haskins and Sells, the
predecessor firm of Deloitte & Touche, from 1970 to 1974. Mr. Edwards
graduated from the University of Alberta, Canada where he obtained a Bachelor
of Science and Bachelor of Commerce.

Two of the Company's directors and officers, Gary C. Nelson and Bradley B.
Landin, were former vice presidents of American Confectionery Corporation
and/or of a subsidiary thereof (collectively, "ACC"). Their duties involved
only the retail, franchising and marketing operations of ACC. They had no
responsibility for ACC's candy manufacturing business, which it carried on
through Pacific Candy Company, another subsidiary. In September 1990, they
participated in a successful management buy-out of ACC's retail and
franchising operations, which included Morrow's Fine Candies, House of
Almond's, the House of Almond's Catalog, and J. HIGBY'S YOGURT AND TREAT
SHOPPES. They both resigned from ACC to help run the new enterprise. ACC
thereafter remained in business only as a candy manufacturer, through Pacific
Candy Company, and under substantially different management. Approximately
six months after Mr. Nelson and Mr. Landin resigned, ACC and its subsidiaries
all filed voluntary petitions for reorganization under Chapter 11 of the
Bankruptcy Code (Case Nos. SB-91-13970, 13971 and 13972, U.S. Bankruptcy
Court, Central District of California, filed April 12, 1991). The
candy-manufacturing business encountered liquidity problems in 1991, leading
ACC to seek protection from creditors. Mr. Nelson and Mr. Landin had no part
in that decision or in the problems of the candy business, which led to it.
On June 16, 1992, ACC's plan of reorganization was confirmed and approved by
the bankruptcy court. As of that date, ACC emerged from its Chapter 11
bankruptcy proceedings and has now resumed operations as a national wholesale
candy manufacturer.

<PAGE>

Directors of the Company are elected at each annual meeting of
the shareholders of the Company and hold office until the next annual
meeting; provided, however, that if any annual meeting is not held or the
directors are not elected at any annual meeting, they may be elected at any
special shareholders' meeting held for that purpose. Each director,
including a director elected to fill a vacancy or elected at a special
shareholders' meeting, holds office until the expiration of the term for
which elected and until a successor has been elected and qualified. Officers
of the Company are appointed by its Board of Directors, and serve at the
pleasure of the Board.

The Company is not aware of any family relationship, among its
Directors and/or executive officers.

ITEM 11. EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

The following table sets forth the cash compensation paid by
the Company to, as well as any other compensation paid to or earned by, the
Company's Chief Executive Officer and the four most highly compensated
executive officers other than the Chief Executive Officer during each of the
fiscal years ended March 31, 1995, 1996 and 1997. The Company's President
and Chief Executive Officer, Mr. Gary C. Nelson, was the only officer of the
Company whose total annual salary and bonus exceeded $100,000 during the 1995
and 1997 fiscal years. The Company's President and Chief Executive Officer,
Mr. Gary C. Nelson, the Company's Chief Financial Officer, Mr. Steven J.
Orlando, and the Company's Chairman of the Board, Mr. Richard Shannon, were
the officers of the Company whose total annual salary and bonus exceeded
$100,000 during the 1996 fiscal year.

<TABLE>
<CAPTION>
Summary Compensation Table

Annual Compensation Long Term Compensation
------------------------------------- ---------------------------
Awards
----------
Securities
Name of Individual Other Restricted Underlying All
and Principal Fiscal Annual Stock Options/ Other
Position Year Salary Bonus Compensation Awards SARS(#) Compensation
- --------------- -------- --------- -------- -------------- ------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gary C. Nelson 1997 $121,634 $ -0- $-0- None -0- $-0-
President/Chief 1996 $158,065 35,000 -0- None 167,000 -0-
Executive Officer 1995 $147,538 -0- -0- None -0- -0-

Steven J. Orlando 1997 $89,900 $ -0- $-0- None -0- $-0-
Chief Financial 1996 97,050 35,000 -0- None 175,000 -0-
Officer 1995 78,431 -0- -0- None 100,000 -0-

Richard Shannon 1997 $99,603 $ -0- $-0- None -0- $-0-
Chairman of 1996 94,328 35,000 -0- None 174,250 -0-
the Board 1995 75,000 -0- -0- None -0- -0-

</TABLE>

COMPENSATION PURSUANT TO PLANS

STOCK OPTION PLAN. Effective November 1993, the Board of Directors
of the Company (the

67
<PAGE>

"Board") adopted the Java Centrale, Inc. Stock Option Plan (the "Stock Option
Plan"). Under the terms of the Stock Option Plan, options to purchase up to
500,000 Common Shares may be granted to officers, key employees and
non-employee directors of the Company. In September 1995, the Company
proposed to shareholders an amendment to increase the option plan to
1,250,000 common shares. The amendment was approved and the Company has
amended the plan to a total of 1,250,000 common shares. Under the Stock
Option Plan, the Board, or a committee appointed by the Board, is authorized
to grant options which are intended to qualify as incentive stock options
under Section 422 of the Internal Revenue Code ("incentive stock options") to
employees (including employee-directors) of the Company, and to grant options
not intended to qualify as incentive stock options ("non-qualifying stock
options") to employees and non-employee directors of the Company, and to
determine the participants, the number of options to be granted and other
terms and provisions of each option.

The exercise price of any incentive stock option granted under the
Stock Option Plan may not be less than 100 percent of the fair market value
of the Common Shares of the Company at the time of the grant. In the case of
incentive stock options granted to holders of more than ten percent of the
voting power of the Company, the exercise price may not be less than 110% of
the fair market value of the Common Shares, nor shall the option by its terms
be exercisable more than 5 years after the date the option is granted.

Under the terms of the Stock Option Plan, the aggregate fair market
value (determined at the time of grant) of shares issuable upon exercise of
incentive stock options exercisable for the first time during any one
calendar year may not exceed $100,000. Options granted under the Stock
Option Plan become exercisable in whole or in part from time to time as
determined by the Board of the committee; provided, however, that in no event
may any option become exercisable earlier than the date six months following
the date on which the option is granted. Options granted under the Stock
Option Plan may have a maximum term of ten years from the date of grant. The
option price must be paid in full on the date of exercise, and is payable in
cash or in Common Shares of the Company having a fair market value on the
date the option is exercised equal to the option price.

As of March 31, 1995, the Company had granted options to purchase
298,750 Common Shares, at prices ranging from $2.12 to $3.00 per share, to
employees of the Company in accordance with the Stock Option Plan.

As of March 31, 1996, the Company had granted options to purchase
1,100,000 common shares, at prices ranging from $1.75 to $2.00 per share, to
employees of the Company in accordance with the Stock Option Plan.

Effective July 31, 1996, the Board re-priced 512,000 shares of
options granted for purchase to $.75 per share.

Effective July 31, 1996 the Board issued 1,200,000 warrants for the
purchase price of $.75 per share to certain directors and officers outside
the plan. These same directors and officers surrendered 572,000 stock
options within the plan.

<PAGE>

As of March 31, 1997 the Company had cancelled 100,500 stock options
due to terminated employees.

As of March 31, 1997, the Company had granted options to purchase
1,042,500 shares, at $.75 per share, to employees of the Company in
accordance with the Stock Option Plan.

Aggregated Option Exercises in Last Fiscal Year and Year-End Option Values

The following table sets forth certain information concerning all options
held by certain of the Company's most highly compensated executive officers
at the end of the Company's 1997 fiscal year (March 31, 1997). The Company
has never granted any stock appreciation rights ("SARs"). All of the options
listed in the table below are currently exercisable.

<TABLE>
<CAPTION>
Number of Securities Value of
underlying Unexercised
Number of Shares Value unexercised options in-the-Money
Name Acquired on Exercise Realized at March 31,1996 Options
- ---------------- -------------------- --------- -------------------- -----------
<S> <C> <C> <C> <C>
Gary C. Nelson None N/A 50,000 N/A

Richard D. Shannon (1) None N/A 50,000 N/A

Steven J. Orlando None N/A 50,000 N/A
</TABLE>

- -----------------------

(1) On October 30, 1995, Baycor Ventures, Inc., a company of which Mr.
Shannon is a Director and 50% shareholder, exercised options to purchase
300,000 shares of the Company's Common Stock at a purchase price of $0.40
per share. The value recognized on these shares was approximately
$742,500.

EMPLOYMENT AGREEMENTS

The Company entered into a three-year employment agreement in February
1994 with Richard D. Shannon. The Company amended this agreement effective
January 1, 1996, increasing the base salary to $137,388 per year and
extending the term two years to January 31, 1999. The Company further amended
this agreement in May of 1996 reducing the base salary to $96,172 as a result
of the Company's financial performance. Under certain conditions based on
the Company's performance the base salary will be reinstated upon either the
Company achieving profitability for one quarter or a significant improvement
in the Company's working capital. As of June 1997, the Company has not
reinstated the base salary. Pursuant to the employment agreement, Mr.
Shannon will act as Chairman of the Company, will serve on the Board of
Directors and will be entitled to receive, among other things, (a) during the
first year thereof, a base salary of $75,000, (b) during the second and third
years thereof, a base salary in an amount equal to the amount of the previous
year's salary plus the greater of (i) 7% of the base salary in effect for the
previous 12 month period and (ii) the percentage increase in the Consumer
Price Index for the prior 12-month period as reported by the United States
Department of Labor (the "Department of Labor"), (c) during each year
thereof, a bonus, equal to the amount determined by the Board of Directors,
under such incentive compensation plan as shall be adopted by the Board of
Directors of the Company, and (d) such options to purchase Common Shares of
the Company as may be granted pursuant to the terms of the Stock Option Plan.
There was no increase in salary since the last amendment. The employment
agreement between the Company and Mr. Shannon does not require him to spend
more than 80% of his time on Company business.

69
<PAGE>

The Company entered into a three-year employment agreement in February
1994 with Gary C. Nelson. The Company amended this agreement effective
January 1, 1996, extending the term two years to January 31, 1999. The
Company further amended this agreement in May of 1996 reducing the base
salary to $116,207 as a result of the Company's financial performance. Under
certain conditions based on the Company's performance the base salary will be
reinstated upon either the Company achieving profitability for one quarter
or a significant improvement in the Company's working capital. As of June
1997, the Company has not reinstated the base salary. Pursuant to the
employment agreement, Mr. Nelson will act as President and Chief Executive
Officer of the Company, will serve on the Board of Directors and will be
entitled to receive, among other things, (a) during the first year thereof, a
base salary of $145,000, (b) during the second and third years thereof, a
base salary in an amount equal to the amount of the previous year's salary
plus the greater of (i) 7% of the base salary in effect for the previous 12
month period and (ii) the percentage increase in the Consumer Price Index for
the prior 12-month period as reported by the Department of Labor, (c) during
each year thereof, a bonus, equal to the amount determined by the Board of
Directors of the Company under such incentive compensation plan as shall be
adopted by the Board of Directors of the Company, and (d) such options to
purchase Common shares of the Company as may be granted pursuant to the terms
of the Stock Option Plan. There was no increase in salary since the last
amendment.

The Company entered into a three-year employment agreement in February
1994 with Bradley B. Landin. The Company amended this agreement in May of
1996 reducing the base salary to $73,274 as a result of the Company's
financial performance. Under certain conditions based on the Company's
performance the base salary will be reinstated upon either the Company
achieving profitability for one quarter or a significant improvement in the
Company's working capital. As of June 1997, the Company has not reinstated
the base salary. In February 1997, the employment contract was extended to
January 1999. Pursuant to the employment agreement, Mr. Landin will act as
Senior Vice President Operations of the Company, will serve on the Board of
Directors and will be entitled to receive among other things, (a) during the
first year thereof, a base salary of $80,000, (b) during the second and third
years thereof, a base salary in an amount equal to the amount of the previous
year's salary plus the greater of (i) 7% of the base salary in effect for the
previous 12 month period and (ii) the percentage increase in the Consumer
Price Index for the prior 12-month period as reported by the Department of
Labor, (c) during each year thereof, a bonus, equal to the amount determined
by the Board of Directors of the Company under such incentive compensation
plan as shall be adopted by the Board of Directors of the Company, and (d)
such options to purchase Common Shares of the Company as may be granted
pursuant to the terms of the Stock Option Plan. There was no salary increase
since the last amendment.

The Company entered into a three-year employment agreement in February
1994 with Thomas A. Craig. The Company amended this agreement in May of 1996
reducing the base salary to $73,274 as a result of the Company's financial
performance. Under certain conditions based on the Company's performance the
base salary will be reinstated upon either the Company achieving
profitability for one quarter or a significant improvement in the Company's
working capital. As of June 1997, the Company has not reinstated the base
salary. In February 1997, the employment contract was extended to January
1999. Pursuant to the employment agreement, Mr. Craig will act as Vice
President -- Marketing and Real Estate of the Company, and will be entitled
to receive, among other things, (a) during the first year thereof, a base
salary of $80,000, (b) during the second and

<PAGE>

third years thereof, a base salary in an amount equal to the amount of the
previous year's salary plus the greater of (i) 7% of the base salary in
effect for the previous 12 month period and (ii) the percentage increase in
the Consumer Price Index for the prior 12-month period as reported by the
Department of Labor, (c) during each year thereof, a bonus, equal to the
amount determined by the Board of Directors of the Company under such
incentive compensation plan as shall be adopted by the Board of Directors of
the Company, and (d) such options to purchase Common Shares of the Company as
may be granted pursuant to the terms of the Stock Option Plan. There was no
salary increase since the last amendment.

The Company entered into a three-year employment agreement in July of
1994 with Steven J. Orlando. The Company amended this agreement effective
January 1, 1996, increasing the base salary to $117,000 per year and
extending the term two years to July 15, 1999. The Company further amended
this agreement in May of 1996 reducing the base salary to $81,900 as a result
of the Company's financial performance. Under certain conditions based on
the Company's performance the base salary will be reinstated upon either the
Company achieving profitability for one quarter or a significant improvement
in the Company's working capital. As of June 1997, the Company has not
reinstated the base salary. Pursuant to the employment agreement, Mr. Orlando
will act as Vice President -- Chief Financial Officer of the Company, and
will be entitled to receive, among other things, (a) during the first year
thereof, a base salary of $80,000, (b) during the second and third years
thereof, a base salary in an amount equal to the amount of the previous
year's salary plus the greater of (i) 7% of the base salary in effect for the
previous 12 month period and (ii) the percentage increase in the Consumer
Price Index for the prior 12-month period as reported by the Department of
Labor, (c) during each year thereof, a bonus, equal to the amount determined
by the Board of Directors of the Company under such incentive compensation
plan as shall be adopted by the Board of Directors of the Company, and (d)
such options to purchase Common Shares of the Company as may be granted
pursuant to the terms of the Stock Option Plan. There was no salary increase
since the last amendment.

COMPENSATION OF DIRECTORS

Directors of the Company do not currently receive any compensation for
serving as Directors.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS

The Company does not maintain a Compensation Committee, as such. All
decisions relating to the compensation of its executive officers are made by
the Company's Board of Directors, which includes as Directors Richard D.
Shannon, the Company's Chairman of the Board, Gary C. Nelson, its President
and Chief Executive Officer, all of whom are Company Employees. Mr. Shannon,
along with Kevin R. Baker, the fourth member of the Company's Board also
serves as a Director and executive officer of Baycor Capital, a private
merchant bank based in Calgary, Canada, which is the parent corporation of
Baycor Ventures, the majority shareholder of the Company. See Item 13,
"Certain Relationships and Related Transactions", below.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth, as of June 30, 1997, the number and
percentage of shares of the Company's outstanding common stock beneficially
owned, directly or indirectly, by (a) any person

<PAGE>

(or "group" as that term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934 (the "Exchange Act")) who or which is known to the
Company to be the beneficial owner of more than five percent of the Company's
Common Stock, based on information filed by such persons with the Securities
and Exchange Commission, (b) each of the Company's Directors and the
executive officers identified in Item 11, above, and the Company's Directors
and executive officers as a group. The shares listed as "beneficially owned"
are determined under Securities and Exchange Commission Rules, and do not
necessarily indicate ownership for any other purpose.

In general, beneficial ownership includes shares over which such
principal shareholder, director, or executive officer has sole or shared
voting or investment power and shares which such person has the right to
acquire within 60 days of June 30, 1997. Unless otherwise indicated, the
persons listed have sole voting and investment powers of the shares
beneficially owned. Management is not aware of any arrangements, which may,
at a subsequent date, result in a change of control of the Company.

72
<PAGE>

<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent of
Name and Address of Beneficial Owner Ownership (1) Class
- ------------------------------------ --------------- -----------
<S> <C> <C>
Baycor Ventures, Inc.(2) 1,748,766 11.2%
1550, 3800 Howard Hughes Avenue
Las Vegas, NV 89109

Kevin R. Baker(3) 1,768,766 11.3%
2000, 335-8th Avenue, S.W.
Calgary, Alberta
Canada T2P 1C9

Thomas A Craig(4) 254,027 1.6%
1610 Arden Way, Suite 299
Sacramento, CA 95819

Bradley B Landin(5) 192,000 1.2%
1610 Arden Way, Suite 299
Sacramento, CA 95819

Gary C. Nelson(6) 1,248,027 7.8%
1610 Arden Way, Suite 299
Sacramento, CA 95819

Steven J. Orlando(7) 457,200 2.8%
1610 Arden Way, Suite 299
Sacramento, CA 95819

Richard D. Shannon(8) 2,204,116 13.7%
2000, 335-8th Avenue, S.W.
Calgary, Alberta
Canada T2P 1C9

Lyle Edwards(10) 10,000 .1%
784 Parkridge Drive S.E.
Calgary, Alberta
Canada T25 5E9

PSSS, Inc. Trustee 834,000 5.3%
3030 Hansen Way #200
Palo Alto, CA 94304

All Directors and Officers
as a Group (6 persons)(9) 4,385,370 25.7%
</TABLE>
- -----------------------------------------

(1) All shares are owned directly by the individual(s) indicated, unless
otherwise indicated.
(2) Does not include 125,000 shares held by Baycor Ventures, Inc. ("Baycor")
but subject to currently exercisable options in favor of Mssrs. Nelson,
Craig and Landin.
(3) Includes shares owned by Baycor, a corporation of which Mr. Baker is an
officer, Director, and 50% stockholder. Does not include 125,000 shares
held by Baycor but subject to currently exercisable options in favor
of Mssrs. Nelson, Craig and Landin. Includes 20,000 shares issuable
upon the exercise of stock options exercisable within 60 days of June
30, 1997.

<PAGE>

(4) Includes 21,000 shares available to Mr. Craig upon the exercise of a
currently exercisable option issued by Baycor on outstanding Company
shares presently owned by Baycor, and 49,000 shares issuable upon the
exercise of stock options exercisable within 60 days of June 30, 1997.
(5) Includes 15,000 shares available to Mr. Landin upon the exercise of a
currently exercisable option issued by Baycor on outstanding Company
shares presently owned by Baycor, and 52,000 shares issuable upon the
exercise of stock options exercisable within 60 days of June 30, 1997.
(6) Includes 89,000 shares available to Mr. Nelson upon the exercise of a
currently exercisable option issued by Baycor on outstanding Company
shares presently owned by Baycor, and 50,000 shares issuable upon the
exercise of stock options exercisable within 60 days of June 30, 1997 and
400,000 shares issuable upon the exercise of warrants exercisable within
60 days of June 30, 1997.
(7) Includes 50,000 shares issuable upon the exercise of stock options
exercisable within 60 days of June 30, 1997, and 400,000 shares issuable
upon the exercise of warrants ercisable within 60 days of June 30, 1997.
(8) Includes shares owned by Baycor, a corporation of which Mr. Shannon is an
officer, Direct or, and 50% stockholder. Does not include 125,000
shares held by Baycor but subject to currently exercisable options in
favor of Messrs. Nelson, Craig and Landin. Includes 48,350 shares
issuable upon the exercise of stock options exercisable within 60 days of
June 30, 1997 and 400,000 shares issuable upon the exercise of warrants
exercisable within 60 days of June 30, 1997.

(9) Includes an aggregate of 1,479,350 shares issuable upon the exercise of
outstanding stock options and warrants, which are exercisable within 60
days of June 30, 1997.

(10)Includes 10,000 shares issuable upon the exercise of stock options
exercisable within 60 days of June 30, 1997.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Baycor Ventures, Inc. ("Baycor"), the Company's largest single
shareholder, has entered into a series of transactions with the Company since
it was incorporated in March of 1992.

Any future transactions between the Company and its officers, directors,
principal stockholders or other affiliates will be on terms no less favorable
to the Company than could be obtained from unaffiliated third parties on an
arms-length basis and will be approved by a majority of the Company's
disinterested directors. Any loans to officers, directors, principal
stockholders or affiliates of any of them will be made for bona fide business
purposes, will be on terms no less favorable than could be obtained from
unaffiliated third parties, and will be approved by a majority of the
Company's disinterested directors.

In September 1995, the Company advanced to Baycor a loan in the amount of
$185,000. The loan has a two-year term at a rate of prime rate plus 2% in
interest and is all due and payable at the end of two years.

In May 1995, the Company advanced to Bradley Landin, Vice President
Operations and Director a loan in the amount of $59,000. The loan has a term
of five years at a rate of principal plus 1% in interest with monthly
principal and interest payments of $1,200. The balance at March 31, 1997 is
$39,893.

In July 1996, Baycor, Gary Nelson, President and Chief Executive Officer,
and Steven J. Orlando, Chief Financial Officer, agreed to loan the Company an
aggregate of $175,000 from time to time as needed in April 1997, when the
line of credit will be due and payable. The lenders will receive a general
lien on Java Centrale assets and will be at an interest rate of principal
plus 2% per annum. In replacement of the line of credit, in April 1997 Gary
Nelson advanced the Company $50,000 and the Company pledge the assets of Java
Centrale for this note, Steven Orlando deferred $28,000 in salary due from
December 1996 through April 1997 and Baycor deferred the receipt of

<PAGE>

salary and expenses, without interest, during the 1997 fiscal year. The
maximum deferral was $145,041 as of January 31, 1997, and the amount
remaining unpaid as of June 30, 1997 was $93,633 and $64,952 at March 31,
1997.

In October 1996, Lyle Edwards was elected as a director to the Company.
Mr. Edwards serves as a Vice President to Alta Petroleum, which has provided
a short-term loan of $200,000 in April 1996 and which was paid in December
1996. Alta Petroleum provided additional financing of $300,000 in January
1997, $125,000 in April 1997 and $150,000 in June 1997. These loans are
provided under an agreement, which secures 100% of the Company's stock of its
subsidiary Paradise Bakery and a security lien on the assets of Paradise
Bakery, Inc. The loan bears an interest rate of 14% and a default rate of
16%. The Company is required to pay this loan by proceeds in excess of
$500,000 in capital raised or assets sold. The Note is due August 10, 1997.
Baycor was paid a $40,000 fee in association with the placement of this
financing.

In February 1997, Mr. Nelson advanced the Company $40,000 for five days.
This advance was paid in March 1997 with no fees or interest charges.

ESCROW AGREEMENT

Pursuant to an Amended and Restated Security Escrow Agreement (the
"Escrow Agreement"), by an between each of Baycor, Gary C. Nelson, Thomas A.
Craig, Bradley B. Landin, Richard D. Shannon, Richard M.H. Thompson &
Associates, Inc. and the Manry Company (such entities and persons being
hereinafter collectively referred to as the "Security Holders"), the Company,
the Representative and American Stock Transfer & Trust Company, as escrow
agent (the "Escrow Agent"), Baycor Ventures, Gary C. Nelson and Bradley B.
Landin, directors and officers of the Company and Thomas A. Craig, an officer
of the Company, placed an aggregate of 855,300 of their currently outstanding
Common Shares in escrow (the "Escrowed Shares") in connection with the
Company's public offering of its Common Stock in May of 1994.

The Escrow Agreement provides that the Escrowed Shares shall be released
to the Security Holders and no longer governed by the terms and provisions of
the Escrow Agreement as follows:

(a) If the Company achieves, during the two fiscal years of
the Company ending March 31, 1995 and March 31, 1996, respectively,
an average annual net earnings per common share on a fully diluted basis,
calculated in accordance with GAAP, of at least $.30 per common
share, then two-thirds (66 2/3%) of the Escrowed Shares will be released
to the Security Holders and will no longer be subject to the Escrow
Agreement;

(b) If (i) two-thirds (66 2/3%) of the Escrowed Shares are released
in accordance with the provisions of paragraph (a), above, and (ii) the
Company has achieved during the fiscal year of the Company ending March
31, 1997, an annual net earnings per common share on fully diluted basis,
calculated in accordance with GAAP, of at least $.60 per common share,
then the remaining third (33 1/3%) of the Escrowed Shares will be
released to the Security Holders and no longer be subject to the Escrow
Agreement;

(c) Notwithstanding the provisions of paragraphs (a) and (b),
above, if the Company has achieved, during the three fiscal years of the
Company ending March 31, 1995, March 31, 1996

75
<PAGE>

and March 31, 1997, respectively, an average annual net earnings per common
share on a fully diluted basis, calculated in accordance with GAAP, of at
least $.40 per common share, then all (100%) of the Escrowed Shares will
be released to the Security Holders and no longer be subject to the
Escrow Agreement;

(d) If (i) one-third (33 1/3%) of the Escrowed Shares remain
subject to the terms and provisions of the escrow created by the Escrow
Agreement as a result of the failure of the Company's annual net earnings
per common share to satisfy the requirements set forth in paragraphs (b)
or (c), above, and (ii) the Company achieves, during the fiscal year of
the Company ending March 31, 1998, an annual net earnings per common
share on a fully diluted basis, calculated in accordance with GAAP, of at
least $.40 per common share, then the remaining third (33 1/3%) of the
Escrowed Shares will be released to the Security Holders and no longer
governed by the terms and provisions of the Escrow Agreement;

(e) Notwithstanding any of the other provisions of the Escrow
Agreement, if the Company achieves, during the four fiscal years of the
Company ending March 31, 1995, March 31, 1996, March 31, 1997 and March
1998, respectively, an average annual net earnings per common share on a
fully diluted basis, calculated in accordance with GAAP, of at least $.40
per common share, all (100%) of the Escrowed Shares will be released to
the Security Holders and no longer subject to the Escrow Agreement; and

(f) Any Escrowed Shares, which have not been previously released to
the Security Holders in accordance with the provisions of the Escrow
Agreement, will then be released, and no longer subject to the Escrow
Agreement.

If any Security Holder exercises warrants or options to acquire
additional Common Shares of the Company (the "Additional Shares"), one-third
(33 1/3%) of such Additional Shares must immediately be delivered to the
Escrow Agent, and will be held and released pursuant to the Escrow Agreement
as if they were original Escrowed Shares.

<PAGE>

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) 1. FINANCIAL STATEMENTS.

The Company's Balance Sheets as of March 31, 1996 (the end of its most
recent fiscal year), and the related statements of operations, stockholders'
equity (deficit) and cash flows for the years ended March 31, 1996, 1995 and
1994, are included herewith under Item 8, "Financial Statements and
Supplementary Data," above.

2. FINANCIAL STATEMENT SCHEDULES.

None.

(b) CURRENT REPORTS ON FORM 8-K.

None.

The following documents are included or incorporated by reference in this
Annual Report. Exhibits marked with an asterisk (*) represent management
contracts or compensatory plans or arrangements.

EXHIBIT
NUMBER DESCRIPTION
-------- -----------

2.1 Stock Purchase Agreement dated December 14, 1995 between Java
Centrale, Inc. and Chart House Enterprises, Inc. (filed as
Exhibit 2.3 to the Registrant's Registration Statement on Form
8-K dated December 31, 1995, and by this reference incorporated
herein.)

2.2 Merger Agreement dated December 15, 1995, between Java Centrale,
Inc., Paradise Bakery, Inc. and Founders Venture, Inc. (filed
as Exhibit 2.4 to the Registrant's Registration Statement on
Form 8-K dated January 17, 1996, and by this reference
incorporated herein.)

2.3 Purchase Agreement dated November 22, 1996, between Java Centrale,
Inc. and Good Food Fast Companies, Inc., (filed as Exhibit No.
2.3 to the Registrant's Registration Statement on Form 8-K
dated December 16, 1996, and by this reference incorporated
herein.)

3.1. Amended and Restated Articles of Incorporation (filed as Exhibit 3.1
to the Registrant's Annual Report on Form 10-K for the fiscal
year ended March 31, 1994, and by

<PAGE>

this reference incorporated herein).

3.2 Bylaws, as amended January 10, 1995 (filed as Exhibit 3.1 to the
Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended December 31, 1994, and by this reference
incorporated herein).

4.1 Warrants issued by the Company to Richard M.H. Thompson &
Associates, Inc. (filed as Exhibit No. 4.1 to the Registrant's
Registration Statement on Form S-1 dated March 17, 1994
(Commission File No. 33-76528), and by this reference
incorporated herein).

4.2 Warrants issued by the Company to The Manry Company (filed as
Exhibit No. 4.2 to the Registrant's Registration Statement on
Form S-1 dated March 17, 1994 (Commission File No. 33-76528),
and by this reference incorporated herein).

4.3 Warrants issued by the Company to Argent Securities, Inc. (filed as
Exhibit No. 4.5 to the Registrant's Registration Statement on
Form S-1 dated March 17, 1994 (Commission File No. 33-76528),
and by this reference incorporated herein).

4.4* Amended and Restated Security Escrow Agreement by and between the
Company and each of Baycor Ventures, Inc., Gary C. Nelson,
Thomas A. Craig, Bradley B. Landin, Richard D. Shannon, Richard
M.H. Thompson & Associates, Inc., The Manry Company, American
Stock Transfer & Trust Company, and Argent Securities, Inc.
(filed as Exhibit No. 4.6 to Amendment No. 1 to the
Registrant's Registration Statement on Form S-1 dated March 17,
1994 (Commission File No. 33-76528), and by this reference
incorporated herein).

4.5* Java Centrale, Inc. 1993 Stock Option Plan (filed as Exhibit No.
10.33 to the Registrant's Registration Statement on Form S-1
dated March 17, 1994 (Commission File No. 33-76528), and by
this reference incorporated herein).

4.6* Incentive Stock Option Agreement between the Registrant and Stephen
J. Orlando, dated August 15, 1994, (filed as Exhibit No. 4.6
to the Registrant Annual Report on form 10-K for the year ended
March 31, 1995, and by this reference incorporated herein).

4.7* Stock Purchase Warrant Agreement between the Registrant and Oh La
La!, Inc., dated March 30, 1995, (filed as Exhibit No. 4.7 to
the Registrant Annual Report on form 10-K for the year ended
March 31, 1995, and by this reference incorporated herein).

4.8 Series B Stock Purchase Warrant, issued to Oh La La!, Inc. pursuant
to the Stock Purchase Warrant Agreement between the Registrant
and Oh La La!, Inc. dated March 30, 1995, (filed as Exhibit No.
4.8 to the Registrant Annual Report on form 10-K for the year
ended March 31, 1995, and by this reference incorporated
herein).

<PAGE>

4.9 Series C Stock Purchase Warrant, issued to Oh La La!, Inc. pursuant
to the Stock Purchase Warrant Agreement between the Registrant
and Oh La La!, Inc. dated March 30, 1995, (filed as Exhibit No.
4.9 to the Registrant Annual Report on form 10-K for the year
ended March 31, 1995, and by this reference incorporated
herein).

4.10 Consulting Agreement between Java Centrale, Inc. and Franchise
Development Corporation, dated as of July 2, 1995 (filed as
Exhibit 4.1 to the Registrant's Registration Statement on Form
S-8 dated August 28, 1995, and by this reference incorporated
herein.)

4.11 Consulting Agreement between Java Centrale, Inc. and Alcott Simpson
& Co., dated as of July 2, 1995 (filed as Exhibit 4.2 to the
Registrant's Registration Statement on Form S-8 dated August
28, 1995, and by this reference incorporated herein.)

4.12 Amendment No. 1 to Consulting Agreement between Registrant and
Alcott Simpson & Co, Inc., dated as of July 2, 1995 (filed as
Exhibit 4.8 to the Registrant's Registration Statement on Form
S-8 dated October 23, 1995, and by this reference incorporated
herein.)

4.13 Stock Purchase Warrant, dated as of July 2, 1995, issued by the
Registrant to Alcott Simpson & Co, Inc., (filed as Exhibit 4.9
to the Registrant's Registration Statement on Form S-8 dated
October 23, 1995, and by this reference incorporated herein.)

4.14 Note Purchase Agreement, dated January 22, 1996, between the
Registrant and Gross Foundation, Inc. (filed as Exhibit No. 4.1
to the Registrant's Registration Statement on Form S-3 dated
February 21, 1996, [Commission File No.333-1526], and by this
reference incorporated herein.)

4.15 Form of Convertible Note, dated January 29, 1996, issued to Gross
Foundation, Inc. (filed as Exhibit No. 4.2 to the Registrant's
Registration Statement on Form S-3 dated February 21, 1996,
[Commission File No.333-1526], and by this reference
incorporated herein.)

4.16 Registration Rights Agreement, dated January 22, 1996, between the
Registrant and Gross Foundation, Inc., (filed as Exhibit No.
4.3 to the Registrant's Registration Statement on Form S-3
dated February 21, 1996, [Commission File No.333-1526], and by
this reference incorporated herein.)

4.17 Note Purchase Agreement, dated January 22, 1996, between the
Registrant and Santina Holding, Inc. (filed as Exhibit No. 4.4
to the Registrant's Registration Statement on Form S-3 dated
February 21, 1996, [Commission File No.333-1526], and by this
reference incorporated herein.)

4.18 Form of Convertible Note, dated January 29, 1996, issued to Santina
Holding, Inc., (filed as Exhibit No. 4.5 to the Registrant's
Registration Statement on Form S-3

<PAGE>

dated February 21, 1996, [Commission File No.333-1526], and by
this reference incorporated herein.)

4.19 Registration Rights Agreement, dated January 22, 1996, between the
Registrant and Santina Holding, Inc. (filed as Exhibit No. 4.6
to the Registrant's Registration Statement on Form S-3 dated
February 21, 1996, [Commission File No.333-1526], and by this
reference incorporated herein.)

4.20 Stock Purchase Agreements covering the issuance of 876,000 common
shares for net proceeds to the Company of $3,561,837 (filed as
Exhibit No. 10(3) to the Registrant's Registration Statement on
Form 10-Q dated September 30, 1995, and by this reference
incorporated herein.)

4.21* Incentive Stock Option Agreement between the Company and its
officers, Steven J. Orlando for 100,000 shares at $2.00, Gary
C. Nelson for 140,000 shares at $2.20, Thomas A. Craig for
50,000 shares at $2.00, Bradley B. Landin for 50,000 shares at
$2.00, and Richard D. Shannon for 163,000 shares at $2.20, all
dated October 27, 1995, are omitted, as they are identical in
form to previous agreements filed as Exhibit 4.6 to the
Company's Annual Report or Form 10-K dated June 27, 1995, which
by this reference are incorporated, (filed as Exhibit No. 10.19
to the Registrant's Registration Statement on Form 10-Q dated
December 31, 1995, and by this reference incorporated herein.)

4.22* Incentive Stock Option Agreement between the Company and its
officers, Steven J. Orlando for 75,000 shares at $1.75, Gary C.
Nelson for 27,000 shares at $1.93, Thomas A. Craig for 15,000
shares at $1.75, Bradley B. Landin for 20,000 shares at $1.75
and Richard D. Shannon for 11,250 shares at $1.93 all dated May
11, 1995, are omitted, as they are identical in form to
previous agreements filed as Exhibit No. 4.6 to the Company's
Annual Report or Form 10-K dated June 27, 1995, which by this
reference are incorporated herein (filed as Exhibit No. 10 to
the Registrant's Registration Statement on Form 10-Q dated June
30, 1995, and by this reference incorporated herein.)

4.23 Note Purchase Agreement, dated December 15, 1995, between the
Registrant and Legong Investments, N.V., (filed as Exhibit No.
4.1 to the Registrant's Registration Statement on Form S-3
dated January 2, 1996, [Commission File No.333-42], and by this
reference incorporated herein.)

4.24 Form of Convertible Note, dated December 15, 1995, between
Registrant and Legong Investments, N.V., (filed as Exhibit No.
4.2 to the Registrant's Registration Statement on Form S-3
dated January 2, 1996, [Commission File No.333-42], and by this
reference incorporated herein.)

4.25 Registration Rights Agreement, dated December 15, 1995, between the
Registrant and Legong Investment, N.V., (filed as Exhibit No.
4.3 to the Registrant's Registration Statement on Form S-3
dated January 2, 1996, [Commission File No.333-42], and by this
reference incorporated herein.)

<PAGE>

4.26 Stock Purchase Warrant, dated as June 12, 1996, issued by the
Registrant to Growth Science Venture, Inc., (filed as Exhibit
No. 4.2 to the Registrant's Registration Statement on Form S-8
dated June 28, 1996, [Commission File No.333-07261], and by
this reference incorporated herein.)

4.27 Stock Purchase Warrant, dated as June 12, 1996, issued by the
Registrant to Hayden Group, (filed as Exhibit No. 4.4 to the
Registrant's Registration Statement on Form S-8 dated June 28,
1996, [Commission File No.333-07261], and by this reference
incorporated herein.)

4.28 Stock Purchase Warrant, dated as June 12, 1996, issued by the
Registrant to Meyers, Pollick, Robbins, Inc., (filed as Exhibit
No. 4.6 to the Registrant's Registration Statement on Form S-8
dated June 28, 1996, [Commission File No.333-07261], and by
this reference incorporated herein.)

4.29 Consulting Agreement, dated as June 12, 1996, between the Registrant
and Growth Science Ventures, Inc., (filed as Exhibit No. 4.1 to
the Registrant's Registration Statement on Form S-8 dated June
28, 1996, [Commission File No.333-07261], and by this reference
incorporated herein.)

4.30 Consulting Agreement, dated as June 12, 1996, between the Registrant
and The Hayden Group, (filed as Exhibit No. 4.3 to the
Registrant's Registration Statement on Form S-8 dated June 28,
1996, [Commission File No.333-07261], and by this reference
incorporated herein.)

4.31 Consulting Agreement, dated as June 12, 1996, between the Registrant
and Meyers Pollock Robbins, Inc., (filed as Exhibit No. 4.5 to
the Registrant's Registration Statement on Form S-8 dated June
28, 1996, [Commission File No.333-07261], and by this reference
incorporated herein.)

4.32 A Stock Purchase Warrant, dated February 20, 1997, issued by the
Registrant to One Capital Corporation, Inc., (filed as Exhibit
No. 4.2 to the Registrant's Registration Statement on Form S-8
dated April 3, 1997, [Commission File No.333-24461], and by
this reference incorporated herein.)

4.33 B Stock Purchase Warrant, dated February 20, 1997, issued by the
Registrant to One Capital Corporation, Inc., (filed as Exhibit
No. 4.3 to the Registrant's Registration Statement on Form S-8
dated April 3, 1997, [Commission File No.333-24461], and by
this reference incorporated herein.)

4.34 C Stock Purchase Warrant, dated February 20, 1997, issued by the
Registrant to One Capital Corporation, Inc., (filed as Exhibit
No. 4.5 to the Registrant's Registration Statement on Form S-8
dated April 3, 1997, [Commission File No.333-24461], and by
this reference incorporated herein.)

4.35* Stock Purchase Warrant, dated July 11, 1996, issued by the Company
to Artistic

<PAGE>

License, Inc., (filed as Exhibit No. 4.1 to the Pre-Effective
Amendment No. 2 to the Registrant's Registration Statement on
Form S-3 dated March 19, 1997, [Commission File No.333-16575],
and by this reference incorporated herein.)

4.36* Stock Purchase Warrant, dated October 21, 1996, issued by the
Company to Alta Petroleum, Inc., (filed as Exhibit No. 4.2 to
the Pre-Effective Amendment No. 2 to the Registrant's
Registration Statement on Form S-3 dated March 19, 1997,
[Commission File No.333-16575], and by this reference
incorporated herein.)

4.37* Stock Purchase Warrant, dated September 30, 1996, between the
Registrant and Richard D. Shannon for 400,000 common shares at
$.75 per share, (filed as Exhibit No. 4.30 to the Registrant's
Registration Statement on Form 10-Q dated September 30, 1996,
and by this reference incorporated herein.)

4.38* Stock Purchase Warrant, dated September 30, 1996, between the
Registrant and Steven J. Orlando for 400,000 common shares
(filed as Exhibit No. 4.31 to the Registrant's Registration
Statement on Form 10-Q dated September 30, 1996, and by this
reference incorporated herein.)

4.39* Stock Purchase Warrant, dated September 30, 1996, between the
Registrant and Gary C. Nelson for 400,000 common shares, (filed
as Exhibit No. 4.32 to the Registrant's Registration Statement
on Form 10-Q dated September 30, 1996, and by this reference
incorporated herein.)

4.40 Stock Purchase Warrant, dated July 11, 1996, between the Registrant
and Artistic License for 350,000 common shares, (filed as
Exhibit No. 4.33 to the Registrant's Registration Statement on
Form 10-Q dated September 30, 1996, and by this reference
incorporated herein.)

4.41 Stock Purchase Warrant, dated October 21, 1996, between the
Registrant and Alta Petroleum, Inc., for 50,000 common shares,
(filed as Exhibit No. 4.34 to the Registrant's Registration
Statement on Form 10-Q dated September 30, 1996, and by this
reference incorporated herein.)

4.42 Stock Purchase Warrant, dated September 24, 1996, between the
Registrant and H.I.G. Securities Investments, LTD, for 384,615
common shares, (filed as Exhibit No. 4.35 to the Registrant's
Registration Statement on Form 10-Q dated September 30, 1996,
and by this reference incorporated herein.)

4.43 Stock Purchase Warrant, dated September 24, 1996, between the
Registrant and Alana Group, LTD, for 384,615 common shares,
(filed as Exhibit No. 4.36 to the Registrant's Registration
Statement on Form 10-Q dated September 30, 1996, and by this
reference incorporated herein.)

4.44 Corporate Development Agreement dated February 4, 1997, between
the Registrant and One Capital Corporation, Inc. (filed as
Exhibit 4.1 to the Registrant's Registration Statement on Form
S-8 dated April 3, 1997, [Commission File No.

<PAGE>

333-24461], and by this reference incorporated herein.)

4.45 Note Purchase Agreement, dated January 22, 1996, between the
Registrant and One Capital Corporation, Inc. (filed as Exhibit
4.1 to the Registrant's Registration Statement on Form S-8
dated April 3, 1997, [Commission File No. 333-24461], and by
this reference incorporated herein.)

4.46 Stock Purchase Agreements dated September 20, 1996, for the issuance
of 1,538,462 common shares (filed as Exhibit 4.29 to the
Registrant's Registration Statement on Form 10-Q dated
September 30, 1996, and by this reference incorporated herein).

4.47 Stock Purchase Warrants dated September 24, 1996, for 384,615 common
shares between the Registrant and Alana Group, LTD, (filed as
Exhibit 4.36 to the Registrant's Registration Statement on Form
10-Q dated September 30, 1996, and by this reference
incorporated herein).

4.48 Stock Purchase Warrant, dated January 1, 1996, issued by the
Registrant to Edward T. Peabody (filed as Exhibit 4.4 to the
Registrant's Registration Statement on Form S-8, dated November
20, 1996, and by this reference incorporated herein).

10.1* Employment Agreement, dated February 1, 1994, between the
Registrant and Richard D. Shannon (filed as Exhibit No. 10.28
to the Registrant's Registration Statement on Form S-1 dated
March 17, 1994 (Commission File No. 33-76528), and by this
reference incorporated herein).

10.2* Employment Agreement, dated February 1, 1994, between the
Registrant and Gary C. Nelson (filed as Exhibit No. 10.29 to
the Registrant's Registration Statement on Form S-1 dated March
17, 1994 (Commission File No. 33-76528), and by this reference
incorporated herein).

10.3* Employment Agreement, dated February 1, 1994, between the
Registrant and Bradley B. Landin (filed as Exhibit No. 10.30 to
the Registrant's Registration Statement on Form S-1 dated March
17, 1994 (Commission File No. 33-76528), and by this reference
incorporated herein).

10.4* Employment Agreement, dated February 1, 1994, between the
Registrant and Thomas A Craig (filed as Exhibit No. 10.31 to
the Registrant's Registration Statement on Form S-1 dated March
17, 1994 (Commission File No. 33-76528), and by this reference
incorporated herein).

10.5 Employment Agreement, dated June 30, 1994, between the Registrant
and Steven J. Orlando (filed as Exhibit No. 10.46 to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1994, and by this reference incorporated herein).

10.6 Java Centrale, Inc. Incentive Compensation Plan (filed as Exhibit No.
10.34 to the

<PAGE>

Registrant's Registration Statement on Form S-1 dated March 17,
1994 (Commission File No. 33-76528), and by this reference
incorporated herein).

10.7 Joint Venture Formation Agreement, dated November 14, 1994, among
the Registrant, Chamberlin Capital Corp, Java Southeast
Partners, L.P., and Java Southeast, Inc., and amendments
thereto, (filed as Exhibit No. 10.7 to the Registrant Annual
Report on form 10-K for the year ended March 31, 1995, and by
this reference incorporated herein).

10.8 Asset Purchase Agreement, dated as of February 15, 1995, between the
Registrant and Oh La La!, Inc. (filed as Exhibit 2.1 to the
Registrant's Current Report on Form 8-K dated March 30, 1995,
and by this reference incorporated herein).

10.9 First Amendment to Asset Purchase Agreement, dated March 30, 1995,
between the Registrant and PSSS, Inc. (filed as Exhibit 2.2 to
the Registrant's Current Report on Form 8-K dated March 30,
1995, and by this reference incorporated herein).

10.10 Authorized Producer Agreement, dated as of May 1, 1995, between the
Registrant and Coffee Bean International, (filed as Exhibit No.
10.10 to the Registrant Annual Report on form 10-K for the year
ended March 31, 1995, and by this reference incorporated
herein).

10.11 Lease effective September 1, 1995 between the Company and
California Birch Associates (filed as Exhibit No. 10(1)
to the Registrant's Registration Statement on Form 10-Q
dated September 30, 1995, and by this reference
incorporated herein.)

10.12 Lease effective August 15, 1995 between the Company and Palmdale
SISOS G.P. (filed as Exhibit No. 10(2) to the Registrant's
Registration Statement on Form 10-Q dated September 30, 1995,
and by this reference incorporated herein.)

10.13* Indemnification Agreements, dated October 16, 1995, between the
Registrant and Richard Shannon, Chairman of the Board; Gary C.
Nelson, President; Steven J. Orlando, Chief Financial Officer;
Bradley B. Landin, Vice President; Thomas A. Craig, Vice
President; Kevin Baker, Director, and Baycor Venture, Inc., the
single largest shareholder.

10.14* Employment Agreement, dated January 1, 1996, between the Registrant
and Ty Peabody.

10.17 Asset Purchase Agreement, dated December 15, 1995, between the
Registrant, Paradise Bakery, Inc. and Venture 88, Inc.

10.18 Credit Agreement, dated July 11, 1996, between the Registrant
and Alta Petroleum, Inc., (filed as Exhibit No. 10.22 to the
Registrant's Registration Statement on Form 10-Q dated
September 30, 1996, and by this reference incorporated herein.)

<PAGE>

10.19 Loan Agreement, dated July 11, 1996, between the Registrant and
Artistic License, (filed as Exhibit No. 10.21 to the
Registrant's Registration Statement on Form 10-Q dated
September 30, 1996, and by this reference incorporated herein.)

10.20 Finance Agreement effective December 1, 1996, between the Company
and Vision Capital Corporation, (filed as Exhibit No. 10.23 to
the Registrant's Registration Statement on Form 10-Q dated
December 31, 1996, and by this reference incorporated herein.)

10.21 Loan Agreement effective January 31, 1997, between the Company and
Alta Petroleum, (filed as Exhibit No. 10.24 to the Registrant's
Registration Statement on Form 10-Q dated December 31, 1996,
and by this reference incorporated herein.)

10.22 Additional Bridge Loan Agreement, amended April 4, 1997, between
the Company and Alta Petroleum, Inc.

10.23 Additional Bridge Loan Agreement, amended April 7, 1997, between
the Company and Alta Petroleum, Inc.

10.24* Addendum No. 1 to Employment Agreement between the Company and
Bradley B. Landin, dated January 1, 1997.

10.25* Addendum No. 1 to Employment Agreement between the Company and
Thomas A. Craig, dated January 1, 1997.

10.26* Amendment to Employment Agreement between the Company and
Steven Orlando, effective March 31, 1997.

10.27 Termination of Credit Line between the Company and Gary
Nelson, dated April 7, 1997.

10.28 Exchange Agreement with Good Food Fast Companies, Inc. and the
Company dated March 31, 1997.

10.29 Termination Agreement with Java Southeast, Inc. and the Company
dated

10.30 Amendment to Note Agreement with Legong Investment, N.V., dated
July 1997.

10.31 Warrant Agreement - Legong Investment, N.V., dated July 1997.

11. Statement re Computation of Per Share Earnings (Loss)

21. Subsidiaries of the Registrant.

27. Financial Data Schedule

<PAGE>

(d) EXCLUDED FINANCIAL STATEMENTS

Not applicable.

<PAGE>
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 2 to
Annual Report on Form 10-K to be signed on its behalf by the undersigned,
thereunto duly authorized.

Dated: July 15, 1997 JAVA CENTRALE, INC.

By: /S/ GARY C. NELSON
--------------------------------
Gary C. Nelson
President and Chief Executive Officer

And By: /S/ STEVEN J. ORLANDO
------------------------------
Steven J. Orlando
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting
Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

/S/ KEVIN R. BAKER July 15, 1997
- ------------------------------
Kevin R. Baker, Director

/S/ LYLE P. EDWARDS July 15, 1997
- ------------------------------
Lyle P. Edwards, Director

/S/ GARY C. NELSON July 15, 1997
- ------------------------------
Gary C. Nelson, President and Director

/S/ RICHARD D. SHANNON July 15, 1997
- ------------------------------
Richard D. Shannon, Director and
Chairman of the Board

<PAGE>

INDEX TO EXHIBITS

Exhibits marked with an asterisk (*) represent management contracts or
compensatory plans or arrangements.

Exhibit
Number Description
-------- -----------

<S> <C>
10.22 Additional Bridge Loan Agreement, amended April 4,
1997, between the Company and Alta Petroleum, Inc.

10.23 Additional Bridge Loan Agreement, amended April 7,
1997, between the Company and Alta Petroleum, Inc.

10.24* Addendum No. 1 to Employment Agreement between
the Company and Bradley B. Landin, dated January 1, 1997.

10.25* Addendum No. 1 to Employment Agreement between the
Company and Thomas A. Craig, dated January 1, 1997.

10.26* Amendment to Employment Agreement between the
Company and Steven Orlando, effective March 31, 1997.

10.27 Termination of Credit Line between the Company and Gary
Nelson, dated April 7, 1997.

10.28 Exchange Agreement with Good Food Fast Companies, Inc.
and the Company dated March 31, 1997.

10.29 Termination Agreement with Java Southeast, Inc. and the
Company dated

10.30 Amendment to Note Agreement with Legong Investment, N.V.,
dated July 1997.

10.31 Warrant Agreement - Legong Investment, N.V., dated July 1997.

11. Statement Re Computation of Per Share Earnings (Loss).

21. Subsidiaries of the Registrant.

27. Financial Data Schedule.

</TABLE>

<PAGE>

EXHIBIT 10.22

ALTA PETROLEUM
240 SAINT PAUL ST., SUITE 310
DENVER, COLORADO 80206-5115

April 4, 1997

DELIVERED

PERSONAL & CONFIDENTIAL

Java Centrale, Inc.
1610 Arden Way, Suite 145
Sacramento, CA 95815

ATTENTION: Mr. Richard D. Shannon

Dear Mr. Shannon:

RE: ADDITIONAL BRIDGE LOAN ADVANCE

We refer to our existing Bridge Loan Agreement dated January 29, 1997 (the
"Original Loan Agreement") and your short term cash requirements. We are
prepared to advance an additional One Hundred Twenty-Five Thousand (U.S.
$125,000.00) Dollars U.S. on April 7, 1997 on the same terms and conditions
as the Original Loan Agreement, excepting only the following clauses which
shall replace the "Repayment" and "Conversion" clauses of the Original Loan
Agreement.

REPAYMENT: Principal and accrued interest may be repaid at any time and
shall be repaid in full out of the proceeds of any refinancing
of greater than Five Hundred Thousand ($500,000) Dollars or
sale of any of the assets of the Company or its subsidiary,
concluded by the Company during the Term.

CONVERSION: The principal outstanding may be converted, in whole or in
part, into common stock of Java at any time during the term,
upon written notice to the company, at a price equal to Fifty
($.50) Cents per share (to a maximum of Eight Hundred Fifty
Thousand (850,000) shares). Java will use its best efforts to
register the shares for trading prior to the expiring of the
term.

<PAGE>

EXHIBIT 10.22

April 4, 1997
Page: 2

We trust that the foregoing is in accord with our discussions and if so you
should sign and return one copy of this letter.

Yours truly,

ALTA PETROLEUM, INC.

Lyle P. Edwards
Vice-President

RDS/pm
encl.

ACKNOWLEDGED AND AGREED TO THIS
_____ DAY OF APRIL, 1997

JAVA CENTRALE, INC.

Per: /s/
--------------------------------
Richard D. Shannon
Chairman

<PAGE>

EXHIBIT 10.22

PROMISSORY NOTE

$125,000 April 7, 1997
U.S. Dollars

FOR VALUE RECEIVED the undersigned, JAVA CENTRALE, INC., promises to pay
to or to the order of ALTA PETROLEUM, INC. at DENVER, COLORADO, on or before
the 31st day of May, 1997, the sum of ONE HUNDRED TWENTY FIVE THOUSAND
($125,000) DOLLARS, UNITED STATES FUNDS, together with interest thereon at an
annual rate of FOURTEEN (14%) Percent Payable monthly until May 31, 1997 and
thereafter at an annual rate equal to SIXTEEN (16%) Percent, payable monthly.

The undersigned hereby waives presentment for payment, notice of protest
and notice of non-payment. No time given to or security taken from or
composition or arrangements entered into with any party hereto shall
prejudice the rights of the holder to proceed against any other party.

<PAGE>
Exhibit 10.23

ALTA PETROLEUM, INC.
240 SAINT PAUL ST., SUITE 310
DENVER COLORADO 80296-5115

June 10, 1997

Delivered
- ---------

PERSONAL AND CONFIDENTIAL

Java Centrale, Inc.
1610 Arden Way, Suite 145
Sacramento, CA. 95815

Attention: Mr Richard D. Shannon
- ----------

Dear Mr. Shannon:

RE: ADDITIONAL BRIDGE LOAN ADVANCE

We refer to our existing Bridge Loan Agreement dated January 29, 1997 and
amended April 4, 1997(the "Original Loan Agreement") and your short term cash
requirements. We are prepared to advance an additional One Hundred Fifty
Thousand (U.S. $150,000.00) Dollars on April 10, 1997 on the same terms and
conditions as the Original Loan Agreement, excepting only the following
clauses which shall replace the "Term", "Repayment" and "Security" clauses of
the Original Loan Agreement and shall included the "Warrants" clause.

TERM: Sixty (60) days - the due dated of the January 29, 1997
advance, the April 4, 1997 advance and the current advance,
together with interest thereon and Bonuses earned (the
"Advances") shall be August 10, 1997. In consideration of the
extension of the due date of January 29, 1997 advance and the
April 4, 1997 advance, the Company agrees that interest on these
two advances shall be calculated at the default rate equal to
Sixteen (16%) Percent per annum.

REPAYMENT: Principal and accrued interest on the advances may be repaid
at any time and shall be repaid in full out of proceeds of any
refinancing of greater the Five Hundred Thousand ($500,000)
Dollars or sale of any of the assets of the Company or its
subsidiary, concluded by the Company during the Term.

<PAGE>

Exhibit 10.23

June 10, 1997
Page: 2

SECURITY: The Company will grant in our favour a pledge of One Hundred
(100%) percent of the issued and outstanding shares of
Paradise Bakery, Inc. together with a U.C.C. filing against
all of the assets of Paradise Bakery, Inc. to secure the
Advances.

WARRANTS: We shall earn on funding warrants to purchase One Hundred
Fifty Thousand (150,000) common shares of the Company at
$.25 per share exercisable to Two (2) years from the date
hereof.

The Company hereby acknowledges that the aggregate amount owing under the
Advances is Five Hundred Seventy-Five Thousand ($575,000.00) Dollars.

We trust that the foregoing is in accord with our discussions and if so you
should sign and return one copy of this letter.

ALTA PETROLEUM, INC.

/s/
Lyle P. Edwards
Vice President

RDS/pm

encl.

ACKNOWLEDGED AND AGREED TO THIS
10 DAY OF JUNE, 1997

JAVA CENTRALE, INC.

Per: /s/
Richard D. Shannon
Chairman

<PAGE>
Exhibit 10.23

PROMISSARY NOTE

$150,000 June 10, 1997
U.S. Dollars

FOR VALUE RECEIVED the undersigned, JAVA CENTRALE, INC., promises to pay
to or to the order of ALTA PERTROLEUM, INC. at DENVER, COLORADO, on or before
the 10th day of August 1997, the sum of ONE HUNDRED FIFTY THOUSAND ($150,000)
DOLLARS, UNITED STATES FUNDS, together with interest thereon at an annual
rate of FOUTEEN (14%) Percent payable monthly until August 10, 1997 and
thereafter at an annual rate equal to SIXTEEN (16%) Percent, payable monthly.

The undersigned hereby waives presentment for payment, notice of protest
and notice of nonpayment. No time given to or security taken from or
composition or arrangements entered into with any party hereto shall
prejudice the rights of the holder to proceed against any other party.

JAVA CENTRALE, INC.

Per: /s/
Richard D. Shannon, Chairman

<PAGE>
EXHIBIT 10.24

ADDENDUM NO. 1

THIS ADDENDUM (hereinafter "Addendum No. 1") is made and entered into
between JAVA CENTRALE, INC., a California corporation (hereinafter "Employer")
and BRADLEY B. LANDIN (hereinafter "Employee").

WHEREAS Employee is employed by Employer in the position of Vice-
President Operations; and

WHEREAS Employer and Employee executed an Employment Agreement as of
the 1st day of February, 1994 (the "Agreement"); and

WHEREAS the parties desire to amend the terms of the Agreement:

1. The term of the Agreement as set out in Article 2 is hereby extended
to January 31, 1999.

2. The base salary of $80,000 shall remain the same as described in
Article 1(a) of the Agreement, subject to the adjustment agreed in May of 1996,
reducing the base salary to $73,274.

3. The Employee further agrees that he will, upon the written request of
the Board, sign an Addendum to the Agreement which provides for changes to the
term and compensation, proportional to any such changes agreed to from time to
time by Messrs. R. Shannon, G. Nelson and S. Orlando in their respective
employment agreements with the Employer.

4. In all other respects the Agreement is hereby confirmed without
amendment.

IN WITNESS WHEREOF the parties have executed this Agreement at
Sacramento, California as of the 1st day of January, 1997.

JAVA CENTRALE, INC.

Per: /s/ Richard D. Shannon
-------------------------------
Richard D. Shannon, Chairman

/s/ Bradley B. Landin
-----------------------------------
BRADLEY B. LANDIN

<PAGE>
EXHIBIT 10.25

ADDENDUM NO. 1

THIS ADDENDUM (hereinafter "Addendum No. 1") is made and entered into
between JAVA CENTRALE, INC., a California corporation (hereinafter "Employer")
and THOMAS A. CRAIG (hereinafter "Employee").

WHEREAS Employee is employed by Employer in the position of Vice-
President Marketing and Real Estate; and

WHEREAS Employer and Employee executed an Employment Agreement as of
the 1st day of February, 1994 (the "Agreement"); and

WHEREAS the parties desire to amend the terms of the Agreement:

1. The term of the Agreement as set out in Article 2 is hereby extended
to January 31, 1999.

2. The base salary of $80,000 shall remain the same as described in
Article 1(a) of the Agreement, subject to the adjustment agreed in May of 1996,
reducing the base salary to $73,274.

4. In all other respects the Agreement is hereby confirmed without
amendment.

IN WITNESS WHEREOF the parties have executed this Agreement at
Sacramento, California as of the 1st day of January, 1997.

JAVA CENTRALE, INC.

Per: /s/ Richard D. Shannon
-------------------------------
Richard D. Shannon, Chairman

/s/ Thomas A. Craig
-----------------------------------
THOMAS A. CRAIG

<PAGE>

Exhibit 10.26

Amendment to Employment Agreement
Effective March 31, 1997
Between Java Centrale, Inc. and Steven Orlando

Java Centrale, Inc. ("Java") and Steven Orlando ("SJO") agree that the salary
due to SJO for the position of Chief Financial Officer is deferred for a period
of 90 days and due June 30, 1997. Java and SJO agree that the salary due SJO
for the period of December 1, 1996 to March 31, 1997 in the amount of $27,291.97
is deferred until June 30, 1997. Java agrees that the credit line dated July
11, 1996, in the amount of $175,000, signed by SJO, Gary Nelson and Baycor
Ventures, Inc. is terminated and that by SJO deferring salary of $27,291.97 by
SJO that Java fully releases SJO of any obligation under this credit line and
there are no further obligations by SJO to loan funds under that credit line
dated July 11, 1996.

Agreed to:

/s/
Steven Orlando

/s/
Gary Nelson, President

/s/
Rick Shannon, Chairman of the Board

<PAGE>

Exhibit 10.27

TERMINATION OF CREDIT LINE
BETWEEN JAVA CENTRALE, INC.
AND
GARY NELSON
DATED APRIL 7, 1997

Effective as of April 7, 1997 Java Centrale, Inc. ("Java") and Gary Nelson "GN"
agree that with the advance of a minimum of $50,000 by GN under a promissory
note dated April 7, 1997 that Java releases GN from any further obligations
under the $175,000 line of credit signed by Gary Nelson, Steven Orlando and
Baycor Ventures, Inc.

Agreed to:

/s/
Gary Nelson

/s/
Rick Shannon, Chairman of the Board

<PAGE>

OMNIBUS AGREEMENT

THIS OMNIBUS AGREEMENT (the "Agreement") is made effective as of the 31st
day of March, 1997 by and among Java Centrale, Inc., a California corporation
("Java"), Edward "Ty" Peabody ("Peabody"), Pacific West Coffee Company, a
California corporation ("PWCC") and The Good Food Fast Companies, a Nevada
corporation ("GFF") (and collectively, the "Parties").

RECITALS

WHEREAS, Peabody alleges that Java and/or Paradise Bakery currently has an
outstanding obligation to Peabody in connection with services rendered to Java
as an independent contractor and/or to Paradise Bakery, Inc. as an employee in
the amount of up to $250,000 (the "Peabody Obligations");

WHEREAS, Java currently has an outstanding three-year secured convertible
subordinated note from PWCC, a wholly owned subsidiary of GFF, in the total
principal amount of Seven Hundred Fifty Thousand Dollars ($750,000), bearing
interest at nine percent (9%) per year (the "Java Note") attached hereto as
Exhibit "A" to this Agreement;

WHEREAS, Java currently holds 233,333 shares of GFF Series A Cumulative
Convertible Preferred Stock (the "Preferred Stock") having the rights,
preferences, and privileges set forth in the Certificate of Determination
attached hereto as Exhibit "B" to this Agreement;

WHEREAS, GFF desires to assume and Java desires to allow the assumption
of the Peabody Obligation in exchange for a reduction in the total principal
amount of the Java Note from $750,000 to $500,000 and in consideration to
entering into this Agreement;

WHEREAS, GFF, PWCC and Java want to effect a further partial payoff of
the Java Note in the amount of $145,000 evidenced by deemed value of $5,000
in connection with the assumption of Peabody's automobile lease and a thirty
day $145,000 promissory note from GFF to Java in the form attached hereto as
Exhibit "C";

WHEREAS, Java has agreed to convert the remaining $350,000 principal
balance of the Java Note into 40,000 shares of GFF common stock;

WHEREAS, Java has agreed to convert its Preferred Stock into 233,333
shares of GFF common stock;

WHEREAS, Java has agreed to grant GFF an option to buy the cumulative
amount of 273,333 shares of GFF common stock back from Java in accordance
with the terms of the Stock Option Agreement attached here to as Exhibit F;
and

WHEREAS, all Parties desire to release each and every other Party from
all claims related to or resulting from all prior transactions, relationships
or undertakings between any two of the Parties.

<PAGE>

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises, representations
and conditions set forth in this Agreement, the Parties to this Agreement
mutually hereby agree as follows:

I. ASSUMPTION OF PEABODY OBLIGATIONS

1.1 ASSUMPTION. GFF shall assume and Java consents to the
assumption of the Peabody Obligation in exchange for a reduction in the total
principal amount of the Java Note from $750,000 to $500,000. Accordingly,
GFF and Peabody shall, contemporaneously with the execution of this Agreement,
enter into that certain Promissory Note (attached hereto as Exhibit "E")
wherein GFF will assume the $250,000 Peabody Obligation by way of issuing a
$250,000 promissory note to Peabody in exchange for a reduction in the total
principal amount of the Java Note from $750,000 to $500,000. Additionally,
GFF shall assume any and all obligations pursuant to the Infinity J30
automobile lease or in connection with such automobile, currently the
obligation of Paradise Bakery, Inc. and guaranteed by Peabody effective as of
March 31, 1997. Paradise Bakery, Inc. is an intended third party beneficiary
of this Agreement.

1.2 SETTLEMENT AGREEMENT AND MUTUAL RELEASES. Java and Peabody
shall, contemporaneously with the execution of this Agreement, enter into
that certain Settlement Agreement and Mutual Releases (attached hereto as
Exhibit "D") whereby Java and Peabody settle all claims among Java, Paradise
and Peabody. The Parties acknowledge that the execution and delivery of the
Settlement Agreement and Mutual Release is Peabody's sole obligation under
this Agreement. Peabody shall have no rights or obligations under the
indemnification obligations or releases contained in this Agreement.

II. PARTIAL PAYOFF OF JAVA NOTE

2.1 PARTIAL PAYOFF. GFF, PWCC and Java hereby consent to the
partial payoff of the Java Note in the amount of $145,000 evidenced by a thirty
day promissory note in the same amount from GFF to Java and in the form
attached hereto as Exhibit "C" and in the deemed amount of $5,000.00 as a
result of the assumption of Peabody's automobile lease.

III. CONVERSION OF BALANCE OF JAVA NOTE

3.1 CONVERSION. GFF, PWCC AND Java hereby consent to the
conversion of the remaining $350,000 principal balance of the Java Note into
40,000 shares of GFF common stock.

3.2 SURRENDER OF NOTE. Java shall surrender on the Closing Date
(as hereinafter defined) the Java Note marked "cancelled."

3.3 ISSUANCE OF SHARES OF COMMON STOCK. GFF shall issue to Java
on the Closing Date (as hereinafter defined) 40,000 shares of GFF common
stock, validly issued, fully paid and nonassessable, and free of any liens or
encumbrances, other than being subject to the Option (as herein defined).
Notwithstanding the foregoing, only Rick Shannon or, in the alternative,
Kevin Baker shall have the ability to vote the shares of common stock issued
pursuant to this Section 3.3.

<PAGE>

IV. CONVERSION OF PREFERRED STOCK

4.1 CONVERSION. GFF, PWCC and Java hereby consent to the conversion
of the Preferred Stock into 233,333 shares of GFF common stock.

4.2 SURRENDER OF SHARES OF PREFERRED STOCK. Java shall surrender to
GFF on the Closing Date (as hereinafter defined) the properly endorsed shares of
Preferred Stock.

4.3 ISSUANCE OF SHARES OF COMMON STOCK. GFF shall issue to Java on
the Closing Date (as hereinafter defined) 233,333 shares of GFF common stock,
validly issued, fully paid and nonassessable, and free of any liens or
encumbrances, other than being subject to the Option (as herein defined).
Notwithstanding the foregoing, only Rick Shannon, or in the alternative Kevin
Baker, shall have the ability to vote the shares of common stock issued pursuant
to this Section 4.3.

V. OPTION TO PURCHASE GFF COMMON STOCK

5.1 GRANT OF OPTION. As partial consideration for GFF entering into
this Agreement and GFF's assumption of the Peabody Obligation, which
consideration is hereby acknowledged, Java hereby grants to GFF an option (the
"Option") to purchase all 273,333 of GFF shares of common stock which will be
held by Java following the Closing (as hereinafter defined) and in accordance
with the form of the Stock Option Agreement attached hereto as Exhibit "F".

VI. CLOSING DATES; DELIVERY

6.1 CLOSING DATES. The closing on the purchase and sale of GFF's
common stock hereunder shall be held at the offices of Jeffers, Wilson & Shaff,
LLP located at 18881 Von Karman Avenue, Irvine CA 92612 on or before April 9,
1997 (the "Closing") or at such other time and place upon which the Parties
shall agree (the date of the Closing is hereinafter referred to as the "Closing
Date").

6.2 DELIVERY. At the Closing, the following documents will be
delivered

a.) GFF will deliver a promissory note in the amount of $250,000
in the favor of Peabody;

b.) Java and Peabody will deliver an executed Settlement
Agreement and Mutual Releases;

c.) Java will deliver that certain Convertible Subordinated
Note, in the principal amount of $750,000, dated December 1, 1996
and marked as "cancelled";

d.) GFF will deliver a certificate representing an aggregate
273,333 shares of GFF common stock issued in the name of Java;

e.) Java will deliver a certificate representing 233,333 shares
of preferred stock of GFF, appropriately endorsed to GFF;

<PAGE>

f.) GFF and Java will deliver an executed Stock Option Agreement
between Java and GFF; and

g.) GFF will deliver a promissory note in the amount of $145,000
in the favor of Java.

VII. REPRESENTATIONS AND WARRANTIES OF JAVA

Except as set forth herein, Java represents and warrants to the Parties as
follows:

7.1 ORGANIZATION AND STANDING; ARTICLES AND BY-LAWS. Java is a
corporation duly organized and existing under, and by virtue of, the laws of the
State of California and is in good standing under such laws. Java has the
requisite corporate power and authority to own and operate its properties and
assets, and to carry on its business as presently conducted and as proposed to
be conducted. Java is not presently qualified to do business as a foreign
corporation in any jurisdiction, and the failure to be so qualified will not
have a materially adverse affect on Java's business as now conducted or as now
proposed to be conducted.

7.2 CORPORATE POWER. Java will have at the Closing Date all
requisite legal and corporate power and authority to execute and deliver this
Agreement and any agreement thereunder, to convert that certain Convertible
Subordinated Note into common stock of GFF, to convert the Preferred Stock into
GFF common stock, and to carry out and perform any and all of its obligations
under the terms of this Agreement.

7.3 AUTHORIZATION. All corporate action on the part of Java, its
directors and shareholders necessary for the authorization, execution, delivery
and performance of this Agreement, and any agreements thereunder, by Java, the
authorization of and conversion of that certain Convertible Subordinated Note,
and the conversion of the Preferred Stock and the performance of all of Java's
obligations hereunder has been taken or will be taken prior to Closing. This
Agreement, when executed and delivered by Java, shall constitute a valid and
binding obligation of Java, enforceable in accordance with its terms.

7.4 PURCHASE ENTIRELY FOR OWN ACCOUNT. Java understands that GFF
is making this Agreement with Java in reliance upon Java's representation to
GFF, which by Java's execution of this Agreement Java hereby confirms, that
the common stock to be received by Java hereunder will be acquired for
investment for Java'a own account, not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and that Java has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, Java further represents
that Java does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participation to such person or to
any third person, with respect to any of the shares of common stock. Java
represents that it has full power and authority to enter into this Agreement.

<PAGE>

7.5 EXPERIENCE. Java has substantial experience in evaluating and
investing in private placement transactions of securities in companies
similar to GFF so that Java is capable of evaluating the merits and risks of
Java's investment in GFF and has the capacity to protect its own interests.

7.6 INVESTMENT. Java is acquiring the GFF common stock for
investment for Java's own account, not as a nominee or agent, and not with the
view to, or for resale in connection with, any distribution thereof. Java
understands that the shares of common stock have not been, and will not be,
registered under the Securities Act by reason of a specific exemption from the
registration provisions of the Securities Act, the availability of which depends
upon, among the other things, the bona fide nature of the investment intent and
the accuracy of such Investor's representations as expressed herein.

7.7 RESTRICTED SECURITIES. Java understands that the shares of
common stock it is acquiring are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from GFF in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act, only in certain limited circumstances. In this connection, Java
represents that it is familiar with SEC Rule 144, as now in effect, and
understands the resale limitations imposed thereby and by the Act.

7.8 TRANSFER RESTRICTIONS. Java understands that the shares of
Common Stock that it is acquiring are subject to GFF's option to purchase (see
Exhibit "F") and are subject to a First Refusal Right as described hereunder:

a.) RESTRICTION ON TRANSFER. Java shall not transfer, assign,
encumber, or otherwise dispose of any of the shares of GFF's common stock to
be transferred under this Agreement (the "Shares") in contravention of the
GFF's First Refusal Right under this Section 7.8.

b.) GRANT. The GFF is hereby granted the right of first refusal
(the "First Refusal Right"), exercisable in connection with any proposed
sale or other transfer of the Shares purchased by the Java pursuant to this
Agreement. For purposes of the Section 7.8, the term "transfer" shall
include any assignment, pledge, encumbrance or other disposition for value
of the Shares intended to be made by Java.

c.) NOTICE OF INTENDED DISPOSITION. In the event the Java
desires to accept a bona fide third-party offer for any or all of the
Shares (the shares subject to such offer to be hereinafter called, solely
for the purposes of the Section, the "Target Shares"), Java shall promptly
(i) deliver to the Secretary of the GFF written notice (the "Disposition
Notice") of the offer and the basic terms and conditions thereof, including
the proposed purchase price, and (ii) provide satisfactory proof that the
disposition of the Target Shares to the third-party offeror would not be in
contravention of the provisions set forth elsewhere in this Agreement.

<PAGE>

d.) EXERCISE OF RIGHT. GFF (or its assignees) shall, for a
period of thirty (30) days following receipt of the Disposition Notice,
have the right to repurchase not less than all of the Target Shares
specified in the Disposition Notice upon substantially the same terms and
conditions specified therein. Such right shall be exercisable by written
notice (the "Exercise Notice") delivered to Java prior to the expiration of
the thirty (30) day exercise period. If such right is exercised with
respect to all the Target Shares specified in the Disposition notice, the
GFF (or its assignees) shall effect the repurchase of the Target Shares,
including payment of the purchase price, not more than five (5) business
days after delivery of the Exercise Notice; and at such time Java shall
deliver to GFF the certificates representing the Target Shares to be
repurchased, each certificate to be properly endorsed for transfer.

Should the purchase price specified in the Disposition Notice be payable in
property other than cash or evidences of indebtedness, GFF (or its
assignees) shall have the right to pay the purchase price in the form of
cash equal in amount to the value of such property. If Java and GFF (or
its assignees) cannot agree on such cash value within ten (10) days after
GFF's receipt of the Disposition Notice, the valuation shall be made by an
appraiser of recognized standing selected by Java and GFF (or its
assignees), or, if they cannot agree on an appraiser within twenty (20)
days after GFF's receipt of the Disposition Notice, each shall select an
appraiser of recognized standing and the two appraisers shall designate a
third appraiser of recognized standing, whose appraisal shall be
determinative of such value. The cost of such appraisal shall be shared
equally by Java and GFF. The closing shall then be held on the latter of
(i) the fifth business day following delivery of the Exercise Notice or
(ii) the 15th day after such valuation shall have been made.

e.) NON-EXERCISE OF RIGHT. In the event the Exercise Notice is
not given to Java within thirty (30) days following the date of GFF's
receipt of the Disposition Notice, Java shall have a period of thirty (30)
days thereafter, in which sell or otherwise dispose of the Target Shares
upon terms and conditions (including the purchase price) no more favorable
to the third-party purchase than those specified in the Disposition Notice;
provided, however, that any such sale or disposition must not be effected
in contravention of the provisions contained elsewhere in this Agreement.
The third-party purchaser shall acquire the Target Shares free and clear of
all terms and provisions of the Agreement (including GFF's First Refusal
Right hereunder). In the event Java does not sell or otherwise dispose of
the Target Shares within the specified thirty (30) day period, GFF's First
Refusal Right shall continue to be applicable to any subsequent disposition
of the Target Shares by Java until such right lapses in accordance with
Section 7.8.

f.) RECAPITALIZATION. In the event of any stock dividend, stock
split, recapitalization or other transaction affecting GFF's outstanding
common stock as a class effected without receipt of consideration, then any
new, substituted or additional securities or other property which is by
reason of such transaction distributed with respect to the Shares shall be
immediately subject to GFF's First Refusal Right hereunder, but only to the
extent the Shares are at a time covered by such right.

<PAGE>

g.) LAPSE. The First Refusal Right under this Section 7.8
shall lapse and cease to have effect upon the earliest of the following
to occur (i) a corporate transaction, (ii) the first date on which
shares of GFF's common stock are held of record by more than five
hundred (500) persons, (ii) a determination is made by GFF's Board of
Directors that a public market exists for the outstanding shares of
GFF's Common Stock or (iii) a firm commitment underwritten public
offering pursuant to an effective registration statement under the 1933
Act, covering the offer and sale of GFF's common stock in the aggregate
amount of at least $7,500,000.

h.) CORPORATE TRANSACTION. For purposes of this Section 7.8, a
"Corporate Transaction shall mean:

(i) a merger or acquisition in which GFF is not the surviving
entity, except for a transaction the principal purpose of which is to
change the State in which GFF is incorporated; or

(ii) the sale, transfer or other disposition of all or
substantially all of the assets of GFF.

i.) RECORD OWNER. GFF shall not be required (i) to transfer on its
books any Shares that have been sold or transferred in violation of the
provisions of Section 7.8 or (ii) to treat as the owner of the Shares, or
otherwise to accord voting or dividend rights to, any transferee to whom
the Shares have been transferred in contravention of this Agreement.

7.9 LEGENDS. It is understood that the certificates evidencing the GFF
common stock may bear one or more of the following legends:

(a) THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE
"ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES ("STATE
ACTS"). THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE
OFFERED, SOLD OR TRANSFERRED FOR VALUE DIRECTLY OR INDIRECTLY, IN THE
ABSENCE OF SUCH REGISTRATION UNDER THE ACT AND QUALIFICATION UNDER
APPLICABLE STATE ACTS, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE ACT AND QUALIFICATION UNDER APPLICABLE STATE ACTS, THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE REASONABLE
SATISFACTION OF GFF;

(b) THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF,
EXCEPT IN COMPLIANCE WITH THE TERMS OF THE WRITTEN AGREEMENTS BETWEEN
THE COMPANY AND THE REGISTERED

<PAGE>

HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE
SHARES). SUCH AGREEMENTS GRANT AN OPTION TO PURCHASE AND A RIGHT OF
FIRST REFUSAL TO THE COMPANY PURSUANT TO THE TERMS OF SUCH AGREEMENTS.
THE SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY
OF SUCH AGREEMENTS TO THE HOLDER HEREOF WITHOUT CHARGE; and

(c) ANY LEGEND REQUIRED BY THE LAWS OF ANY STATE, INCLUDING
ANY LEGEND REQUIRED BY THE CALIFORNIA DEPARTMENT OF CORPORATIONS AND
SECTIONS 417 AND 418 OF THE CALIFORNIA CORPORATIONS CODE.

7.10 ACCESS TO DATE. Java has had an opportunity to discuss GFF's
business, management and financial affairs with the GFF's management and has
had the opportunity to review any and all relevant GFF's documents and
records related thereto. Java has also had an opportunity to ask questions of
officers of the GFF, which questions were answered to its satisfaction. Java
understands that such discussion, as well as any written information issued
by the GFF, were intended to describe certain aspects of GFF's business and
prospects but were not a thorough or exhaustive description.

VIII. REPRESENTATIONS AND WARRANTIES OF GFF

Except as set forth herein, GFF represents and warrants to the Parties
as follows:

8.1 ORGANIZATION AND STANDING: ARTICLES AND BY-LAWS. GFF is a
corporation duly organized and existing under, and by virtue of, the laws of
the State of Nevada and is in good standing under such laws. GFF has the
requisite corporate power and authority to own and operate its properties and
assets, and to carry on its business as presently conducted and as proposed
to be conducted. GFF is presently qualified to do business as a foreign
corporation in California but is not so qualified in any other jurisdiction,
and the failure to be so qualified will not have a materially adverse affect
of GFF's business as now conducted or as now proposed to be conducted.

8.2 CORPORATE POWER. GFF will have at the Closing Date all requisite
legal and corporate power and authority to execute and deliver this Agreement
and any agreement thereunder, to convert that certain Convertible
Subordinated Note into common stock of GFF, to convert the Preferred Stock
into GFF common stock, and to carry out and perform any and all of its
obligations under the terms of this Agreement.

8.3 AUTHORIZATION. All corporate action on the part of GFF, its
directors and shareholders necessary for the authorization, execution,
delivery and performance of this Agreement, and any agreements thereunder, by
GFF, the authorization of and conversion of that certain Convertible
Subordinated Note, and the conversion of the Preferred Stock and the
performance of all of GFF's obligations hereunder has been taken or will be
taken prior to Closing. This Agreement, when executed and delivered by GFF,
shall constitute a valid and binding obligation of GFF, enforceable in
accordance with its terms.
<PAGE>

a.) each of the representations and warranties of the other
Parties set forth above shall be true and correct in all material
respects at and as of the Closing Date;

b.) Java shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;

c.) no Adverse Consequence shall be pending or threatened, wherein
an unfavorable determination would (i) prevent consummation of any of
the transactions contemplated by this Agreement or (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation;

d.) valid written and binding acceptance and approval of this
Agreement and the transactions contemplated thereunder by the governing
body of Java, GFF, and PWCC; and

XIII. INDEMNIFICATION

13.1 OBLIGATION OF THE PARTIES TO INDEMNIFY. The Parties hereby
indemnify and hold harmless each of the other Parties and their directors,
officers, employees, subsidiaries (including Paradise) and agents, if any, in
respect of any and all Adverse Consequences incurred by any of the other
Parties in connection with each and all of the following:

a.) Any misrepresentation or breach of any warranty made by the
other respective Party or Parties in this Agreement or in any Schedule,
Exhibit, or other document attached hereto or delivered to any of the
Parties or any officer or agent of each of the Parties in connection
with the transactions contemplated hereby.

b.) The breach of any covenant, agreement, or obligation of any
of the Parties contained in this Agreement or any Schedule or Exhibit
hereto or any other instrument specifically contemplated by this
Agreement.

c.) Any misrepresentation in or omission from any list, Schedule,
Exhibit, certificate or other instrument required to be furnished or
specifically contemplated to have been furnished pursuant to this
Agreement to any other Party or its authorized representatives.

13.2 METHOD OF ASSERTING CLAIMS FOR INDEMNIFICATION. Whenever any
claims shall arise for indemnification hereunder, the party seeking
indemnification (the "Indemnitee") shall promptly notify the other party (the
"Indemnitor") of the claim and, when known, the facts constituting the basis
for such claim. If any claim for indemnification hereunder results from or is
in connection with any claim or Adverse Consequence by a person who is not a
party to this Agreement (the "Third-Party Claim"), such notice shall also
specify, if known, the amount or an estimate of the amount of the liability
arising therefrom. The Indemnitee shall give the other party prompt notice of
any such claim and the Indemnitor shall undertake the defense thereof by
representatives of its own choosing, reasonably satisfactory to the
Indemnitee, at the expense of the Indemnitor. The Indemnitee shall have the
right to participate in any such defense of a Third-Party Claim with advisory
counsel of its own choosing, at its own expense. If the Indemnitor fails to
defend within a reasonable time after notice of any such Third-Party Claim,
the Indemnitee or any subsidiary

<PAGE>

or affiliate of the indemnitee shall have the right to undertake the defense,
compromise, or settlement of such Third-Party Claim on behalf and for the
account of the Indemnitor, at the Indemnitor's expense and risk. The
Indemnitor shall not, without the Indemnitee's written consent, settle or
compromise any such Third Party Claim or consent to entry of any judgment
that does not include, as an unconditional term thereof, the giving by the
claimant or the plaintiff to Indemnitee of an unconditional release from all
liability in respect of such Third-Party Claim. Notwithstanding any provision
herein to the contrary, failure of Indemnitee to give any notice required by
this Section shall not constitute a waiver of Indemnitee's right to
indemnification or a defense to any claim by Indemnitee hereunder.

13.3 MEANS OF INDEMNIFICATION. All indemnification hereunder shall be
effected upon demand as follows by prompt payment of cash, delivery of a
cashier's check or wire transfer in the amount of the indemnification
liability.

13.4 SURVIVAL OF RIGHTS TO INDEMNIFICATION. The indemnities contained
herein shall survive the Closing for a period of one (1) year after the
Closing Date.

XIV. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

14.1 SURVIVAL. All of the representations and warranties of the
respective parties contained in this Agreement shall survive the Closing for
a period of one (1) year after the Closing Date.

XV. RELEASE.

15.1 RELEASE. Upon completion of the Closing, GFF and PWCC, for
themselves, their legal successors and assigns, their agents, officers,
employees, directors, attorneys, subsidiaries, affiliates, heirs, executors,
administrators, personal representatives, members and each of them, do hereby,
absolutely, fully and forever release and discharge Java, its legal
successors and assigns, its agents, officers, employees, directors,
attorneys, subsidiaries (including but not limited to Paradise), affiliates,
heirs, executors, administrators, personal representatives, members and each
of them, from any and all manner of action or actions, cause or causes of
action, suits, debts, liabilities, demands, sums of money in controversy,
damages, accounts, reckonings, and liens of every kind or nature whatsoever,
whether known, suspected, or unsuspected which GFF and/or PWCC shall or may
have, own or hold, which they at any time heretofore had, owned or held, or
may hereafter own, or hold, based on anything occurring before the date of
this Agreement, including but not limited to, claims in connection with that
certain Asset Purchase Agreement and the related documents entered into by
and among GFF, PWCC and Java on or about December 1, 1996 and/or GFF's
relationship with Peabody (collectively the "GFF/PWCC Claim" or "GFF/PWCC
Claims"). GFF/PWCC Claims shall not include any claim for a misrepresentation
or a breach of a convent or warranty under the terms of this Agreement.

Upon completion of the Closing, Java, for themselves, their legal
successors and assigns, their agents, officers, employees, directors,
attorneys, subsidiaries, affiliates, heirs, executors, administrators,
personal representatives, members and each of them, do hereby, absolutely,
fully and forever release and discharge GFF and PWCC, its legal successors
and assigns, its agents, officers,

<PAGE>

employees, directors, attorneys, subsidiaries (including but not limited to
Paradise), affiliates, heirs, executors, administrators, personal
representatives, members and each of them, from any and all manner of
action or actions, cause or causes of action, suits, debts, liabilities,
demands, sums of money in controversy, damages, accounts, reckonings, and
liens of every kind or nature whatsoever, whether known, suspected, or
unsuspected which Java shall or may have, own or hold, which they at any time
heretofore had, owned or held, or may hereafter own, or hold based on anything
occurring before the date of this Agreement, including, but not limited to,
claims in connection with that certain Asset Purchase Agreement and the
related documents entered into by and among GFF, PWCC and Java on or about
December ___, 1996 and/or GFF's relationship with Peabody (collectively
the "Java Claim" or "Java Claims"). Java Claims shall not include any claim
for a misrepresentation or a breach of a covenant or warranty under the terms
of this Agreement.

GFF, PWCC and Java each acknowledge that they have been informed by their
respective attorneys and advisors of, and each is familiar with, Section 1542
of the CIVIL CODE of the State of California, which provides as follows:

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN
HIS FAVOR AT THE TIME OF EXECUTING A RELEASE WHICH
IF KNOWN TO HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR."

GFF, PWCC and Java do hereby waive and relinquish all rights and benefits
each has or may have under Section 1542 of the CIVIL CODE of the State of
California, to the fullest extent that each may lawfully waive such rights
and benefits pertaining to the subject matter of this AGREEMENT.

GFF, PWCC and Java understand and acknowledge that they may discover
facts different from, or in addition to, those facts which each such party
now knows or believes to be true, and agrees that this Release shall be and
remain effective in all respects notwithstanding any such subsequent
discovery of different and/or additional facts. GFF, PWCC and Java
acknowledge that it has undertaken its own independent investigation of all
the facts relating to GFF/PWCC claims and/or the Java Claims and in entering
this Agreement is not relying on any representation, warranty or statement of
any other Party except as expressly set forth herein. GFF, PWCC and Java each
acknowledge that this waiver is an essential and material term of this
Agreement, without which the consideration set forth herein would not have
been so delivered.

<PAGE>

XVI. MISCELLANEOUS

16.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and
be binding upon the respective successors and assigns of the Parties
(including transferees of any of the Shares issued hereunder). Nothing in
this Agreement, express or implied, is intended to confer upon any party
other than the parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.

16.2 GOVERNING LAW. This Agreement shall be governed by and
construed under the internal laws of the State of California.

16.3 TIDES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

16.4 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or on
three (3) days after the date of deposit with the United States Post Office,
by registered or certified mail, postage prepaid and addressed to the Party
to be notified at the address indicated for such Party indicated below, or at
such other address as such Party may designate by ten (10) days' advance
written notice to the other Parties.

(A) If to GFF or PWCC, to:
The Good Food Fast Companies
c/o Pacific Culinary Capital
1280 Bison Street, Suite B9-243
Newport Beach, CA 92660
Attn.: Christopher A. Wheeler, President
Telephone Number: (714) 444-4939
Telecopier Number: (714) 444-4952

With a courtesy copy to:

Barry Falk, Esq.
Jeffers, Wilson & Shaff, LLP
18881 Von Karman Avenue, Suite 1400
Irvine, CA 92612
Telephone Number: (714) 660-7700
Telecopier Number: (714) 660-7799

(B) If to Java, to:

Java Centrale, Inc.
1610 Arden Way, Suite 145
Sacramento, CA 95815
Attn.: Steven J. Orlando
Telephone Number: (916) 568-2310
Telecopier Number: (916) 568-6446

<PAGE>

(C) If to Peabody, to:
Edward "Ty" Peabody
C/O Christopher Wheeler
151 Kalmus Drive, Suite E-200
Costa Mesa, CA 92626
Telephone Number: (714) 444-3301
Telecopier Number: (714) 444-3310

16.5 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the parties hereto. Any
amendment or waiver effected in accordance with this paragraph shall be
binding upon parties hereto and their successors, assigns and transferees.

16.6 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as
if such provision were so excluded and shall be enforceable in accordance
with its terms.

16.7 COMPLETE AGREEMENT. This Agreement, together with the agreements
and documents referred to herein, constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings by and between the Parties.

16.8 ATTORNEYS' FEES. Should any litigation or arbitration be commenced
between the parties hereto or their personal representatives concerning any
provision of this Agreement or the rights and duties of any person in
relation thereto, the party prevailing in such litigation or arbitration
shall be entitled, in addition to such other relief as may be granted, to a
reasonable sum as and for its or their attorneys' fees in such litigation or
arbitration which shall be determined by the court or arbitration board.

16.9 ARBITRATION. Any matter or disagreement arising under this
Agreement shall be submitted in Orange County, California for decision to a
panel of three neutral arbitrators with expertise in the subject matter to
be arbitrated. One arbitrator will be selected by each party and the two
arbitrators so selected shall select the third arbitrator. The arbitration
shall be conducted in accordance with the rules of the American Arbitration
Association. The decision and award rendered by the arbitrators shall be
final and binding. Judgment upon the award may be entered in any court
having jurisdiction thereof. Any arbitration shall be held in Orange County,
California, or such other place which may be mutually agreed upon by the
parties.

16.10 CORPORATE APPROVALS. The Parties represent and warrant that the
execution of this Agreement by its applicable corporate officer named below
has been duly authorized by their applicable Board of Directors, is not in
conflict with any Bylaw or other agreement and will be a binding obligation
of the Parties, enforceable in accordance with its terms.

<PAGE>

16.11 COUNTERPARTS. This Agreement may be executed in counterparts,
including electronically transmitted counterparts, each of which shall be
enforceable against the Party actually executing such counterpart, and all of
which together shall constitute one instrument.

IN WITNESS WHEREOF, the parties have executed this Omnibus Agreement
dated March 31, 1997.

"Java" JAVA CENTRALE, INC.
a California corporation

By: /s/ Gary Nelson
--------------------------------------------
Gary Nelson, President

By:/s/ Stephen J. Orlando
--------------------------------------------
Stephen J. Orlando, Chief Financial Officer

"GFF" THE GOOD FOOD FAST COMPANIES,
a Nevada corporation

By:--------------------------------------------
J. Brian Amster, Chairman of the Board

By: /s/ Christopher A. Wheeler
--------------------------------------------
Christopher A. Wheeler, President

"PWCC" PACIFIC WEST COFFEE COMPANY,
a California corporation

By:--------------------------------------------
J. Brian Amster, Chairman of the Board

By: /s/ Christopher A. Wheeler
--------------------------------------------
Christopher A. Wheeler, President

"Peabody" By: /s/ Edward Ty Peabody
--------------------------------------------
Edward "Ty" Peabody

<PAGE>
Exhibit 10.29

TERMINATION AGREEMENT

THIS TERMINATION AGREEMENT is entered into as of March 14, 1997 by and
between Java Centrale, Inc., a California corporation ("Java Centrale"), and
Java Southeast, Inc., a Delaware corporation ("JSE"). Unless otherwise specified
herein, capitalized terms used herein shall have their respective meanings set
forth in the Joint Venture Development and Operating Agreement dated as of June
30, 1995 between Java Centrale and JSE, as amended (the "Development
Agreement").

WHEREAS, pursuant to a Joint Venture Formation Agreement dated as of
November 14, 1994 among Chamberlin Capital Corp., Java Southeast Partners, L.P.,
JSE and Java Centrale, as amended (the "Formation Agreement"), Java Centrale and
JSE entered into the Development Agreement, which provides for the development
and operation of Java Centrale cafes in the State of Florida and certain
additional areas by JSE;

WHEREAS, the parties desire to terminate the Development Agreement upon the
terms set forth herein;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants contained herein, the parties hereto agree as follows:

1. TERMINATION OF DEVELOPMENT AGREEMENT. The Development Agreement is
hereby terminated effective immediately. In connection with such
termination, the parties hereto acknowledge and agree that:

(a) JSE shall have no further obligation to Java Centrale to
pay any Area Development Fees as provided in Section 2.1 of
the Development Agreement, Opening Fees as provided in
Section 2.2 and 2.3 of the Development Agreement, advisory
fees, as provided in Section 2.4 of the Development
Agreement, or any other fees, royalties or other
compensation to Java Centrale or any of its affiliates,
whether accruing in the past, currently owing or payable in
the future.

(b) JSE shall have no further rights to open Java Centrale cafes
in Florida or elsewhere under Section 1.1 or 1.2 or Article
3 or 4 of the Development Agreement. Java Centrale shall
have the right to immediately open, directly or through
franchisees, Java Centrale cafes anywhere in Florida or
elsewhere, including in the market areas served by JSE's
currently existing cafes.

(c) JSE's rights under Section 1.4 of the Development Agreement,
including the right to use the trademark and service mark
"Java Centrale" and the Trade Dress, shall terminate;
PROVIDED, HOWEVER, that JSE shall continue to have the
rights act forth in Section 1.4 of the Development Agreement
through December 31, 1997. By such date, JSE shall cease
using the trademark and service mark "Java Centrale" and
shall make reasonable changes to the trade dress of its
existing cafes to differentiate such trade dress from the
Trade Dress to the extent such changes in the trade dress
may be without the incurrence of substantial costs.

(d) All other provisions of the Development Agreement shall be
deemed terminated and of no further force or effect.

<PAGE>
Exhibit 10.29

2. RELEASE OF DEFAULT The parties acknowledge that Java Centrale has
failed to loan to JSE the sum of $250,000 as contemplated by the
amendment Section 1.1 (a) of the Formation Agreement, as amended by
Section 1(a) of the letter agreement dated June 30, 1995 among such
parties. JSE hereby releases Java Centrale from any liability or
obligation Java Centrale may have to JSE arising from such failure,
including, without limitation, any consequential damages suffered by
JSE, as a result of the effect of the failure to obtain such $250,000
loan from Java Centrale on JSE's ability to develop additional cafes.

3. CANCELLATION OF LOAN Java Centrale hereby releases JSE from any and
all liabilities or obligations JSE by have with respect to a loan by
Java Centrale to JSE in the amount of $27,500 pursuant to the letter
dated June 11, 1996 between Java Centrale and JSE. Concurrently
herewith, Java Centrale shall deliver such note to JSE for
cancellation.

4. NO EFFECT OF $200,000 LOAN JSE acknowledges its obligation under the
promissory note of JSE dated December 7, 1995 to repay Java Centrale
the sum of $200,000 on October 3, 1999 without interest. Such
obligation shall not be terminated or affected by this Agreement.

5. CANCELLATION OF JAVA CENTRALE SHARES Concurrently with the execution
hereof, JSE shall return to Java Centrale for cancellation the stock
certificates representing all the shares of Java Centrale Common Stock
issued to JSE pursuant to the Formation Agreement. The Registered
Rights Agreement dated as of June 30, 1995 between JSE and Java
Centrale shall be terminated and be of no further force or effect upon
the execution of this Agreement.

6. CANCELLATION OF JSE SHARES Concurrently with the execution hereof,
Java Centrale shall return to JSE for cancellation the stock
certificates representing all of the shares of JSE Common Stock issued
to Java Centrale pursuant to the Formation Agreement. The
Stockholders Agreement dated as of June 30, 1995 between JSE and Java
Centrale shall be terminated and be of no further force or effect upon
the execution hereof.

7. LEGAL FEES OF JSE The fees and disbursements of JSE's counsel,
Gibson, Dunn & Crutcher LLP, incurred in connection with the
preparation and finalization of the Agreement shall be split evenly
between JSE and Java Centrale; PROVIDED, HOWEVER, that Java Centrale
shall not be obligated to bear more that $2,500 of such fees and
disbursements. The parties acknowledge that Gibson, Dunn & Crutcher
LLP represents JSE, and not Java Centrale.

8. NO PRIOR ASSIGNMENT OF RIGHTS Each of the parties represents and
warrants that it has not heretofore assigned or transferred, or
purported to have assigned or transferred, to any firm, corporation or
person whatsoever, any liability or obligation herein released and
agrees to and indemnify and hold harmless the other party against any
liability or obligation based on, arising out of or in connection with
any such transfer or assignment or purported transfer or assignment.

9. ATTORNEYS' FEE If any action, in law or in equity, is brought by
either party against the other party with respect to any right or
claimed right arising under or by reason of this Termination
Agreement, the prevailing party shall be entitled to judgment for all
reasonable attorneys' fees and court costs incurred with respect to
such action.

10. GOVERNING LAW This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without giving
effect to the conflict of laws rules thereof.

<PAGE>

Exhibit 10.29

11. ENTIRE AGREEMENT This Agreement represents the entire agreement
between the parties with respect to the subject matter hereof and
supersedes and cancels any prior oral or written agreement with
respect to such subject matter.

12. BINDING EFFECT This agreement shall be binding upon and shall insure
to the benefit of the parties hereto and their respective successors
and assigns.

13. COUNTERPARTS This Agreement may be executes in one or more
counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument,
and shall become effective when one or more counterparts have signed
by each of the parties.

IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.

JAVA CENTRALE, INC.

By: /s/
-------------------------------
Name: Steven J. Orlando
Title: Chief Financial Officer

JAVA SOUTHEAST, INC.

By: /s/
-------------------------------
Name: Larry L. Chamberlin
Title: Chairman of the Board

<PAGE>
EXHIBIT 10.30

AMENDMENT NO. 1 TO CONVERTIBLE NOTE

THIS AMENDMENT NO. 1 TO CONVERTIBLE NOTE (the "Amendment") is entered into
by and between Java Centrale, Inc., a California corporation (the "Borrower")
and Legong Investments, N.V., a Netherlands Antilles corporation ("Legong"), to
be effective as of July 10, 1997 (the "Effective Date").

R E C I T A L S

A. On or about December 15, 1995 the Borrower borrowed Two Million
Dollars ($2,000,000) from Legong pursuant to a Convertible Note (the "Note") and
certain related agreements including a Registration Rights Agreement and a Note
Purchase Agreement (the "Related Agreements").

B. The Note included provisions which allowed Legong to convert portions
of the principal balance thereof into shares of the Borrower's common stock,
pursuant to which Legong has from time to time so converted a total of One
Million Dollars ($1,000,000) in principal balance of the Note, leaving a
remaining principal balance, as of the date of this Amendment, of One Million
Dollars ($1,000,000.00).

C. The parties now wish to amend the Note in several respects. As so
amended, the parties intend to secure the Note, pursuant to a Security Agreement
of even date herewith, by granting Legong a security interest in all of the
outstanding shares of Borrower's wholly-owned subsidiary Paradise Bakery, Inc.,
a Delaware corporation ("PBI").

A G R E E M E N T

NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and other conditions contained herein, and for other good and valuable
consideration the receipt and sufficiency of which is by all parties hereto
acknowledged and accepted, the parties do agree as follows:

1. CURRENT PRINCIPAL BALANCE OF THE NOTE; INCREASE IN PRINCIPAL BALANCE.

(a) As of the date of this Amendment the current principal balance
owing on the Note is One Million, One Hundred Thousand Dollars ($1,000,000).

(b) In consideration of this Amendment, the principal balance of the
Note shall for all purposes hereafter be deemed increased by (i) Forty-Four
Thousand, Seven Hundred Dollars ($44,700), which is the amount of all accrued
and unpaid interest on the Note from December 15, 1996 to date, plus (ii) Two
Hundred Fifty Thousand Dollars ($250,000), so that commencing with the date of
this Amendment the principal amount of the Note shall for all purposes be One
Million, Two Hundred Ninety-Four Thousand, Seven Hundred Dollars ($1,294,700)
(the "Adjusted Principal Balance").

<PAGE>

2. CHANGE OF MATURITY DATE; EXTENSION.

(a) Except as provided in paragraph (b), below, from and after the
Effective Date of this Amendment the principal balance of the Note shall be due
and payable on October 1, 1997 (the "Adjusted Maturity Date").

(b) Borrower shall have the right, in its sole and absolute
discretion, to extend the Adjusted Maturity Date to a later date; PROVIDED,
HOWEVER, that the Adjusted Maturity Date may not be so extended to a date
falling after January 1, 1998; and PROVIDED, FURTHER, that if the Adjusted
Maturity Date is so extended the Adjusted Note Balance shall be automatically
increased by Fifty-Two Thousand Dollars ($52,000).

3. AMENDMENT TO ARTICLE I.

From and after the Effective Date of this Amendment, Article I,
Section 1.1, of the Note shall be hereby amended and replaced in its entirety,
to read hereafter as follows:

1.1 So long as no Event of Default (as defined herein) shall have
occurred and be continuing, the Borrower shall have the right, exercisable at
any time after the date hereof to prepay this Note in whole or in any part in
accordance with this Section 1.1. Notice of any such prepayment shall be
delivered to the Holder at its registered address appearing on the records of
the Borrower, and shall state (1) that the Borrower is exercising its right to
prepay all or a portion of the principal amount of this Note, (2) the principal
amount to be prepaid and (3) the date of prepayment, which may be the date on
which such notice is given or any later date fixed by the Borrower. On the date
fixed for prepayment, the Borrower shall make payment of accrued and unpaid
interest on the principal amount to be so prepaid.

It is recognized, understood, and agreed that a principal effect of the
foregoing amendment is to eliminate from the terms of the Note any penalty on
the Borrower for prepayments of the Note in the future.

4. ELIMINATION OF ARTICLE II. From and after the Effective Date of this
Amendment, Article II of the Note shall be deleted and eliminated in its
entirety, so that it shall hereafter be of no further force nor effect.

5. AMENDMENT OF ARTICLE III. From and after the Effective Date of this
Amendment, Article III of the Note shall be deemed amended hereby so that,
notwithstanding anything to the contrary in the Note or elsewhere:

(a) If any of the Events of Default enumerated in Article III shall
occur, Lender's sole remedies shall be that (i) the Note shall, at Lender's
option, become immediately due and

-2-

<PAGE>

payable and (ii) Lender shall have those additional rights granted to it in that
certain Security Agreement of even date herewith (the "Lender's Security
Agreement").

(b) Section 3.2 of Article III shall be deleted and eliminated in its
entirety so that the said Section shall hereafter be of no further force nor
effect.

(c) Clause (2) of that final portion of Article III which follows
after Section 3.7 thereof (from the words "an amount" through the words "this
Note"), shall be deleted and eliminated in its entirety, so that the said clause
shall hereafter be of no further force nor effect.

6. GRANT OF WARRANTS.

(a) Simultaneously with the execution of this Amendment, Borrower
shall grant to Legong nontransferable stock purchase warrants representing the
right to purchase up to Two Hundred Fifty Thousand (250,000) shares of
Borrower's common stock (the "Warrant Shares") at a warrant exercise price equal
to Seventy-Five Cents ($0.75) per share (the "Legong Warrants"). The Legong
Warrants shall expire on June 1, 2000.

(b) The Legong Warrants shall be redeemable by Borrower at a
redemption price of Five Cents ($0.05) per Warrant Share if the closing sale
price for Borrower's common stock shall have exceeded Two Dollars ($2.00) per
share for not less than twenty (20) trading days immediately prior to the date
on which Borrower shall give Legong written notice of its intent to so redeem
the Legong Warrants. In the event that Borrower shall give Legong notice of its
intent to redeem the Legong Warrants as described in this paragraph (b), Legong
shall have the right to exercise its rights under the Legong Warrants at any
time within the ten (10) business days following the date on which such notice
is first given to Legong.

(c) Borrower will file with the Securities and Exchange Commission
(the "SEC") a form of registration statement on which the Warrant Shares are
eligible to be registered (an "Eligible Registration Statement"), and shall
register the Warrant Shares thereon, on or before (i) January 15, 1998, or (ii)
such earlier date on which Borrower files an Eligible Registration Statement
with the SEC.

7. SECURITY FOR THE NOTE; COVENANTS OF THE BORROWER.

(a) Pursuant to the Lender's Security Agreement, the Note as amended
hereby will be secured by all of Borrower's shares of stock (the "PBI Shares")
in its wholly-owned subsidiary Paradise Bakery, Inc. ("PBI").

(b) Borrower and PBI currently have certain outstanding obligations
secured by the PBI Shares and/or the assets of PBI, including (i) amounts
outstanding under a term loan to PBI from Imperial Bank in the approximate
amount of Seven Hundred Thousand Dollars ($700,000) in principal amount, plus
interest currently due thereon (the "Imperial Bank Loan"),

-3-
<PAGE>

(ii) certain trade payables and other accrued liabilities of under One Million
Dollars ($1,000,000) in the aggregate, (iii) amounts outstanding under a loan to
Borrower by Alta Petroleum, Inc. in the principal amount of approximately Five
Hundred Seventy-Five Thousand Dollars ($575,000), secured by both the PBI Shares
and (subject to prior claims arising under the Imperial Bank Loan) all or
substantially all of PBI's assets, and (iv) that certain promissory note of
Borrower held by Chart House Enterprises, Inc., with a current principal balance
of approximately Four Hundred Fifty Thousand Dollars ($450,000), which is
secured by certain purchase-money notes from PBI franchisees.

(c) Borrower hereby covenants and agrees that, until such time as the
Note, as amended hereby, has been paid in full, or Legong agrees otherwise in
writing:

(i) Borrower shall not sell or transfer the PBI Shares, or (except in
the ordinary course of business) any material portion of the assets of PBI, to
any other party.

(ii) Borrower shall not pay any dividends on the PBI Shares.

(iii) The aggregate direct liabilities of PBI, whether or not
secured, shall not exceed at any time One Million Eight Hundred Thousand Dollars
($1,800,000) (the "PBI Debt Limit").

(iv) The aggregate direct liabilities of Borrower which are
specifically secured by any interest in the PBI Shares shall not exceed at any
time One Million Five Hundred Thousand Dollars ($1,500,000) (the "PBI Debt
Limit").

(v) Neither Borrower nor PBI shall hereafter incur new debt
obligations, specifically secured by an interest in the assets of PBI, in excess
of One Hundred Thousand Dollars ($100,000) in principal balance.

(vi) In the event that Borrower shall hereafter succeed in obtaining
any debt or equity funding in excess of One Million, Six Hundred Thousand
Dollars ($1,600,000) any such funding in excess of that amount shall be used to
pay down the outstanding principal balance of, and any interest then due on, the
Note.

(d) Legong hereby covenants and agrees that the Note may be
subordinated to any existing or future debt obligation or obligations of
Borrower which may be secured by the PBI Shares; PROVIDED that following the
date on which such debt is incurred the total amount of Borrower's debt secured
by the PBI Shares does not exceed One Million, Five Hundred Thousand Dollars
($1,500,000) in principal balance.

(e) Any breach of the covenants described in this Section 7 shall be
deemed a breach of the Note within the meaning of Article III, Sections 3.1 and
3.3 thereof.

-4-

<PAGE>

8. WAIVER OF DEFAULTS. Borrower and Legong mutually acknowledge and
agree that as of the date of this Amendment there has been no default under,
breach of, or non-compliance with any portion of the Note or the Related
Agreements by any party to them, and waive any such default, breach, or
non-compliance which may have occurred prior to the Effective Date.

9. ABROGATION OF REGISTRATION RIGHTS AGREEMENT. From and after the
Effective Date of this Amendment, the Registration Rights Agreement referred to
in Recital A, above, shall be mutually rescinded, revoked, and eliminated in its
entirety, so that it shall hereafter be of no further force nor effect.

10. Continued Validity of the Terms of the Note Not Amended
HEREBY; AMENDMENT GOVERNED BY ARTICLE IV OF THE NOTE .

(a) Nothing contained in this Amendment shall be construed as
altering, waiving, or supplementing any of the terms or covenants of the Note or
any of the parties thereto, except and only to the extent described above.

(b) This Amendment shall be governed by all of the provisions of
Article IV of the Note.

11. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.

IN WITNESS WHEREOF, Borrower and Legong have caused this Amendment to
be signed in their respective names by their duly authorized officers, to be
effective as of the day and year first above written.

BORROWER: JAVA CENTRALE, INC.

By:
--------------------------------
Name: Gary C. Nelson
Title: President

LEGONG: LEGONG INVESTMENTS, N.V.

By:
--------------------------------
Name:
Title:

-5-

<PAGE>
EXHIBIT 10.31

STOCK PURCHASE WARRANT

TWO HUNDRED FIFTY THOUSAND (250,000) WARRANTS
TO PURCHASE COMMON STOCK OF
JAVA CENTRALE, INC.

This stock purchase Warrant, dated as of June 24, 1997 (the "Warrant") has
been adopted and executed by JAVA CENTRALE, INC., a California corporation (the
"Company"), to certify that the Company has granted to LEGONG INVESTMENTS, N.V.,
a Netherlands Antilles corporation ("Legong") the right to purchase an aggregate
of Two Hundred Fifty Thousand (250,000) fully-paid and non-assessable shares of
the no par value Common Stock of the Company (the "Warrant Shares"), on payment
of the price per Share specified in Section 2 of this Warrant and subject to the
terms and conditions governing this Warrant expressed herein and in the Warrant.

THIS IS TO CERTIFY ALSO THAT, for value received, the Company agrees,
subject to the terms and conditions hereinafter expressed, to sell and deliver
to Legong 250,000 fully-paid and nonassessable Warrants.

This Warrant is and shall remain nontransferable, shall be subject to all
of the terms hereof, and shall become void, and terminate and lapse, at 5:00
P.M. (Sacramento, California time) on June 10, 2000 (the "Expiration Time"),
after which the Warrant shall be of no further force nor effect.

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
the undersigned, duly authorized thereunto.

DATED as of June 24, 1997.

JAVA CENTRALE, INC.

By:
----------------------
Gary C. Nelson
Its President

<PAGE>

WARRANTS TO PURCHASE COMMON STOCK

The terms and conditions with respect to the holding and exercise of these
Stock Purchase Warrants are as follows.

1. NUMBER OF SHARES ACQUIRABLE UPON EXERCISE; CERTAIN ADJUSTMENTS.

(a) Legong shall be initially entitled to receive, upon exercise
hereof as provided herein, up to Two Hundred Fifty Thousand (250,000) shares of
the Company's Common Stock, subject, however, to adjustment as provided below.

(b) If, following the date hereof and prior to the Expiration Time
(as defined below), the outstanding shares of the Company's Common Stock shall
be increased or decreased through a stock split, stock dividend, reverse stock
split, stock consolidation, or otherwise, without consideration to the Company,
an appropriate and proportionate adjustment shall be made in the number and kind
of shares as to which the Warrants may be exercised.

(c) Any increase or decrease in the number of shares obtainable
through the exercise of the Warrants shall become effective immediately
following the effective time of the stock split or consolidation causing such
increase or decrease, or in the case of an increase required by a stock
dividend, shall become effective as of the payment or distribution date of such
dividend.

(d) No fractional shares of stock shall be issued or made available
under the this Warrant on account of any such adjustment, and fractional share
interests shall be disregarded.

2. EXERCISE PRICE; ADJUSTMENT IN CERTAIN EVENTS.

(a) The Warrants shall be initially exercisable for the following
purchase price per Share, subject to the adjustments set forth below (the
"Exercise Price"). The Exercise Price shall remain unchanged until the
occurrence of one of the events described in Section 1(b), above.

(b) The Exercise Price for the Warrant Shares shall be Seventy-Five
Cents ($0.75) per share.

(c) In the event of a change in the number of shares of Common Stock
which may be caused by any event described in Section 1(b), above, a
corresponding adjustment changing the exercise price per share of Common Stock
attributable to any unexercised Warrants shall likewise be made.

-2-

<PAGE>

3. METHOD OF EXERCISE. Legong may exercise its right to purchase
Warrant Shares pursuant to this Warrant at any time prior to the Expiration
Time, by (a) completing in the manner indicated, and executing, the attached
Subscription Form for that number of Warrant Shares which it is entitled, and
desires, to purchase; (b) surrendering the Warrant to the Company at its
principal place of business in Sacramento, California; and (c) paying the
appropriate purchase price for the Warrant Shares (rounded to the nearest whole
cent), by cash, money order, bank draft, or certified check, payable to the
Company at its principal place of business in Sacramento, California. Upon such
surrender and payment, the Company will issue to Legong the number of Warrant
Shares so subscribed for.

4. EFFECT OF EXERCISE. Upon surrender of this Warrant and due payment
of the exercise price, the Company will issue to Legong the number of shares of
Common Stock subscribed for, and Legong will be a shareholder of the Company in
respect of such Common Stock as of the date on which the shares representing
such Common Stock are issued by the Company's Transfer Agent and Registrar.

5. NO RIGHTS AS SHAREHOLDER PRIOR TO EXERCISE. No person or entity shall
be considered to be a shareholder of the Company for any purpose until the
exercise of the Warrant as provided herein and the due and formal issuance of
Warrant Shares by the Company's Transfer Agent and Registrar thereupon.

6. NO RIGHTS AFTER THE EXPIRATION TIME. Nothing contained in this
Warrant, or in any instrument evidencing the Warrant, shall confer on any person
or entity any right to subscribe for or purchase, after the Expiration Time, any
security of or issued by the Company. From and after the Expiration Time, this
Warrant and all rights hereunder shall be valueless, unexercisable, void, and of
no further force or effect.

7. NONTRANSFERABILITY. This Warrant shall not be transferrable, and any
attempt to sell, assign, transfer, hypothecate, or otherwise convey or encumber
any interest herein or therein shall be void. The Company shall have no
obligation to recognize any such sale, assignment, transfer, hypothecation, or
other conveyance or encumbrance, to reflect such transaction on the official
records of the Company, or to issue Warrants or shares of its Common Stock to
any party in violation of this provision.

8. SUBDIVISION. This Warrant may be divided and subdivided into two or
more certificates, evidencing the total number of Warrants provided herein, upon
written demand therefor delivered to the Company. This Warrant may be exercised
for all or any part of the Warrant Shares, and in such event the Company shall
issue a new Warrant Certificate, evidencing the balance of the Warrant Shares
not previously subscribed for. Notwithstanding the foregoing sentences,
however, no Warrant Certificate shall be issued, and no exercise of a Warrant
shall be permitted, involving any fraction of one Share.

9. REDEMPTION BY THE COMPANY. The rights to purchase Warrant Shares
represented by this Warrant shall be redeemable by the Company, in whole or in
part, at any time at a redemption price of Five Cents ($0.05) per Warrant Share
purchase right so redeemed: PROVIDED, HOWEVER, that the following conditions
have been met:

-3-

<PAGE>

(a) The closing price for the Company's common stock must have
equalled or exceeded Two Dollars ($2.00) per share for each of the twenty (20)
consecutive trading days prior to the date on which the Company so redeems the
rights to purchase Warrant Shares represented by this Warrant;

(b) The Company shall give Legong not less than thirty (30) days'
prior written notice of its intention to so redeem the rights to purchase
Warrant Shares represented by this Warrant; and

(c) The Company shall tender the redemption price to Legong or its
representative in cash, by certified or cashiers' check, or by wire transfer, in
any case at Legong's address as then appearing on the Company's records or at
such other address as may be specified from time o time by Legong.

10. MISCELLANEOUS.

(a) This Warrant shall be governed by and construed in accordance
with the internal laws of the State of California, without reference to the
choice of laws provisions thereof.

(b) The captions set forth in this Warrant are for convenience only,
and shall not be used in the construction hereof.

(c) If this Warrant, or any paragraph, sentence, term, or provision
hereof, is invalidated on any ground by any court of competent jurisdiction, the
remainder hereof shall, notwithstanding such invalidation, remain in full force
in effect, and each other provision of this Warrant shall thereafter be
construed and enforced in such a manner as to give the fullest possible effect
to the intention and purposes expressed herein.

-4-

<PAGE>

JAVA CENTRALE, INC.

WARRANT SUBSCRIPTION FORM
Stock Purchase Warrants dated as of June 24, 1997

TO: Java Centrale, Inc.
ATTENTION: Chief Financial Officer
1610 Arden Way, Suite 145
Sacramento, CA 95815

RE: Exercise of Stock Purchase Warrants

Pursuant to the terms of that certain Stock Purchase Warrant, dated as of
June 24, 1997 (the "Warrant"), which Warrant is attached to this Subscription
Form, the undersigned hereby subscribes for _____ whole shares of the Company's
no par value Common Stock, at a price of $______ per share or at such other
price as may be applicable in accordance with the terms of the Warrant.

TOTAL SUBSCRIPTION PRICE: $
-----------

The undersigned hereby directs and requires that the shares of Common Stock
being subscribed for hereby be issued and delivered as follows:

Full Name of Shareholder:
------------------------------------
Full Address:
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
Number of Shares for Which Subscribed:
----------------------

DATED:
------------

LEGONG INVESTMENTS, N.V.

By:
--------------------------
--------------------------
Its
-----------------------

SEE REVERSE FOR IMPORTANT INFORMATION

-5-
<PAGE>

NOTE: This Subscription Form must be signed and accompanied by payment to
Java Centrale, Inc., in full, of the appropriate subscription price, in cash or
by money order, bank draft, or certified check, payable to the Company at its
principal place of business in Sacramento, California, and must be received by
the Company prior to 5:00 PM, California time, on June 24, 2000 (the
"Expiration Time"), after which time all rights represented by the attached
Stock Purchase Warrant will expire.

JAVA CENTRALE, INC. ACCEPTS NO RESPONSIBILITY FOR THE DELIVERY TO IT OF
THIS SUBSCRIPTION FORM OR THE ACCOMPANYING STOCK PURCHASE WARRANT. SUFFICIENT
TIME SHOULD BE ALLOWED FOR THE DELIVERY OF THESE DOCUMENTS PRIOR TO THE
EXPIRATION TIME.

Upon surrender of this Subscription Form and the Stock Purchase Warrant,
and payment of the subscription price as provided therein, the Company will
issue the number of shares of Common Stock subscribed for, and such persons or
entities will thereupon become shareholders of the Company. If a lesser number
of shares is subscribed for than the number of shares described in the Stock
Purchase Warrant, the Company shall issue a further Stock Purchase Warrant in
respect of the unsubscribed shares of Common Stock not subscribed for hereby.

-6-

<PAGE>

JAVA CENTRALE, INC.

COMPUTATION OF NET LOSS PER COMMON SHARE EXHIBIT 11

<TABLE>
<CAPTION>
For the Year Ended March 31,

1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Weighted average number
of common shares outstanding 11,540,800 6,526,377 4,488,532
----------- ----------- -----------
----------- ----------- -----------

Net Loss $(5,326,192) $(3,966,426) $(1,894,183)
Preferred stock dividend requirement - - -
Series A Preferred dividend requirement - - -
Series B Preferred dividend requirement - - -
----------- ----------- -----------
Adjusted net loss-common shareholders $(5,326,192) $(3,966,426) $(1,894,183)
----------- ----------- -----------
----------- ----------- -----------
Net loss per weighted average
eqivalent common share outstanding (2) $(.46) $(.61) $(.42)
----------- ----------- -----------
----------- ----------- -----------

Share months outstanding
1996 1995
----------- ----------- -----------
Calculation of weighted average shares
outstanding (2)
Balance at beginning of period
March 5, 1992 - 2,500,000 shares
March 3, 1994 - 2,591,820 shares 31,101,840 31,101,840 31,101,840
May 10, 1994 - 1,875,000 shares 22,500,000 22,500,000 20,118,750
May 19, 1994 - 250,000 shares 3,000,000 3,000,000 2,601,794
March 30, 1995 - 600,000 shares 7,200,000 7,200,000 40,000
July 7, 1995 - 83,594 shares 1,003,128 736,548
August 28, 1995 - 403,000 shares 4,836,000 2,861,844
August 30, 1995 - 100,000 shares 1,200,000 703,560
September 8, 1995 - 124,567 shares 1,494,804 839,544
September 12, 1995 - 250,000 shares 3,000,000 1,652,052
September 20, 1995 - 326,000 shares 3,912,000 2,068,536
September 27, 1995 - 95,000 shares 1,140,000 580,932
October 19, 1995 - 5,834 shares 70,008 31,452
October 25, 1995 - 20,000 shares 240,000 103,896
November 8, 1995 - 300,000 shares 3,600,000 1,420,272
December 17, 1995 - 302,083 shares 3,624,996 1,042,824
January 4, 1996 - 426,609 shares 5,119,308 1,220,208
January 17, 1996 - 505,926 shares 6,071,112 1,230,864
March 20, 1996 - 40,000 shares 480,000 14,460
March 30, 1996 - 234,000 shares 2,808,000 7,692
March 31, 1996 - 154 shares 1,848
April 24, 1996 - 83,723 shares 938,615
May 21, 1996 - 221,071 shares 2,282,180
May 23, 1996 - 221,071 shares 2,267,643
May 28, 1996 - 124,378 shares 1,255,366
May 31, 1996 - 2,105 shares 21,038
June 13, 1996 - 68,376 shares 654,162
June 18, 1996 - 271,001 shares 2,548,152
June 20, 1996 - 67,919 shares 634,159
June 20, 1996 - 133,200 shares 1,243,687
June 26, 1996 - 132,334 shares 1,209,497
July 3, 1996 - 224,215 shares 1,997,664

</TABLE>

<PAGE>

JAVA CENTRALE, INC.

COMPUTATION OF NET LOSS PER COMMON SHARE EXHIBIT 11

For the Year Ended March 31,

1997 1996 1995
------------ ------------- -------------
<S> <C> <C> <C>
Weighted average number
of common shares outstanding 11,540,800 6,526,377 4,488,532
------------ ------------- -------------
------------ ------------- -------------

Adjusted net loss-common shareholders $ (5,326,192) $ (3,966,426) $ (1,894,183)
------------ ------------- -------------
------------ ------------- -------------

Net Loss per weighted average
equivalent common share
outstanding (2) $(.46) $(.61) $(.42)
------------ ------------- -------------
------------ ------------- -------------

Share months outstanding
1996 1995
------------ ------------- -------------

Calculation of weighted average shares
outstanding (2) Continued

August 2, 1996 - 481,348 shares 3,813,859
August 2, 1996 - 18,652 shares 147,785
August 5, 1996 - 213,675 shares 1,671,934
August 19, 1996 - 159,335 shares 1,173,404
August 19, 1996 - 157,791 shares 1,162,033
September 12, 1996 - 250,000 shares 1,643,836
October 2, 1996 - 769,231 shares 4,552,162
October 2, 1996 - 769,231 shares 4,552,162
November 14, 1996 - 360,239 shares 1,622,556
January 28, 1997 - 196,399 shares 400,331
February 27, 1997 - 200,000 shares 210,411
March 4, 1997 - 10,000 shares 8,877
March 6, 1997 - 16,667 shares 13,699
March 18, 1997 - 93,644 shares 40,023
March 19, 1997 - 54,054 shares 21,325

Options outstanding (1) (1) (1)
Series B redeemable Preferred Stock - - -
Warrants outstanding (1) (1) (1)
------------ ------------- -------------
Total 138,489,604 78,316,524 53,862,384
------------ ------------- -------------
------------ ------------- -------------

Weighted average number
of common shares outstanding 11,540,800 6,526,377 4,488,532
------------ ------------- -------------
------------ ------------- -------------

</TABLE>

(1) Not calculated as anti-dilutive.
(2) All share and per share data have been retroactively restated to reflect
the 2.5 to 1 stock split.
(3) Shares issued on May 10, 1994 and May 19, 1994 have been restated to
reflect the 25% stock dividend.

<PAGE>
EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

Java Centrale has only one subsidiary, Paradise Bakery, Inc., a Delaware
corporation

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEET, CONSOLIDATED STATEMENT OF OPERATIONS, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 350,608
<SECURITIES> 0
<RECEIVABLES> 2,029,778
<ALLOWANCES> 176,223
<INVENTORY> 314,342
<CURRENT-ASSETS> 2,102,177
<PP&E> 3,723,615
<DEPRECIATION> 942,457
<TOTAL-ASSETS> 11,017,990
<CURRENT-LIABILITIES> 4,958,616
<BONDS> 0
0
0
<COMMON> 18,507,874
<OTHER-SE> (13,438,422)
<TOTAL-LIABILITY-AND-EQUITY> 11,017,990
<SALES> 12,934,643
<TOTAL-REVENUES> 14,808,888
<CGS> 4,599,929
<TOTAL-COSTS> 12,666,962
<OTHER-EXPENSES> 14,710,998
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 548,916
<INCOME-PRETAX> (5,326,192)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,326,192)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,326,192)
<EPS-PRIMARY> (0.46)
<EPS-DILUTED> (0.46)

</TABLE>