From the August 10-Q:
"...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 with an additional loss of $811,409 for the quarter ended June 30, 1997. 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 and at June 30, 1997 had an accumulated deficit of $14,249,831. In the
quarter ended June 30, 1997 the Company had warrants exercised and borrowed short-term funds to meet on going liquidity
needs. Currently the Company has a material working capital shortfall.
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. In July, 1997 the Company entered into a letter of intent with a
placement agent provided for the sale of the Company's common stock and warrants in a private placement on a best efforts
basis to be completed by September 1997. The Company can make no assurance as to the outcome of the private placement
sale of its common stock.
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, the closing of certain
outlets in this system and settling disputes with franchisees.
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."
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It looks to me like the funds are supposedly for development of the Paradise Bakery concept. Sergio asked about positives I can give you two (2) positives from highly respected sources:
1) My wife spends at least $10.00 a week at the Paradise Bakery in downtown and everyone at the large Bank where she works does too. They offer an excellent range of salads, sandwiches, soups, flavored coffees, baked goods, etc. THIS CONCEPT IS WHERE THE COMPANY NEEDS TO FOCUS and according to the 10-Q the Paradise Bakery stores are profitable (and I can see why after talking to the wife more). If this is the use of funds then its good news.
2) Doug R saw a buy signal on Tuesday afternoon (post filing/news date I believe).
That's all I have for now and only started looking at this company Tuesday after I saw Doug's message.
Thanks all and have fun today making money.
BW |
