<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO Section 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1997
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ________ to ________
Commission file no. 0-23936 (CA)
JAVA CENTRALE, INC.
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(Exact name of registrant as specified in its charter)
California 68-0268780
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State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1610 Arden Way, Suite 145
Sacramento, California 95815
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(Address of principal executive office) (Zip Code)
Issuer's telephone number: (916) 568-2310
-------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X. No. .
---- ----
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. AS OF FEBRUARY 13, 1997,
2,685,504 SHARES OF COMMON STOCK (NO PAR VALUE) WERE OUTSTANDING.
1.
<PAGE>
JAVA CENTRALE, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1997
(Unaudited) March 31, 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 584,000 $ 351,000
Notes - current 260,000 448,000
Accounts receivable, net 477,000 592,000
Inventories 229,000 314,000
Prepaid expenses and other 108,000 397,000
- ------------------------------------------------------------------------------------------------------------
Total current assets 1,658,000 2,102,000
- ------------------------------------------------------------------------------------------------------------
Property and equipment, net 2,235,000 2,781,000
Notes receivable 147,000 990,000
Notes receivable - officer 225,000 241,000
Deferred and other charges 216,000 317,000
Intangible assets 3,816,000 4,041,000
Investment in Good Food Fast Companies, Inc. - 547,000
Investment in Massimo Da Milano, Inc. 400,000 -
- ------------------------------------------------------------------------------------------------------------
Total assets $ 8,697,000 $ 11,019,000
- ------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,285,000 $ 1,124,000
Accrued liabilities 901,000 619,000
Due to related parties 160,000 44,000
Short-term debt 250,000 -
Current maturities of long-term debt ,052,000 1,946,000
Convertible debenture - 1,197,000
Current capital lease obligation 30,000 28,000
- ------------------------------------------------------------------------------------------------------------
Total current liabilities 5,678,000 4,958,000
- ------------------------------------------------------------------------------------------------------------
Deferred revenues 35,000 576,000
Convertible debenture - 249,000
Capital lease 81,000 96,000
Other liabilities 62,000 70,000
Stockholders' equity:
Common Stock, no par, 50,000,000 shares authorized,
Issued and outstanding shares; 2,330,504 at 19,720,000 18,508,000
December 31, 1997 and 853,359 at March 31, 1997
Accumulated deficit (16,879,000) (13,438,000)
- ------------------------------------------------------------------------------------------------------------
Total stockholders' equity 2,841,000 5,070,000
- ------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 8,697,000 $ 11,019,000
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART TO THESE FINANCIAL STATEMENTS.
2.
<PAGE>
JAVA CENTRALE, INC. AND SUBSIDIARY
Consolidated Statements of Operations
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
December 31, December 31,
1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
Company cafe sales $ 2,487,000 $3,152,000 $ 6,931,000 $10,708,000
Franchise operations 80,000 20,000 184,000 223,000
Royalties 354,000 358,000 970,000 972,000
Sales of equipment and supplies 18,000 9,000 51,000 117,000
- ----------------------------------------------------------------------------------------------------
Total revenue 2,939,000 3,539,000 8,136,000 12,020,000
- ----------------------------------------------------------------------------------------------------
Cost of company sales:
Food and beverage 849,000 1,075,000 2,369,000 3,727,000
Labor 852,000 1,117,000 2,408,000 3,862,000
Direct and occupancy 486,000 667,000 1,497,000 2,231,000
Cost of equipment and supplies 12,000 6,000 36,000 108,000
Depreciation 121,000 112,000 361,000 433,000
Other 21,000 5,000 63,000 96,000
- ----------------------------------------------------------------------------------------------------
Total cost of company sales 2,341,000 2,982,000 6,734,000 10,457,000
- ----------------------------------------------------------------------------------------------------
General and administrative 903,000 1,015,000 2,964,000 3,128,000
Depreciation and amortization 103,000 89,000 310,000 408,000
Loss associated with cafe closure 159,000 119,000 634,000 247,000
Bad debt expense 7,000 - 130,000 -
Settlement expense - - 55,000 -
Gain on sale of assets (280,000) (167,000) (280,000) (203,000)
- ----------------------------------------------------------------------------------------------------
Operating loss (294,000) (499,000) (2,411,000) (2,017,000)
- ----------------------------------------------------------------------------------------------------
Other income (expense)
Loss on investment (547,000) - (547,000) -
Interest expense and financing fees (263,000) (217,000) (595,000) (395,000)
Interest income 5,000 46,000 96,000 48,000
Other income 52,000 20,000 66,000 156,000
- ----------------------------------------------------------------------------------------------------
Net loss $(1,047,000) $ (648,000) $ (3,441,000) $(2,160,000)
- ----------------------------------------------------------------------------------------------------
Net loss per weighted average equivalent
Common Share outstanding $ (0.50) $ (1.98)
Equivalent Common Shares outstanding 1,283,636 1,092,014
- ----------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART TO THESE FINANCIAL STATEMENTS.
3.
<PAGE>
JAVA CENTRALE, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended
December 31,
1997 1996
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Net cash flows from operating activities: $(451,000) $(2,764,000)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from investing activities:
Purchase of property and equipment (48,000) (240,000)
Proceeds from the sale of assets - 1,556,000
Other - 21,000
- --------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (48,000) 1,337,000
- --------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from warrant conversions 226,000 -
Proceeds from the issuance of Common Stock 538,000 962,000
Proceeds from short term borrowings and capital lease obligations 475,000 1,594,000
Principal payment on notes payable and capital lease obligations (507,000) (1,580,000)
- --------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 732,000 976,000
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash 233,000 (451,000)
Cash and cash equivalents at beginning of period 351,000 1,182,078
- --------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 584,000 $ 731,000
Supplemental disclosure of cash flow information
Interest paid
Income tax paid $ 33,000 $ 380,000
1,600 800
- --------------------------------------------------------------------------------------------------------------
Supplemental disclosure of non-cash financing activities:
Depreciation and amortization $ 671,000 $ 841,000
Preferred Stock received in connection with dispositions - 700,000
Common Stock received in connection with dispositions 400,000 -
Issuance of Warrants for consulting services 144,000 -
Conversion of debenture to Common Stock 446,000 1,900,000
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Sale of certain assets of Java Centrale, Inc., and Subsidiary for the nine
months ended December 31, 1997 and December 31, 1996.
<TABLE>
<CAPTION>
Sale of Assets
Nine months ended
December 31, 1997 December 31, 1996
- -----------------------------------------------------------------------------
<S> <C> <C>
Cash received $ - $ 1,556,000
Note receivable received - 1,351,000
Preferred Stock received - 700,000
Common Stock received 400,000 -
Liabilities assumed 350,000 128,000
Net book value of assets sold (470,000) (3,532,000)
- -----------------------------------------------------------------------------
Gain on sale of assets $ 280,000 $ 203,000
- -----------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
4.
<PAGE>
JAVA CENTRALE, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION The accompanying consolidated financial statements
include the accounts of the Company and its wholly owned subsidiary, Paradise
Bakery, Inc. All significant inter-company accounts and transactions have been
eliminated. Certain prior year financial statement balances have been
reclassified to conform to the fiscal 1998 presentation. These financial
statements have been prepared without audit and do not include certain notes and
certain financial presentations normally required under generally accepted
accounting principles and, therefore, should be read in conjunction with the
Company's financial statements included with the Annual Report on Form 10-K
filed with the Securities and Exchange Commission for the fiscal year ended
March 31, 1997. It should be understood that accounting measurements at interim
dates inherently involve greater reliance on estimates than at year end. The
results of operations for the three months and nine months ended December 31,
1997 are not necessarily indicative of results that can be expected for the full
year.
The December 31, 1997 and 1996 financial statements included herein are
unaudited. They contain, however, all adjustments which, in the opinion of
management are necessary to present fairly the financial position of the Company
at December 31, 1997 and March 31, 1997; and the results of its operations for
the three months and nine months ended December 31, 1997, and 1996, and its cash
flows for the nine months ended December 31, 1997 and 1996, respectively.
As of December 19, 1997, the Company's 1 for 10 reverse stock split went into
effect. As a result of the stock split, all the share data and per share data
has been restated to reflect this stock split.
NOTE 2. ACQUISITIONS/DISPOSITIONS
JAVA CENTRALE FRANCHISE SYSTEM In December 1997, the Company sold the assets
of the Java Centrale franchise system to Massimo Da Milano, Inc. ("MDMI"). The
total consideration consists of $1,000,000 to be received from future royalties
of the Java Centrale franchise system and credits against purchases from MDMI's
bakery operations, and 5,000,000 shares of the Buyer's Common Stock. The Common
Stock has been recorded at $400,000 and a gain on sale of assets of $280,000 has
been recognized as of December 31, 1997.
OH LA LA! DIVISION In December 1996, the Company sold the assets of it's Oh La
La! Division to Good Food Fast Companies, Inc. "GFF" for $1,250,000 in cash,
233,333 shares of Preferred Stock and a $750,000 convertible note receivable due
in 1999. In March 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
convert the remaining $355,000 balance of the note into 40,000 shares of GFF
Common Stock. As of December 31, 1997, the Company determined that it is more
likely than not, that the value of these shares will not be realized, and has
accordingly, recorded an adjustment of $547,000.
NOTE 3. STOCKHOLDERS' EQUITY
CONVERTIBLE DEBENTURES 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, was due on December 15, 1997, with interest payable quarterly
beginning on March 15, 1996, at the rate of 8% per year. The note was
convertible into Common Stock of the Company after February 26, 1996, under
certain terms and conditions. As of December 31, 1997, $1,000,000 had been
converted into 184,639 shares of Common Stock. The remaining principal balance
of $1,000,000 was restructured to remove the conversion feature in July 1997.
The restructured note is due no later than April 1, 1998. Paradise Bakery,
Inc. Common Shares have been pledged as collateral and $250,000 has been added
to the principal balance of the note as consideration for the elimination of the
conversion feature of the note.
The second series of notes, in the amount of $1,500,000, was due January 29,
1998, with interest payable quarterly beginning on March 15, 1996, at the rate
of 8% per year. These notes were convertible into Common Stock of the Company
after April 12, 1996, under certain terms and conditions. As of July 11, 1997,
the entire $1,500,000 had been converted into 385,103 Common Shares.
5.
<PAGE>
PRIVATE COMMON STOCK OFFERING During September 1996, the Company completed
certain private equity placements of restricted Common Shares resulting in the
issuance of 153,846 Common Shares providing net proceeds of $900,000.
During September and October 1997, the Company sold 325,000 Common Shares in a
private placement for net proceeds of $544,000.
COMMON STOCK WARRANTS During July 1996, the Company issued a Warrant to
purchase 25,000 shares of the Company's Common Stock. This Warrant was
exercised in September 1996 for proceeds of $62,500.
During April 1997, the Company issued Warrants to purchase 62,500 shares of its
Common Stock. These Warrants were exercised in April and May of 1997 for
proceeds of $142,000.
During July 1996, the Company issued a Warrant to purchase 15,000 shares of the
Company's Common Stock. This Warrant was exercised in November 1997 for proceeds
of $84,000.
During July 1997 and December 1997, the Company issued Warrants to purchase
25,000 and 20,000 shares of the Company's Common Stock, respectively. These
Warrants were exercised in February 1998 for proceeds of $81,000.
During December 1997, the Company issued Warrants to purchase 1,250,000 shares
of the Company's Common Stock. In February 1998, 300,000 of these Warrants were
exercised for proceeds of $150,000.
During December 1997, the Company issued a Warrant to purchase 10,000 shares of
the Company's Common Stock. These Warrants were exercised in February 1998 for
proceeds of $5,000.
6.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
THE FOLLOWING INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED
FINANCIAL STATEMENTS AND THE NOTES THERETO AND IN CONJUNCTION WITH THE COMPANY'S
ANNUAL FORM 10-K AND QUARTERLY REPORTS FORM 10-Q. THIS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTAINS FORWARD-LOOKING
STATEMENTS REGARDING FUTURE EVENTS OR THE FUTURE PERFORMANCE OF THE COMPANY THAT
INVOLVE CERTAIN RISKS AND UNCERTAINTIES. IN THIS REPORT, THE WORDS
"ANTICIPATE(S)," "BELIEVE(S)," "EXPECT(S)," "INTEND(S)," "FUTURE," AND SIMILAR
EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS. ACTUAL EVENTS OR THE ACTUAL
FUTURE RESULTS OF THE COMPANY MAY DIFFER MATERIALLY FROM ANY FORWARD-LOOKING
STATEMENTS DUE TO SUCH RISKS AND UNCERTAINTIES. THE COMPANY ASSUMES NO
OBLIGATION TO UPDATE THESE FORWARD-LOOKING STATEMENTS DUE TO SUCH RISKS AND
UNCERTAINTIES. THE COMPANY ASSUMES NO OBLIGATION TO UPDATE THESE
FORWARD-LOOKING STATEMENTS TO REFLECT ACTUAL RESULTS OR CHANGES IN FACTORS OR
ASSUMPTIONS AFFECTING SUCH FORWARD-LOOKING ASSUMPTIONS. READERS ARE CAUTIONED
NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH REFLECT
MANAGEMENT'S ANALYSIS ONLY AS OF THE DATE HEREOF. THE COMPANY UNDERTAKES NO
OBLIGATION TO PUBLICLY RELEASE THE RESULTS OF ANY REVISION TO THESE
FORWARD-LOOKING STATEMENTS, WHICH MAY BE MADE TO REFLECT EVENTS OR CIRCUMSTANCES
AFTER THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
OVERVIEW
Java Centrale, Inc. and subsidiary operates and franchises upscale bakery cafes.
As of December 31, 1997, the Company operates one brand, Paradise Bakery and
Cafe, under the Company's wholly owned subsidiary, Paradise Bakery, Inc.
However, for the nine months ended December 31, 1997, the Company operated under
two brands: Java Centrale, which was sold on December 31, 1997 (see below), and
Paradise Bakery and Cafe. As of December 31, 1996, the Company operated under
two brands: Java Centrale and Paradise Bakery and Cafe. Whereas during the nine
months ended December 31, 1996, the Company operated three brands: Java
Centrale, Paradise Bakery and Cafe, and Oh La La!, a division of Java Centrale
which was sold in December 1996 (see Note 2 to the Financial Statements).
On December 31, 1997, the Company sold substantially all of the assets of the
Java Centrale franchise system to Massimo Da Milano, Inc. (MDMI:OTC), which
consisted of 20 franchised cafes and one Company-owned cafe. Consideration
received by the Company was $1,000,000 in a combination of future royalties to
be received by MDMI and credits from purchases by the Company from MDMI's
wholesale bakery operation and 500,000 Common Shares of MDMI (see Note 2 to the
Financial Statements).
Paradise Bakery and Cafe operates in high-end locations such as upscale malls
and airports. Menu items feature, depending upon the location, an assortment of
bakery products, including cookies, muffins, croissants and desserts, freshly
prepared and baked daily at each location, as well as, specialty soups, salads,
and sandwiches. The franchised cafes pay a franchise fee of $15,000 - $35,000
per cafe and weekly royalties of 4%-6% of the gross receipts from each franchise
cafe and/or kiosk. As of December 31, 1997, the Company had 16 Company-owned
cafes and 35 franchised locations.
The following table set forth the Company's operations at December 31, 1997 and
1996:
<TABLE>
<CAPTION>
Operating Units as of December 31,
Company Franchised
1997 1996 1997 1996
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Java Centrale - 3 - 35
Paradise Bakery 16 16 35 34
- ------------------------------------------------------------------------------
Total 16 19 35 69
- ------------------------------------------------------------------------------
</TABLE>
The Company has not earned a profit in any fiscal year since its incorporation
in 1992. The net loss for fiscal 1997 was $5,326,000 and for the nine months
ended December 31, 1997 was $3,3441,000. The Company had an accumulated deficit
of $13,438,000 and $16,879,000 at December 31, 1997 and March 31, 1997,
respectively. During fiscal 1997 and to date, the Company has been operating at
a loss primarily due to the under performance of the cafes in its Java Centrale
system and to its administrative overhead. The Company has experienced higher
than anticipated expenses in pursuing the development of the Java Centrale
cafes, the closing of outlets in this system and settling disputes with
franchisees. The Company's
7.
<PAGE>
JAVA CENTRALE, INC. AND SUBSIDIARY
continuing operating losses have left it materially weak, which has resulted in
the Company being unable to develop its more profitable Paradise Bakery system
as rapidly and extensively as it has planned to do. With the sale of the Java
Centrale franchise system (see Note 2 to the Financial Statements) and upon the
completion of the private equity placement efforts, described elsewhere herein,
the Company anticipates that the expansion of its Paradise Bakery system and
cost savings efforts will reverse the trend of losses. However, the Company can
make no assurance that the losses will not continue or that the Company will
become profitable, as currently structured.
The following tables' sets forth the Company's cafe operating activities for the
quarters and nine months ended December 31, 1997 and 1996:
<TABLE>
<CAPTION>
Quarter Ended December 31,
Java Centrale Paradise Bakery & Cafe Oh La La!
1997 1996 1997 1996 1997 1996
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Opening 3 2 2 1 - -
Closing (14) (4) (1) - - -
Disposition to a non-franchise (21) - - - - (10)
- -----------------------------------------------------------------------------------------
Total Change (32) (2) 1 1 - (10)
- -----------------------------------------------------------------------------------------
Nine Months Ended December 31,
Java Centrale Paradise Bakery &Cafe Oh La La!
1997 1996 1997 1996 1997 1996
- -----------------------------------------------------------------------------------------
Opening 5 6 3 1 - -
Closing (15) (7) (3) - - -
Disposition to a non-franchise (21) - - - - (13)
Disposition to a franchisee - (5) - (2) - -
- -----------------------------------------------------------------------------------------
Total Change (31) (6) - (1) - (13)
- -----------------------------------------------------------------------------------------
</TABLE>
RESULTS OF OPERATIONS
QUARTER ENDED DECEMBER 31, 1997 AS COMPARED TO QUARTER ENDED DECEMBER 31, 1996
REVENUE
The Company's revenue is derived from Company cafe sales, franchise fees,
royalties, and the sale of equipment and supplies. Total revenue was $2,939,000
for the quarter ended December 31, 1997, as compared to $3,539,000 for the
quarter ended December 31, 1996, which included $655,000 derived from the Oh La
La! Division that was sold in December 1996. Excluding the Oh La La! Division,
revenues increased by 2% for the quarter ended December 31, 1997 as compared to
December 31, 1996.
COMPANY CAFE SALES Company cafe sales represented 85% and 89% of the Company's
revenues during the quarters ended December 31, 1997 and 1996, respectively.
The revenues from the Paradise Bakery and Cafe system remained virtually the
same during the quarters ended December 31, 1997 and 1996. Revenue during the
quarter ended December 31, 1997 did not include revenue derived from the Oh La
La! Division since the disposition was completed December 1, 1996.
FRANCHISE OPERATIONS Franchise operations revenue is derived from recognition
of franchise fees when either a new franchise has opened, a cancellation has
occurred, or franchise ownership transfers. Franchise fees generated revenues
of $80,000 during the quarter ended December 31, 1997, as compared to, $20,000
for the quarter ended December 31, 1996, an increase of $60,000. This increase
is primarily a result of recognized franchise fees from the increased franchise
cafes openings and forfeitures as represented in the chart below:
8.
<PAGE>
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended
December 31, 1997 December 31, 1996
Opening/Transfer Forfeiture opening/Transfer Forfeiture
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Java Centrale $50,000 $10,000 $5,000 -
Paradise Bakery $20,000 - $15,000 -
</TABLE>
ROYALTY Royalty revenue is derived from 4% to 6% of the gross sales of
franchisees in accordance with Franchise Agreements. The Company's royalties
represented 12% and 10% of the total revenue during the quarter ended December
31, 1997 and 1996, respectively. Of the $354,000 in royalties earned during the
quarter ended December 31, 1997, Paradise Bakery and Java Centrale represented
74% and 26%, respectively and of the $358,000 in royalties earned during the
quarter ended December 31, 1996, Paradise Bakery and Java Centrale represented
68% and 32%, respectively.
COST OF COMPANY SALES
The cost of company sales consists of costs relating to the operations of
Company-owned bakery/cafes; cost of food and beverage, labor, direct and
occupancy, depreciation and other costs, and costs relating to equipment and
supplies sold to franchisees. Total cost of company sales were $2,341,000 for
the quarter ended December 31, 1997, as compared to, $2,982,000 for the quarter
ended December 31, 1996. The quarter ended December 31, 1997 did not include
$563,000 in costs associated with the Oh La La! Division, since the disposition
was completed in December 1996.
COST OF FOOD AND BEVERAGE Cost of food and beverage represents the cost of
bakery items, beverages, retail items and paper costs, for the bakery items
produced and sold at the Company-owned bakeries and cafes. The cost of food and
beverage remained virtually the same for the Paradise Bakery system and
represents 34% of related sales, for both the quarters ended December 31, 1997
and 1996. Cost of food and beverage during the quarter ended December 31, 1997
did not include costs derived from the Oh La La! Division since the disposition
was completed December 1, 1996. The costs produced by the Oh La La! Division
represented 21% of the total cost of food and beverage for the quarter ended
December 31, 1996.
LABOR Labor consists of the wages, bonuses, and related personnel costs
associated with the operations of Company-owned bakeries/cafes. As of December
31, 1997 and 1996, the labor represents 34% and 35% of related sales,
respectively. Labor during the quarter ended December 31, 1997 did not include
labor derived from the Oh La La! Division since the disposition was completed
December 1, 1996. The labor produced by the Oh La La! Division represented 23%
of total labor for the quarter ended December 31, 1996.
DIRECT AND OCCUPANCY Direct and occupancy consist of the costs associated with
occupying leaseholds by Company owned cafes. As of December 31, 1997 and 1996,
direct and occupancy costs represent 20% and 21% of related sales, respectively.
Direct and occupancy costs during the quarter ended December 31, 1997 did not
include costs derived from the Oh La La! Division, since the disposition was
completed December 1, 1996. The direct and occupancy costs for the Oh La La!
Division were 12% of total direct and occupancy for the quarter ended December
31, 1996.
OTHER OPERATING COSTS
GENERAL AND ADMINISTRATIVE General and administrative expenses consist
primarily of salaries and other related expenses of administrative, executive
and financial personnel and other professional fees. General and administrative
expenses decreased 11% to $903,000 for the quarter ended December 31, 1997, as
compared to $1,015,000 the quarter ended December 31, 1996. The primary
components of this decrease consist of a decrease in personnel costs of
$108,000, marketing of $38,000, travel costs of $30,000, investor relations of
$14,000, and other costs associated with administration of the Company totaling
$27,000. Additionally, there were increases in legal and accounting of $25,000,
and consulting/professional services of $67,000.
OPERATING LOSS The Company's operating loss decreased 41% to $294,000 during
the quarter ended December 31, 1997, as compared to $499,000 during the quarter
ended December 31, 1996. This decrease is a result of the above described
increases and decreases along with an increase in bad debt, a decrease of losses
associated with cafe and cart closures, and an increase on the gain on sale of
assets.
9.
<PAGE>
JAVA CENTRALE, INC. AND SUBSIDIARY
NET LOSS The Company's net loss increased to $1,047,000 during the quarter
ended December 31, 1997, as compared to $648,000 during the quarter ended
December 31, 1996. The increase in net loss is primarily a result of the items
described in the operating loss above, in addition to a one-time, non-recurring
adjustment to the GFF Common Stock. Additionally, there was an increase in
interest expense and financing fees of $46,000, a decrease in interest income of
$43,000 and an increase in other income of $34,000.
NINE MONTHS ENDED DECEMBER 31, 1997 AS COMPARED TO NINE MONTHS ENDED DECEMBER
31, 1996
REVENUE
Total revenue was $8,136,000 for the nine months ended December 31, 1997, as
compared to $12,020,000 for the nine months ended December 31, 1996. Revenue
during the nine months ended December 31, 1997 did not include $3,606,000 in
revenue derived from both the Company-owned Java Centrale cafes and the Oh La
La! Division, since the disposition of these operating assets was completed
during the nine months ended December 1996.
COMPANY Cafe Company cafe sales represented 85% and 89% of the Company's
revenues during the nine months ended December 31, 1997 and 1996, respectively.
The revenues from the Paradise Bakery and Cafe system decreased 5% during the
nine months ended December 31, 1997, as compared to the nine months ended
December 31, 1996. Revenue during the nine months ended December 31, 1997 did
not include revenue derived from the Company-owned Java Centrale cafes and the
Oh La La! Division since the dispositions were completed during the nine months
ended December 31, 1996, which represented 30% of the revenues for the nine
months ended December 31, 1996.
FRANCHISE OPERATIONS The Company's franchise fees generated revenues of
$184,000 during the nine months ended December 31, 1997, as compared to,
$223,000 from the nine months ended December 31, 1996, a decrease of 17%. This
is primarily due to a decrease in recognized franchise fees from the opening of
franchise cafes as represented in the chart below:
<TABLE>
<CAPTION>
Nine months ended Nine months ended
December 31, 1997 December 31, 1996
Opening/Transfer Forfeiture Opening/Transfer Forfeiture
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Java Centrale $125,000 $10,000 $83,000 $70,000
Paradise Bakery $49,000 - $70,000 -
</TABLE>
ROYALTY The Company's royalties remained virtually the same, and represented
12% and 8% of the total revenue during the nine months ended December 31, 1997
and 1996, respectively. Of the $970,000 in royalties earned during the nine
months ended December 31, 1997, Paradise Bakery and Java Centrale represented
72% and 28%, respectively and of the $972,000 in royalties earned during the
nine months ended December 31, 1996, Paradise Bakery and Java Centrale
represented 66% and 34%, respectively.
COST OF COMPANY SALES
Total cost of company sales were $6,734,000 for the nine months ended December
31, 1997, as compared to $10,457,000 for the nine months ended December 31,
1996, a decrease of 36%. The nine months ended December 31, 1997 did not
include $3,196,000 in costs associated with the Company-owned Java Centrale
cafes and Oh La La! Division since the disposition of these operating assets was
completed during the nine months ended December 31, 1996.
COST OF FOOD AND BEVERAGE The cost of food and beverage during the nine months
ended December 31, 1997 and 1996 represent 29% and 31% of related sales,
respectively. Cost of food and beverage during the nine months ended December
31, 1997 did not include costs derived from the Oh La La! Division and the Java
Centrale Company-owned cafes since the disposition of these operating assets was
completed during the nine months ended December 31, 1996, which represented 11%
of the cost of food and beverage for the nine months ended December 31, 1996.
LABOR The cost of labor during the nine months ended December 31, 1997 and 1996
represents 35% and 36% of related sales, respectively. Labor during the nine
months ended December 31, 1997, did not include costs derived from the Oh La La!
Division and the Java Centrale Company-owned cafes since the disposition of
these operating assets was completed
10.
<PAGE>
JAVA CENTRALE, INC. AND SUBSIDIARY
during the nine months ended December 31, 1996, which represented 34% of total
labor for the nine months ended December 31, 1996.
DIRECT AND OCCUPANCY The cost of direct and occupancy costs during the nine
months ended December 31, 1997 and 1996 represents 22% and 21% of related sales,
respectively. Direct and occupancy costs during the nine months ended December
31, 1997 did not include costs derived from the Oh La La! Division and the Java
Centrale Company-owned cafes since the disposition of these assets was completed
during the nine months ended December 31, 1996, which represents 66% of the
total direct and occupancy costs during the nine months ended December 31, 1996.
OTHER OPERATING COSTS
GENERAL AND ADMINISTRATIVE General and administrative expenses decreased 5% to
$2,964,000 for the nine months ended December 31, 1997 as compared to $3,128,000
the nine months ended December 31, 1996. The primary components of this
decrease consist of a decrease in personnel costs of $374,000, marketing of
$80,000, travel and training costs of $96,000, investor relations of $80,000,
and other costs associated with administration of $108,000. Additionally, there
were increases in legal and accounting of $183,000, and consulting and
professional services of $280,000.
OPERATING LOSS The Company's operating loss increased $394,000 to $2,411,000
during the nine months ended December 31, 1997 as compared to $2,017,000 during
the nine months ended December 31, 1996. This increase is a result of the above
described increases and decreases along with an increase in bad debt expense of
$130,000, an increase of losses associated with cafe and cart closures of
$387,000, an increase in settlement fee of $55,000, and an increase on the gain
on sale of assets of $77,000. Of the bad debt, settlement and losses associated
with cafe and cart closure, $647,000 is associated with the Java Centrale
franchise system.
NET LOSS The Company's net loss increased to $3,441,000 during the nine months
ended December 31, 1997 as compared to $2,160,000 during the nine months ended
December 31, 1996. The net loss increase is primarily a result of the items
described above in addition to a one-time, non-recurring adjustment to the GFF
Common Stock. Additionally, there was an increase in interest expense and
financing fees of $200,000, a decrease in interest income of $50,000 and an
increase in other income of $90,000.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES
Since its incorporation in 1992, the Company's operations have required (rather
than provided) cash every year. The Company reduced its use of cash for
operations by $2,313,000 during the nine months ended December 31, 1997, as
compared to the nine months ended December 31, 1996. The net cash used would
have been increased by $303,000 if the Company did not receive note payments
from two franchises during the nine months ended December 31, 1997. Since April
1996, the Company has relied on a series of short-term loans in the aggregate
amount of $1,861,000, sale of assets totaling $1,556,000, the raising of
$1,795,000 in equity through the exercising of Warrants and private equity
placements to finance its continuing cash flow shortfalls. 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 execute a significant sale of
assets. Additionally, there can be no assurances that the Company will be able
to provide cash, rather than require cash, in the future nor provide similar
financing to meet the cash demands of the Company. Currently the Company has a
material working capital shortfall.
In April 1996, the Company received a series of short-term loans from Alta
Petroleum, Inc. The remaining principal amount of these loans is $575,000. The
loan has an interest rate of 16% and is currently due.
In April 1997, the Company received loan advancements from Baycor Venture, Inc.,
Gary C. Nelson, the Company's President and Chief Executive Officer, and Steven
J. Orlando, its then-Chief Financial Officer. As of December 31, 1997, Baycor
Venture, Inc. deferred receipt of salary and expenses totaling $165,000, without
interest. Gary C. Nelson loaned the Company $50,000 in exchange for a note
secured by the Company's assets and interest at the rate of prime plus 2%, at
December 31, 1997 the balance of this note was $30,000. Steven J. Orlando
deferred salary for the period from December 1996 through March 1997 totaling
$31,000; at December 31, 1997 the balance of this loan had been paid in full.
11.
<PAGE>
JAVA CENTRALE, INC. AND SUBSIDIARY
In November 1996, the Company completed a financing of $779,000 in long-term
debt, pledging the assets of Paradise Bakery, Inc. The proceeds were used to
retire notes totaling $680,000. Although this note is currently in default of
certain financial covenants, it is current with the required monthly payments.
The principal balance as of December 31, 1997 was $597,000.
During fiscal 1996, 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,
was due on December 15, 1997, with interest payable quarterly beginning on March
15, 1996, at the rate of 8% per year. The note was convertible into Common
Stock of the Company after February 26, 1996, under certain terms and
conditions. As of December 31, 1997, $1,000,000 had been converted into
1,846,394 shares of Common Stock. The remaining principal balance of $1,000,000
was restructured to remove the conversion feature in July 1997. The
restructured note is due April 1, 1998. Paradise Bakery, Inc. Common Shares
have been pledged as collateral and $250,000 has been added to the principal
balance of the note as consideration for the elimination of the conversion
feature of the note.
The second series of notes, in the amount of $1,500,000, was due January 29,
1998, with interest payable quarterly, at the rate of 8% per year. These notes
were convertible into Common Stock of the Company after April 12, 1996, under
certain terms and conditions. As of July 11, 1997, the entire $1,500,000 had
been converted into 3,851,029 Common Shares.
In August of 1997, the Company retained E.C. Capital Ltd. ("ECC"), a New York
based investment-banking firm, to raise equity capital in a private offering
(the "ECC Offering"). The Company issued to investors units consisting of
25,000 shares of Common Stock, 25,000 "A" and "B" Warrants. The "A" Warrants
have a term of two years from the date of issuance and may be exercised to
purchase shares of Common Stock at a per share exercise price of $1.60. The "B"
Warrants have a three-year term and may be exercised to purchase shares of
Common Stock at a price per share of $2.00. The offering price for each full
unit of the ECC Offering was $25,000. All the Units offered have been sold,
including a total of 625,000 Common Shares and Warrants for the purchase of an
additional 1,250,000 Common Shares, for net proceeds of $544,000. The issuance
of the "A" and "B" Warrants were subject to approval by the Company's Board of
Directors and shareholders of (i) an amendment to the Company's Articles of
Incorporation increasing its authorized number of shares of Common Stock from
25,000,000 to 50,000,000, (ii) effecting a one for ten reverse stock split of
the outstanding shares of Common Stock, and (iii) moving the Company's state of
incorporation from California to Delaware. All of the above proposals were
approved by the Company's shareholders at its annual meeting held November 25,
1997. The Company has agreed to pay ECC a 10% commission on all sales of units
and a 3% non-accountable expense reimbursement. Additionally, the Company has
issued to ECC 500,000 "A" and 500,000 "B" Warrants, as partial compensation for
its efforts in completing the ECC Offering, for a total of 1,000,000 Warrants in
all. The Company has also agreed to retain ECC as an advisor for the next three
years at a fee of $3,000 per month and to pay ECC a 5% warrant solicitation fee
for any of the investor Warrants which are exercised. The Company has also
agreed not to raise debt or equity financing during this three-year period other
than with consent of ECC and to allow a ECC designee to observe all meetings of
the Company's Board of Directors. Further, all of the Company's officers and
directors have executed lock-up agreements with ECC whereby they have agreed not
to transfer, assign, sell or otherwise dispose of any of their Company shares,
except with the consent of ECC, until at least one year after the effective date
of the registration statement.
The Company has developed a specific operating plan to meet the ongoing
liquidity needs of the Company's operations. During the fiscal year ended March
31, 1996, the Company reduced administrative salaries, certain employee benefit
costs, and marketing expenses. Since fiscal 1996, the Company has sold assets
for proceeds of $1,556,000 in cash. 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 financing transactions
and the sale of equity to meet its ongoing liquidity needs in the fiscal year
ended March 31, 1997. Additionally during the nine months ended December 31,
1997, the Company utilized short-term loans and the exercise of Warrants in the
amount of $226,000 to meet its ongoing liquidity needs.
Based on the Company's existing cost structure, and the Company's current and
anticipated revenue streams, including the operating income and franchise sales
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 required 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 $3,340,000 as of February 1998. 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.
The Company has no available credit line.
12.
<PAGE>
JAVA CENTRALE, INC. AND SUBSIDIARY
PART II
ITEM 1. LEGAL PROCEEDINGS
On March 30, 1995, the Company issued to Oh La La!, Inc, Debtor-in Possession, a
promissory note in principal amount of $932,000 (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 principal amount of the Note plus $123,000 in accrued interest to
date of such letter. In August, 1997 PSSS, Inc. filed suit against the Company
in the United States Bankruptcy Court, Northern District of California,
asserting the tender of the above stock was not in compliance with the note
agreement. The Company's management believes that the Company has substantial
defenses to this suit and that the September 1995 conversion was within the
provisions of the note and, on that basis believes that the ultimate disposition
of the suit by PSSS, Inc. in this matter will not have a material adverse effect
on the Company's financial condition or operating results.
In January 1998, the Company was served with notice of suit by California-Birch
Associates, a California Limited Partnership. The suit is related to past due
rent, mitigation and legal fees totaling $110,000 resulting from claimed losses
from the abandonment of said premise by a Java Centrale franchisee who has filed
for protection under the provisions of the United States Bankruptcy Court. The
Company is a party to the lease of the premises and currently is in negotiation
to settle this matter. The Company's management believes that the ultimate
disposition of this matter will not have a material adverse effect on the
Company's financial condition or operating results.
In February 1998, the Company was served with notice of suit by Phoenix Leasing
for past due lease payments, interest and penalties totaling $198,000. The
lease was originated by a Maryland franchisee and is guaranteed by the Company.
The franchisee is continuing operations. The Company believes that it will
prevail upon the franchisee to renumerate Phoenix Leasing for all past due
amounts. The Company's management believes that the ultimate disposition of this
matter will not have a material adverse effect on the Company's financial
condition or operating results.
.
ITEM 2. CHANGES IN SECURITIES
NONE.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
DEFAULT ON NOTES/LOANS PAYABLE The Company is in default on the payment of
interest due on a note payable in the aggregate principal amount of $417,000 and
interest of $45,140 was due and payable on December 31, 1997. The Company has
not received a demand for acceleration of payment. The principal holder of this
note is Chart House Enterprises, Inc. A note receivable that is held by
Paradise Bakery from a franchisee secures this note payable.
The Company's wholly-owned subsidiary, Paradise Bakery, Inc., is in default of
certain financial covenants on a loan payable in the amount of $597,000. The
Company has not received a demand for acceleration of payment. Monthly
scheduled payments are current. The principal holder of this loan is Imperial
Business Credit and is secured by substantially all of the assets of Paradise
Bakery, Inc.
The Company is in default on payment of principal and interest due on a note
payable in the aggregate principal amount of $575,000 and interest of $62,632.
The Company has not received a demand for acceleration of payment. The
principal holder of this note is Alta Petroleum, Inc. and the note is secured by
the Common Stock of Paradise Bakery, Inc.
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
ANNUAL SHAREHOLDERS MEETING At the Company's shareholders meeting, held on
December 5, 1997, three new directors were elected, and one director was
re-elected. One new director was elected chairperson, five proposals to amend
the Company's Articles of Incorporation passed and Grant Thornton L.L.P. was
ratified as the Company's independent accountants.
13.
<PAGE>
JAVA CENTRALE, INC. AND SUBSIDIARY
The vote was as follows:
<TABLE>
<CAPTION>
Issue In favor Against/Withheld
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Election of directors
Richard J. Crosby 12,086,068 148,300
Philip E. Pearce 12,086,068 148,300
Bradley B. Landin 11,716,896 517,472
Gary C. Nelson 12,086,068 148,300
Amendment to the Company's Articles of Incorporation
Proposal No. 2, to increase the number of shares of Common Stock from 25,000,000 to
50,000,000 - Passed 11,601,305 390,063
Proposal No. 3 to create a new class of 25,000,000 shares of Preferred Stock - Passed
11,414,170 406,988
Proposal No. 4 to effect a one-for-ten reverse stock split of the company's outstanding
shares of Common Stock - Passed 11,601,305 595,198
Proposal No. 5 to change the Company's state of incorporation to Delaware - Passed
11,459,020 550,348
Accountant Ratification - Passed 11,749,780 259,588
</TABLE>
ITEM 5. OTHER INFORMATION
NONE.
ITEM 6. EXHIBITS; REPORTS OF FORM 8-K
EXHIBITS The Company is filing herewith the Exhibits listed on Schedule I
attached hereto.
REPORTS ON FORM 8-K On March 11, 1997, the Company filed a Form 8-K/A in
regards to the sale of the Oh La La! Division to Good Foods Fast Companies, Inc.
On September 30, 1997, the Company filed a Form 8-K in regards to the private
offering of common stock and the appointment of a new Chief Financial Officer.
On January 16, 1998, the Company filed a Form 8-K in regards to the sale of the
assets of the Java Centrale Franchise system to Massimo Da Milano, Inc.
14.
<PAGE>
JAVA CENTRALE, INC. AND SUBSIDIARY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
JAVA CENTRALE, INC.
(Registrant)
Date: February 13, 1997
By: /s/ Gary C. Nelson
-------------------------------------
Gary C. Nelson
President and Chief Executive Officer
By: /s/ Jeffrey W. Dudley
------------------------------------
Jeffrey W. Dudley, MS, CPA
Vice President and Chief Financial Officer
(Principal Financial and
Accounting Officer)
15.
<PAGE>
JAVA CENTRALE, INC. AND SUBSIDIARY
INDEX TO EXHIBITS
Exhibits marked with an asterisk (*) represent management contracts or
compensatory plans or arrangements.
EXHIBIT DESCRIPTION
NUMBER
11 Statement re: Computation of Per share Earnings (Loss)
27 Financial Data Schedule
16.
<PAGE>
JAVA CENTRALE, INC., AND SUBSIDIARY
EXHIBIT 11
COMPUTATION OF NET LOSS PER COMMON SHARE
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
December 31, December 31,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Weighted average number of common shares outstanding 2,200,506 1,283,637 1,301,332 1,092,014
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net Loss ($1,047,000) ($648,037) ($3,441,000) ($2,159,288)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net loss per weighted average equivalent common
shares outstanding ($0.48) ($0.50) ($2.64) ($1.98)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
Share Months Outstanding
---------------------------- ----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Calculation of weighted average shares outstanding
April 1, 1996-853,358 shares 2,560,076 7,680,228
April 24, 1996-8,372 shares 25,117 69,490
May 20, 1996-44,214 shares 132,643 328,659
May 28, 1996-12,438 shares 37,313 89,138
May 31, 1996-211 shares 632 1,488
June 5, 1996-27,100 shares 81,300 186,991
June 7, 1996-6,838 shares 20,513 46,724
June 14, 1996-6,792 shares 20,376 44,827
June 18, 1996-13,320 shares 39,960 86,136
June 19, 1996-13,233 shares 39,700 85,135
June 27, 1996-22,422 shares 67,265 138,266
August 2, 1996-65,934 shares 197,801 327,470
August 5, 1996-21,368 shares 64,103 103,989
August 15, 1996-15,779 shares 47,337 71,532
September 20, 1996-153,846 shares 461,539 512,821
November 15, 1996-36,024 shares 55,237 55,237
April 1, 1997-137,4382 shares 4,123,146 8,246,292
April 10, 1997-10,667 shares 32,001 92,447
April 22, 1997-30,000 shares 90,000 248,000
April 29, 1997-15,000 shares 45,000 120,500
May 13, 1997-7,500 shares 22,500 56,750
May 30, 1997-12,195 shares 36,585 85,365
June 9, 1997-15,685 shares 47,055 104,567
June 10, 1997-15,686 shares 47,058 104,050
June 17, 1997-22,308 shares 66,924 142,771
June 24, 1997-56,980 shares 170,940 351,377
July 17, 1997-40,000 shares 120,000 216,000
July 22, 1997-65,103 shares 195,309 340,706
August 26, 1997-10,000 shares 30,000 10,667
September 30, 1997-525,000 shares 1,575,000 1,592,500
Options outstanding (1) (1) (1) (1)
Warrants outstanding (1) (1) (1) (1)
------------ ------------ ------------ ------------
Total 6,601,518 3,850,910 11,711,992 9,828,127
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average number of common shares outstanding 2,200,506 1,283,637 1,301,332 1,092,014
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
(1) Not calculated as anti-dilutive
<TABLE> <S> <C>
<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>
<CIK> 0000920528
<NAME> JAVA CENTRALE, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 584,000
<SECURITIES> 0
<RECEIVABLES> 1,854,000
<ALLOWANCES> 745,000
<INVENTORY> 229,000
<CURRENT-ASSETS> 1,658,000
<PP&E> 3,360,442
<DEPRECIATION> 1,125,442
<TOTAL-ASSETS> 8,697,000
<CURRENT-LIABILITIES> 5,678,000
<BONDS> 178,000
0
0
<COMMON> 1,972,000
<OTHER-SE> (16,879,000)
<TOTAL-LIABILITY-AND-EQUITY> 8,697,000
<SALES> 6,931,000
<TOTAL-REVENUES> 8,136,000
<CGS> 2,369,000
<TOTAL-COSTS> 6,734,000
<OTHER-EXPENSES> 3,653,000
<LOSS-PROVISION> 130,000
<INTEREST-EXPENSE> 595,000
<INCOME-PRETAX> (3,441,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,441,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,441,000)
<EPS-PRIMARY> (2.64)
<EPS-DILUTED> (2.64)
</TABLE>
