UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A #2
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2001
-------------
Or
[ ] TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission File Number: 000-32745
Blue Star Coffee, Inc.
----------------------
(Exact name of registrant as specified in its charter)
Nevada 88-0471353
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
500 N. Rainbow, Suite 300, Las Vegas, NV 89107
- ---------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(503) 297-2833
--------------
(Registrant's telephone number, including area code)
N/A
---
(Former name, former address and former fiscal year, if changed
since last report)
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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
3,587,787
- -1-
BLUE STAR COFFEE, INC.
(A Development Stage Company)
Table of Contents
----------------- Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Independent Accountant's Review Report 5
Balance Sheet as of June 30, 2001 6
Statement of Operations and Accumulated Deficit 7
for the Period April 1, 2001 to June 30, 2001
Statement of Changes in Stockholders' Equity 8
from Inception to June 30, 2001
Statement of Cash Flows for the Period 9
April 1, 2000 to June 30, 2001
Notes to Financial Statements 10
Item 2. Management's Discussion and Plan of Operation 13
PART II - OTHER INFORMATION
Item 6. Exhibits
SIGNATURES
- -2-
BLUE STAR COFFEE, INC.
----------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
FINANCIAL STATEMENTS
--------------------
JUNE 30, 2001
-------------
(UNAUDITED)
-----------
- -3-
CONTENTS
--------
INDEPENDENT ACCOUNTANT'S REVIEW REPORT
FINANCIAL STATEMENTS:
Balance Sheet
Statement of Operations and Accumulated Deficit
Statement of Operations and Accumulated Deficit
Statement of Cash Flows
NOTES TO FINANCIAL STATEMENTS
- -4-
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
To the Board of Directors of
Blue Star Coffee, Inc.:
We have reviewed the accompanying balance sheet of Blue Star
Coffee, Inc. as of June 30, 2001, and the related statements of
income, changes in stockholders' equity, and cash flows for the
periods from April 1, 2001 to June 30, 2001 and inception to June
30, 2001, in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute
of Certified Public Accountants. All information included in
these financial statements is the representation of the
management of Blue Star Coffee, Inc.
A review consists principally of inquiries of Company personnel
and analytical procedures applied to financial data. It is
substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying financial
statements in order for them to be in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As disclosed in
Note 5 to these financial statements, the Company has had limited
operations and has not established a long-term source of revenue.
This raises substantial doubt about its ability to continue as a
going concern. Management's plan in regards to this issue is
also described in Note 5. The financial statements do not
include any adjustments that might result from the outcome of
this uncertainty.
/s/Chavez & Koch, CPA's, Ltd.
August 10, 2001
Henderson, Nevada
- -5-
PART I - FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements
BLUE STAR COFFEE, INC.
----------------------
(A Development Stage company)
-----------------------------
BALANCE SHEET
-------------
AS OF JUNE 30, 2001
-------------------
(UNAUDITED)
-----------
06/30/2001
----------
ASSETS
------
CURRENT ASSETS:
Cash $ 15,188
Stockholder receivable 15,000
Prepaid Rent 6,750
----------
Total Current Assets 36,938
----------
TOTAL ASSETS $ 36,938
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock; 20,000,000 authorized;
3,587,787 issued and outstanding
as of June 30, 2001; Par value $.001 3,588
Preferred stock; 5,000,000 authorized;
None issued and outstanding; Par value $.001 -
Additional paid in capital 224,231
Retained earnings (Accumulated Deficit) (144,631)
Subscribed Stocks (46,250)
----------
Total stockholders' equity 36,938
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 36,938
===========
The accompanying independent accountants' report and the notes to financial
statements should be read in conjunction with this Balance Sheet.
- -6-
BLUE STAR COFFEE, INC.
----------------------
(A Development Stage company)
-----------------------------
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
-----------------------------------------------
FOR THE PERIOD APRIL 1, 2001 TO JUNE 30, 2001
---------------------------------------------
(UNAUDITED)
-----------
04/01/2001 Inception
to to
06/30/2001 6/30/01
------------ ------------
REVENUES $ - $ -
COST OF REVENUES - $ -
------------ ------------
Gross Profit - -
------------ ------------
EXPENSES:
General and administrative 87,190 144,631
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Total expenses 87,190 144,631
------------ ------------
Loss before taxes (87,190) (144,631)
Income tax expense - -
------------ ------------
NET LOSS (87,190) (144,631)
ACCUMULATED DEFICIT, beginning of period (57,441) -
------------ ------------
ACCUMULATED DEFICIT, end of period $ (144,631) $ (144,631)
============ ============
Weighted average number of shares outstanding
from April 1, 2001 through June 30,2001 and
from inception through June 30, 2001 $ 3,587,787 2,947,692
Net loss per share $ (0.04) $ (0.05)
The accompanying independent accountants'report and the notes to financial
statements should be read in conjunction with this Statement of Operations
and Accumulated Deficit.
- -7-
BLUE STAR COFFEE, INC.
----------------------
(A Development Stage Company)
-----------------------------
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
--------------------------------------------
FROM INCEPTION TO JUNE 30, 2001
-------------------------------
(UNAUDITED)
-----------
Add'l Paid Total
Common Stock In Capital/ Income/(Loss) Stock-
----------------- Donated Subscribed Accumulated holders'
Shares Value Capital Stock Dev Stage Equity
--------- ------ -------- --------- ---------- --------
Issued for cash
- ---------------
July 29, 2000 2,167,000 $2,167 $27,933 $ - $ - $30,100
Issued for prepaid expenses
- --------------------------
July 29, 2000 150,000 150 22,350 (22,500) -
Issued for note receivable
- --------------------------
September 21, 2000 100,000 100 9,900 (10,000) - -
Issued for prepaid expenses
- ---------------------------
September 21, 2000 400,000 400 49,200 (49,600) - -
Net Loss
- --------
September 30, 2000 - - - - (109) (109)
--------- ------ -------- --------- ---------- --------
Total
- -----
September 30, 2000 2,817,000 2,817 109,383 (82,100) (109) 29,991
Issued for cash
- ---------------
March 30, 2001 770,787 771 114,848 - - 115,619
Subscribed stock
- ----------------
March 31, 2001 - - - 35,850 - 35,850
Net Loss
- --------
March 31, 2001 - - - - (57,332) (57,332)
--------- ------ -------- --------- ---------- --------
Total
- -----
March 31, 2001 3,587,787 3,588 224,231 (46,250) (57,441) 124,128
Net Loss
- --------
June 30, 2001 - - - - (87,190) (87,190)
--------- ------ -------- --------- ---------- --------
Total
- -----
June 30, 2001 3,587,787 $3,588 $224,231 $(46,250) $(144,631) $36,938
========= ====== ======== ========= ========== ========
The accompanying independent accountants' report and the notes to financial
statements should be read in conjunction with this Statement of Changes in
Stockholders' Equity.
- -8-
BLUE STAR COFFEE, INC.
----------------------
(A Development Stage Comapany)
------------------------------
STATEMENT OF CASH FLOWS
-----------------------
FOR THE PERIOD APRIL 1, 2001 TO JUNE 30, 2001
---------------------------------------------
(UNAUDITED)
-----------
4/1/2001 Inception
to to
6/30/2001 6/30/2001
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(87,190) $(144,631)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Stock issued for services - 35,850
Increase in prepaid expenses (6,750) (6,750)
---------- ----------
Net Cash used in Operating Activities (93,940) (115,531)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in shareholder loans (10,000) (15,000)
---------- ----------
Net Cash used in Investing Activities (10,000) (15,000)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of capital stock - 2,938
Increase in additional paid in capital - 142,781
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Net Cash provided by Financing Activities - 145,719
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NET INCREASE IN CASH (103,940) 15,188
CASH, BEGINNING OF PERIOD 119,128 -
---------- ----------
CASH, END OF PERIOD $ 15,188 $15,188
========== ==========
SUPPLEMENTAL INFORMATION:
Interest paid $ - $ -
========== ==========
Taxes paid $ - $ -
========== ==========
The accompanying independents accountants' report and the notes to financial
statements should be read in conjunction with this Statement of Cash Flows.
- -9-
BLUE STAR COFFEE, INC.
----------------------
(A Development Stage Company)
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
JUNE 30, 2001
-------------
NOTE 1 - STOCKHOLDER RECEIVABLE
The company made a payment of $5,000, on behalf of one of its
stockholders, against a liability of the stockholder. The amount
has been determined to be payable within 12 months, therefore no
interest has been imputed.
The company made a payment of $10,000 which is funds loaned to
the stockholder for a family emergency. It is expected to be
repaid by August 17, 2001, therefore no interest is accrued.
NOTE 2 - STOCKHOLDERS' EQUITY
Stock Issuances
---------------
A chronological history of Stockholders' Equity is as follows:
July 28, 2000 - The Company incorporated in Nevada. The Company
is authorized to issue 20,000,000 shares of its $0.001 par value
common stock and 5,000,000 shares of its $0.001 par value
preferred stock.
July 29, 2000 - The Company issued 2,167,000 shares to the three
company founders as follows:
The Company issued to Ronald Davis 1,083,500 shares of
$0.001 par value common stock in exchange for cash in the
amount of $29,016. Of the total amount received, $1,084 is
considered common stock and $27,933 is considered additional
paid-in capital.
The Company issued to Ronald Brigham 541,750 shares of
$0.001 par value common stock in exchange for cash in the
amount of $542 of which $542 is considered common stock and
there is no additional-paid-in-capital.
The Company issued to Christopher Secreto 541,750 shares of
$0.001 par value common stock in exchange for cash in the
amount of $542 of which $542 is considered common stock and
there is no additional-paid-in-capital.
All of these shares were issued in accordance with Section 4(2)
of the Securities Act of 1933.
July 29, 2000 - The Company issued 150,000 shares of $0.001 par
value common stock to GoPublicToday, Inc. in exchange for
services (prepaid expenses) rendered in the amount of $22,500.
Of the total received, $150 is considered common stock and
$22,350 is considered
additional paid-in capital. Shares issued in accordance with
Section 4(2) of the Securities Act of 1933.
- -10-
BLUE STAR COFFEE, INC.
----------------------
(A Development Stage Company)
-----------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
JUNE 30, 2001
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NOTE 2 - STOCKHOLDERS' EQUITY (CONTINUED)
September 21, 2000 - The Company issued 100,000 shares of $0.001
par value common stock to GoPublicToday, Inc. in exchange for a
non-interest baring balloon note totaling $10,000, which was due
and payable on March 21, 2001. Of the total received, $100 is
considered common stock and $9,900 is considered additional paid-
in capital. The note was extended until September 21, 2001.
Shares were issued in accordance with Section 4(2) of the
Securities Act of 1933.
September 21, 2000 - The Company issued 400,000 shares of $0.001
par value common stock to Arrowhead Capital Management in
exchange for rights to services in the amount of $49,600. Of the
total received, $400 is considered common stock and $49,200 is
considered additional paid-in capital. Shares were issued in
accordance with Section 4(2) of the Securities Act of 1933.
January 3, 2001 -- The State of Nevada issued a permit to the
Company to sell securities pursuant to the Company's application
for registration by qualification of an offering of Common Stock
in the state.
March 30, 2001 - The Company closed its offering pursuant to
Regulation D, Rule 504 of the 1933 Securities and Exchange Act,
as amended, whereby it sold a total of 770,787 shares of its
$0.001 par value common stock at $0.15 per share to outside
investors. Of the total number of shares, 770,787 shares were
issued in exchange for cash in the amount of $115,619, net of
offering costs in the amount of $12,898 of which $11,492 was
commission and $1,406 was for related expenses. Of the total
cash received, $116 is considered common stock and $115,503 is
considered additional paid-in capital. There have been no other
issuances of common stock or preferred stock. The Company sold
all 770,787 shares of its common stock to approximately 84
unaffiliated shareholders, none of whom were/are officers.
March 31, 2001 - The Company had 3,587,787 shares of Common
issued and outstanding, held by 89 shareholders of record.
Stock Subscriptions
-------------------
On September 21, 2000, the Company issued 100,000 shares in
exchange for a note receivable of $10,000. The amount has been
determined to be payable within 12 months, therefore no interest
has been imputed.
Certain stock-for-future services transactions have occurred
during the period from inception to March 31, 2001. These future
services consist of consulting fees to help the Company develop a
business plan and establish its organization and infrastructure.
On September 21, 2000, a stockholder contributed $49,600 of
rights to the future services in exchange for stock. Another
stockholder has promised to provide future services valued at
$22,500 in exchange for 150,000 shares of stock. All of the
shares related to the prepaid expenses have been issued to the
stockholders as of September 30, 2000.
- -11-
BLUE STAR COFFEE, INC.
----------------------
(A Development Stage Company)
-----------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
JUNE 30, 2001
-------------
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company paid one of its shareholders, Arrow Capital
Management $27,500 in full for services related to the following
activities; site search, marketing research and management fees.
The Company also paid Arrow Capital Management an additional
$18,500 for services relating to marketing research, including
demographic research.
The Company paid a related party, Newport Advisors $15,000 in
full for servies related to consulting.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
The company has entered into a 6 month lease commencing on April
1, 2001 and ending on September 30, 2001. These lease payments
total $13,500 for April 1, 2001 through September 30, 2001 which
were paid in advance in April 2001.
NOTE 5 - GOING CONCERN
The Company's financial statements are prepared using the
generally accepted accounting principles applicable to a going
concern, which assumes the realization of assets and liquidation
of liabilities in the normal course of business. However, the
Company has no current source of revenue. Without realization of
additional capital, it would be unlikely for the Company to
continue as a going concern. It is management's plan to seek
additional capital through a 506 State Registered Offering.
Management has also taken measures to reduce expenses
significantly.
- -12-
Item 2. Management's Discussion and Plan of Operation
Forward-Looking Statements
This Quarterly Report contains forward-looking statements
about the Company's business, financial condition and prospects
that reflect management's assumptions and beliefs based on
information currently available. The Company can give no assurance
that the expectations indicated by such forward-looking statements
will be realized. If any of management's assumptions should prove
incorrect, or if any of the risks and uncertainties underlying such
expectations should materialize, Blue Star Coffee's actual results
may differ materially from those indicated by the forward-looking
statements.
The key factors that are not within the Company's control and
that may have a direct bearing on operating results include, but
are not limited to, acceptance of the Company's services, its
ability to expand its customer base, managements' ability to raise
capital in the future, the retention of key employees and changes
in the regulation of the Company's industry.
There may be other risks and circumstances that management may
be unable to predict. When used in this Quarterly Report, words
such as, "believes," "expects," "intends," "plans,"
"anticipates," "estimates" and similar expressions are intended to
identify forward-looking statements, although there may be certain
forward-looking statements not accompanied by such expressions.
General
Blue Star Coffee, Inc. is a developmental stage company that
seeks to build a chain of drive-through only specialty coffee
kiosks designed to serve the specialty coffee consumer in the
comfort of his or her automobile. Blue Star Coffee has no
intention of opening cafe style shops, where customers would be
able to sit and linger at the location. The facilities from which
coffee will be sold will be freestanding structures designed to
accommodate two automobiles simultaneously, through a service
window on each side of the establishment. The Company's main focus
will be on developing company-owned and franchised retail drive-
through locations selling brewed coffee, espresso-based beverages
(such as cappuccinos, lattes, mochas and espressos), Italian sodas
and various blended drinks.
Management of the Company have prior experience with other
companies that have each operated stand-alone, drive-though only
coffee shops, in addition to operating sit-down, cafe-style shops,
as well as combination sit-down and drive-through stores. During
his tenure with Coffee People, Inc. in Oregon, Mr. Ronald Brigham,
COO of Blue Star Coffee, noted that of the 25 stores Coffee People
operated in the Portland area, two stores offered customers the
option of drive-through service and cafe-style accommodations and
seven stores were drive-through only. Mr. Brigham further
estimated that the drive-through locations each performed similarly
to the locations offering either sit-down only service or a
combination or sit down and drive-through services. He estimates
that the two combination inside-seating and drive-through stores
generated approximately 50% of revenues from drive-through
operations.
Drive-through coffee sales are in the infant stage, similar to
the experience of fast food restaurants' experimentation with drive-
through service in the 1960s. However, there are a negligible
number of existing drive-though only coffee shops to provide
sufficient data to demonstrate the performance of such stores'
operations. The Company has yet to generate revenues and faces
competition from all specialty coffee establishments. Many of the
Company's potential competitors have significantly greater
financial, technical and marketing resources than the Company does.
Competition may limit the Company's ability to generate sufficient
sales to meet its financial obligations and continue operations.
Results of Operations and Liquidity and Capital Resources
The Company has not generated any revenues since its inception
on July 28, 2000. For the quarter ended June 30, 2001, expenses
totaled $87,190, resulting in a net loss of $87,190. Management
anticipates that the Company will continue to incur net losses for
the next at least nine to 15 months.
- -13-
To date, Blue Star Coffee so far has accomplished the
following startup and development activities:
1. Completed an offering of equity securities;
2. Communicated with landowners to identify potential store
locations in Utah, Arizona or Nevada;
3. Developed and implementing the corporate accounting control
systems;
4. Interviewed potential specialty coffee roasters;
5. Established the corporate office;
6. Evaluated potential management personnel for the Company's
first drive-through location;
7. Evaluated potential building designers and building
manufacturing companies;
8. Discussed the Company's corporate marketing image with graphic
design artists;
9. Evaluated coffees from various parts of the world; and
10. Sought supplier relationships.
To fund the build-out and initial marketing of it first drive-
through location, the Company anticipates that it will need to
raise additional working capital through a private or public
offering of equity or debt securities. As at June
30, 2001, the Company has not recognized revenue to date and have
accumulated a deficit of approximately $144,631 since inception.
Blue Star Coffee's ability to continue as a going concern is
contingent upon attaining additional financing, for which there are
no formal or informal arrangements. While management of the
Company are expending their best efforts to achieve the above
plans, there is no assurance that any such activity will generate
funds that will be available for operations.
Continuing Operations
Blue Star Coffee intends to have its first drive-through kiosk
operational by the end of the first quarter of 2002. The Company
has provided the following estimated timeline and probable cost for
the planned store:
Action Estimated Time Frame Estimated Cost
------ -------------------- --------------
Sign lease for land By October 31, 2001
Obtain initial permits By November 30, 2001 $1,500
Permit process 11/1/01 - 2/28/02 $3,500
Site development 12/1/01 - 2/28/02 $31,500
Building construction 1/15/02 - 2/15/02 $48,000
Building delivery 2/28/02 Included
Utility hookups 3/1/02 - 3/15/02 $5,000
Equipment installation 3/15/02 - 3/22/02 $43,000
Employee hiring and training 3/22/02 - 3/30/02 $2,500
Initial marketing and advertising 3/1/02 - 6/30/02 $15,000
Opening date 3/31/02
The Company cannot guarantee that it will be able to meet its
timeline and remain within its estimated costs. If additional
funding is not obtained, the Company will be unable to pursue its
goal of having its first store fully operational by the start of
the second quarter of 2002. If such financing is realized, the
Company must execute its plan of operation on a timely basis, as
well as assure that its suppliers and contractors meet the same
goals, otherwise the Company's expected opening date will be
delayed or its expected costs may be elevated.
- -14-
PART II - OTHER INFORMATION
Item 6. Exhibits
Exhibit Name and/or Identification of Exhibit
Number
3 Articles of Incorporation & By-Laws
(a) Articles of Incorporation of the Company filed
July 28, 2000. Incorporated by reference to the
exhibits to the Company's General Form For
Registration Of Securities Of Small Business Issuers
on Form 10-SB, previously filed with the Commission.
(b) By-Laws of the Company adopted August 2, 2000.
Incorporated by reference to the exhibits to the
Company's General Form For Registration Of
Securities Of Small Business Issuers on Form 10-SB,
previously filed with the Commission.
23 Consent of Experts and Counsel
-15-
Consents of independent public accountants
SIGNATURES
Pursuant to the requirements of the Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Blue Star Coffee, Inc.
- -------------------------------------------------------------------
(Registrant)
Date: August 13, 2001
By: /s/Ronald A. Davis
Ronald A. Davis, President
- -16-