BCCI Baristas Coffee Company Inc (PK)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10

AMENDMENT NO. 2

 

GENERAL FORM FOR REGISTRATION OF SECURITIES

Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934

(Exact name of registrant as specified in its charter)

 

 

Registrant's telephone number, including area code: (800) 988-7735

 

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

Securities to be registered pursuant to Section 12(g) of the Act:

(Title of Class)

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

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TABLE OF CONTENTS

  

2

FORWARD-LOOKING STATEMENTS

 

This registration statement contains forward-looking statements as defined under the federal securities laws.  All statements other than statements of historical facts included in this registration statement regarding our financial performance, business strategy and plans and objectives of management for future operations and any other future events are forward-looking statements and based on our beliefs and assumptions.  Words such as "may," "will," "expect," "might," "believe," "anticipate," "intend," "could," "estimate," "project," "plan," and other similar words are one way to identify such forward-looking statements.  Actual results could vary materially from these forward-looking statements. Such statements reflect our current view with respect to future events and are subject to certain risks, uncertainties, and assumption, and assumptions including, without limitation, those risks and uncertainties contained in the Risk Factors section of this registration statement.  Although we believe that our expectations are reasonable, we can give no assurance that such expectations will prove to be correct.  Based upon changing conditions, any one or more of these events described herein as anticipated, believed, estimated, expected or intended may not occur.  Al prior and subsequent written and oral forward-looking statements attributable to our Company or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.  We do not intend to update any of the forward-looking statements after the date of this registration statements to conform these statements to actual results or to changes in our expectations, except as required by laws.

USE OF CERTAIN DEFINED TERMS

Unless the context requires otherwise, references to "the Company," "we," "us," "our," "Baristas" and "Baristas Coffee." refer specifically to Baristas Coffee Company, Inc.

In addition, unless the context otherwise requires and for the purposes of this report only:

 

 

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HISTORY

 

Baristas Coffee Company, Inc. ("BCCI") is a Nevada Corporation that was originally formed on October 18, 1996. Its fiscal year end date is December 31st. Neither the issuer nor any of its predecessors has ever been in bankruptcy, receivership or any other similar proceeding. We are in the development stage with limited operations.  Our independent public accounting firm has issued a going concern opinion.  This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next 12 months. 

 

The Company was originally formed as InfoSpi.com in 1996, and developed software programs, hired programmers and procured funding from a venture capital group prior to merging with Innovative Communications Technologies in 2001. In 2009, InfoSpi was looking for new opportunities, as its discount long distance business was decreasing and winding down.  Pangea was accumulating coffee shops, formulating a business model and procedures for the Baristas brand.   On December 22, 2009, InfoSpi acquired greater than a 60% interest in Pangea Networks, Inc. ("Pangea"), DBA Baristas and Inc., for cash, stock, and other consideration. The assets of Pangea, including numerous coffee stands in the greater Seattle area were transferred to the Company, and, thereafter, Pangea was administratively dissolved. In May of 2010, the Company changed its name to Baristas Coffee Company, Inc.    The transaction was structured as a partial stock purchase. After the acquisition, the assets and operations were transferred to InfoSpi, and the Company  was renamed to Baristas Coffee Company.  

 

The Company  is not in default on the terms of any indebtedness or financing arrangement requiring it to make payments, nor has it had a change of control.

 

In conjunction with the above discussed acquisition of Pangea, the acquisition of certain coffee shops and the conversion of debt to equity, the Company issued common stock shares that increased the number of shares outstanding by more than 10%.  Subsequent to year-end, the Company effected a 20:1 reverse split resulting in the number of shares outstanding at June 30, 2010 being more than 10% less than the number of shares outstanding at December 31, 2009.

 

There has been no delisting of the issuer's securities by any securities exchange or deletion from the OTC Markets , nor are there any current, past, pending or threatened legal proceedings or administrative actions either by or against the issuer that could have a material effect on the issuer's business, financial condition, or operations. There have been no current, past or pending trading suspensions by a securities regulator.  The Company's common stock currently trades on the OTC Markets under the symbol BCCI.

 

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Emerging Growth Company Status

 

We are an "emerging growth company", as defined in the Jumpstart Our Business Startups Act enacted on April 5, 2012 (the "JOBS Act"). For as long as we are an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding advisory "say-on-pay" and "say-when-on-pay" votes on executive compensation and shareholder advisory votes on golden parachute compensation.

 

Under the JOBS Act, we will remain an emerging growth company until the earliest of:

 

 

The JOBS Act also provides that an emerging growth company may utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. However, we are choosing to "opt out" of such extended transition period, and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for companies that are not emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

 

Current Business Operations

Baristas provides its customers the ability to drive up and order their choice of a custom-blended espresso drink, freshly brewed coffee or other beverages. Baristas believes it offers a high quality option to fast-food, gas station, or institutional coffee.

Baristas strives to offer its patrons the finest hot and cold beverages, specializing in specialty coffees, blended teas and other custom drinks. In addition, Baristas offers smoothies, fresh-baked pastries and other confections. Seasonally, Baristas will add beverages such as hot apple cider, hot chocolate, frozen coffees and more. Through the three-month period ended March 31, 2015, the Company generated $331,984 from the sale of their products.  Net losses for the period were $2,048,913. For the year ended December 31, 2014, the Company generated $1,297,957 from the sale of their products and franchise fees.  Net losses for the year were $3,858,403.

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The Company does not have the need for any government approval of principle product or services, except for the normal licenses to operate a business.

Future governmental regulations, such as tax on coffee, restrictions on attire, varying health requirements, among others, may affect profitability of the operations of the Company in the future.

Competition

Competition in the market for coffee and coffee related products is intense and we expect it to increase. Our most significant competitors include premium coffee companies such as Starbucks, Peet's Coffee, Keurig Green Mountain (formerly Green Mountain Coffee Roasters), Dunkin' Donuts, McDonalds, Farmer's Brothers, Dutch Brothers, and other national, local and regional companies in the grocery retail and office coffee service and hospitality industry market, many of which have substantially greater financial, sales, marketing and human resources than we do. In addition, there are numerous smaller companies and that offer similar products and which compete in the coffee business.  Baristas separates itself from the competition by offering a premium product and by featuring attractive female servers in fun costumes that provide for a unique coffee experience in the industry. The only risk with the business model is that zoning laws might change, and our female servers might be precvented from wearing fun costumes. 

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We believe that our customers choose among coffee brands based on the total value proposition that includes quality, variety, convenience, personal taste preference, price, service and social/sustainable consciousness. We believe that our market share in the category is driven by the quality of our product and the overall experience created by the Company and its servers, while being competitively priced in the premium category.

The environment in the greater Seattle area is very competitive and saturated.  Markets outside of the Pacific Northwest are less saturated and do not have the same level of competition.

Product Research and Development

The Company has not spent significant money in the last two fiscal years on research and development activities.

Patents, Trademarks and Licenses

On January 11, 2012, Baristas filed for a trademark of the Baristas Brand SER. No. 85-513,645.  On Sept 25, 2012 it was granted protection of the Baristas service mark for coffee shops: Restaurant and Cafe services, in class 43 (U.S. CLS. 100 and 101).  The United States Patent and Trademark Office Service Mark Reg. No. is 4,213,149.  The Baristas Brand has been in use in commerce since July 1, 2009.

Employees

The Issuer currently has approximately 41 employees (including employees of joint ventures) of which approximately 30 are full-time employees.

Available Information

 

We are subject to the information and reporting requirements of the Exchange Act, under which we file periodic reports, proxy and information statements and other information with the United States Securities and Exchange Commission, or SEC. Copies of the reports, proxy statements and other information may be examined without charge at the Public Reference Room of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549, or on the Internet at http://www.sec.gov. Copies of all or a portion of such materials can be obtained from the Public Reference Room of the SEC upon payment of prescribed fees. Please call the SEC at 1-800-SEC-0330 for further information about the Public Reference Room.

An investment in our common stock is highly speculative, and should only be made by persons who can afford to lose their entire investment in us. You should carefully consider the following risk factors and other information in this registration statement before deciding to become a holder of our common stock. If any of the following risks actually occur, our business and financial results could be negatively affected to a significant extent.

Shareholders may be diluted significantly through our efforts to obtain financing and satisfy obligations through the issuance of additional shares of our common stock.

 

Wherever possible, our Board of Directors will attempt to utilize revenues and profits in order to satisfy debts and other obligations.  Any non-cash based compensations will be reserved for executive performance incentives, debt reconciliations, acquisitions, or other such activities that the board determines in the best interest of the Company.  Our Board of Directors has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued shares of common stock. In addition, we may attempt to raise capital by selling shares of our common stock, possibly at a discount to market.  These actions will result in dilution of the ownership interests of existing shareholders, may further dilute common stock book value, and that dilution may be material.  Such issuances may also serve to enhance existing management's ability to maintain control of the Company because the shares may be issued to parties or entities committed to supporting existing management.

7

We rely upon key personnel and if they leave us, our business plan and results of operations could be adversely affected.

 

Although Baristas relies on key personnel, the Company has reached a point of duty diversification such that given the loss of one or a few key personnel, although potentially detrimental, would not likely materially affect the ongoing operations for an extended period of time.

Competition for coffee products and coffee brands is intense and could affect our future sales and profitability.

 

The coffee industry is highly fragmented.  Competition in coffee products and brands are increasingly intense as relatively low barriers to entry encourage new competitors to enter the marketplace.  In addition, we believe that maintaining and developing our brands is important to our success, and the importance of brand recognition may increase to the extent that competitors offer products similar to ours.  Many of our current and potential competitors have substantially greater financial, marketing and operating resources and access to capital than we do. Our primary competitors include Starbucks, Tully's, Seattle's Best, Peet's Coffee, Keurig Green Mountain (formerly Green Mountain Coffee Roasters), Farmer's Brothers and other companies in the office coffee service and hospitality industry market. If we do not succeed in effectively differentiating ourselves from our competitors in the coffee industry, including by developing and maintaining our brands, or our competitors adopt our strategies, then our competitive position may be weakened and our sales of coffee, and accordingly our future revenues may be materially adversely affected.

Our business is dependent on sales of coffee, and if demand for coffee decreases, our business would suffer.

 

All of our revenues are planned to be generated through the sale of coffee.  Demand for coffee is affected by many factors, including:

 

 

Because we are highly dependent on consumer demand for coffee, a shift in consumer preferences away from coffee would harm our business more than if we had more diversified product offerings.  If customer demand for our coffee decreases, our sales, if any, would decrease and we would be materially adversely affected.

 

If we fail to continue to develop and maintain our brand, our business could suffer.

 

We believe that maintaining and developing our brand is critical to our success and that the importance of brand recognition may increase as a result of competitors offering products similar to ours.  Our brand building initiative involves increasing the availability of our products on the Internet, in grocery stores, licensed locations and food service locations to increase awareness of our brand and create and maintain brand loyalty.  If our brand building initiative is unsuccessful, we may never recover the expenses incurred in connection with these efforts and we may be unable to increase our future revenue or continue to  implement our business strategy. As part of our brand building initiative, we may revise our packaging or make other changes from time to time. If these changes are not accepted by customers, our business could suffer.

 

Our success in promoting and enhancing our brand will also depend on our ability to provide customers with high quality products and customer service. Although we take measures to ensure that we sell only high-quality coffee, we have no control over our coffee products once purchased by customers.  Accordingly, customers may prepare coffee from our products in a manner inconsistent with our standards, store our coffee for long periods of time or resell our coffee without our consent, which in each case potentially affects the quality of the coffee prepared from our products.  If customers do not perceive our products to be of high quality, then our reputation and the value of our brand may be diminished and, consequently, our ability to implement our business strategy may be adversely affected.

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Coffee costs have been very volatile over the last several years and increases in the cost of high-quality coffee beans could impact the profitability of our business.

 

In the past several years, we have experienced a dramatic increase in the price volatility of Arabica coffee traded on the New York Board of Trade. While we do not purchase coffee on the commodity markets, price movements in the commodity trading of Arabica coffee beans impacts the prices we pay.  We expect the coffee commodity market to continue to be challenging as it continues to be influenced by worldwide supply and demand, the relative strength of the United States Dollar and speculative trading.  Coffee prices can also be affected by multiple factors in the producing countries, including weather, natural disasters, political and economic conditions, export quotas or similar factors.

Decreases in the availability of high-quality coffee beans could impact the profitability and growth of our business.

 

One of our main concerns for fiscal 2015 is a shortage in Jamaican Blue Mountain (JBM) beans and products.  Hurricane Sandy and coffee leaf rust has impacted the production output of JBM by about 40 percent for 2014.  Jamaica and the industry expect a slow recovery in 2015 and to be back in full production by 2016.  We are diligently working to secure more JBM as the market we created for it continues to expand.  Limited JBM supply hampered our growth in fiscal 2014.  If we are not able to purchase sufficient quantities of high-quality coffee beans, we may not be able to fulfill the demand for our coffee, our revenue may decrease and our ability to expand our business may be negatively impacted.

Besides coffee, we face exposure to other commodity cost fluctuations, which could impair our profitability.

In addition to the increase in coffee costs discussed above, we are exposed to cost fluctuation in other commodities, including milk, sugar, syrups, energy and fuel. For example, an increase in the cost of fuel could indirectly lead to higher electricity costs, transportation costs and other commodity costs. An increase in the cost of milk or other products, including sugar and other sweeteners, which coffee drinkers use to flavor and season their coffee, could also lead to a decrease in the demand for our products.  Much like coffee costs, the costs of these commodities depend on various factors beyond our control, including economic and political conditions, foreign currency fluctuations and global weather patterns. To the extent that we are unable to pass along such costs to our customers through price increases, our margins and profitability will decrease.

Our financial performance is highly dependent upon the sales of coffee; changes in the coffee environment and retail landscape could impact our financial results.

 

The coffee environment is rapidly evolving as a result, among other things, of changes in consumer preferences; shifting consumer tastes and needs; changes in consumer lifestyles; and competitive product and pricing pressures.  In addition, the beverage retail landscape is very dynamic and constantly evolving, not only in emerging and developing marketplaces, where modern trade is growing at a faster pace than traditional trade outlets, but also in developed marketplaces, where discounters and value stores, as well as the volume of transactions through e-commerce, are growing at a rapid pace.  If we are unable to successfully adapt to the rapidly changing environment and retail landscape, our share of sales, volume growth and overall financial results could be negatively affected.

Climate change may have a long-term adverse impact on our business and results of operations.

 

Decreased agricultural productivity in certain regions of the world as a result of changing weather patterns may limit availability or increase the cost of key agricultural commodities, such as coffee and tea, which are important sources of ingredients for our products, and could impact the food security of communities around the world.  Increased frequency or duration of extreme weather conditions could also impair production capabilities, disrupt our supply chain or impact demand for our products.  As a result, the effects of climate change could have a long-term adverse impact on our business and results of operations.

 

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We cannot predict the impact that the following may have on our business: (i) new or improved technologies, (ii) alternative methods of delivery, or (iii) changes in consumer behavior facilitated by these technologies and alternative methods of delivery.

Advances in technologies or alternative methods of delivery, including advances in vending machine technology and home coffee makers, or certain changes in consumer behavior driven by these or other technologies and methods of delivery could have a negative effect on our business.  Moreover, technology and consumer offerings continue to develop, and we expect that new or enhanced technologies and consumer offerings will be available in the future.  We may pursue certain of those technologies and consumer offerings if we believe they offer a sustainable customer proposition and can be successfully integrated into our business model.  However, we cannot predict consumer acceptance of these delivery channels or their impact on our business.  In addition, our competitors, many of whom have greater resources than us, may be able to benefit from changes in technologies or consumer acceptance of alternative methods of delivery, which could harm our competitive position.  There can be no assurance that we will be able to successfully respond to changing consumer preferences, including new technologies and alternative methods of delivery, or to effectively adjust our product mix, service offerings, and marketing and merchandising initiatives for products and services that address, and anticipate advances in technology and market trends.  If we are not able to successfully respond to these challenges, our business, financial condition, and operating results could be harmed.

Adverse public or medical opinion about caffeine may harm our business.

 

Our coffee contains significant amounts of caffeine and other active compounds, the health effects of some of which are not fully understood.  A number of research studies conclude or suggest that excessive consumption of caffeine may lead to increased heart rate, nausea and vomiting, restlessness and anxiety, depression, headaches, tremors, sleeplessness and other adverse health effects.  An unfavorable report on the health effects of caffeine or other compounds present in coffee could significantly reduce the demand for coffee, which could harm our business and reduce our sales and profits.  Also, we could become subject to litigation relating to the existence of such compounds in our coffee; any such litigation could be costly and could divert management attention.

 

Adverse publicity regarding product quality or food and beverage safety, whether or not accurate, may harm our business.

 

We may be the subject of complaints or litigation from customers alleging beverage and food-related illnesses or other quality, health or operational concerns.  Adverse publicity resulting from such allegations may materially adversely affect us, regardless of whether such allegations are true or whether we are ultimately held liable.  In addition, any litigation relating to such allegations could be costly and could divert management attention.

 

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We face a risk of a change in control due to the fact that our current officers and directors do not own a majority of our outstanding voting stock.

 

Our current officers and our directors do not hold voting control over the Company.  As a result, our shareholders who are not officers and directors may be able to obtain a sufficient number of votes to choose who serves on our Board of Directors, and/or to remove our current directors from the Board of Directors.  Because of this possibility, the current composition of our Board of Directors may change in the future, which could in turn have an effect on those individuals who currently serve in management positions with us.  If that were to happen, our new management could affect a change in our business focus and/or curtail or abandon our business operations, which, in turn could cause the value of our securities, if any, to decline or become worthless.

 

Failure to comply with applicable laws and regulations could harm our business and financial results.

Our policies and procedures are designed to comply with all applicable laws, accounting and reporting requirements, tax rules and other regulations and requirements, including those imposed by the SEC, as well as applicable trade, labor, healthcare, privacy, food, anti-bribery and corruption and merchandise laws.  In addition to potential damage to our reputation and brand, failure to comply with the various laws and regulations, as well as changes in laws and regulations or the manner in which they are interpreted or applied, may result in civil and criminal liability, damages, fines and penalties, increased cost of regulatory compliance and restatements of our financial statements.  Future laws or regulations (or the cost of complying with such laws, regulations or requirements) could also adversely affect our business and results of operations.

 

Adverse changes in global and domestic economic conditions or a worsening of the United States economy could materially adversely affect us.

Our sales and performance depend significantly on consumer confidence and discretionary spending, which are still under pressure from United States and global economic conditions.  A worsening of the economic downturn and decrease in consumer spending may adversely impact our sales, ability to market our products, build customer loyalty, or otherwise implement our business strategy and further diversify the geographical concentration of our operations.  For example, we are highly dependent on consumer demand for specialty coffee, and a shift in consumer demand away from specialty coffee due to economic or other consumer preferences would harm our business.

We believe that our future success will depend in part on our ability to obtain and maintain protection of our intellectual property and brand names.

Our brand is among our most valuable assets.  Maintaining the brand "Baristas" as it becomes a more generalized term may lead to a dilution of our brand as a generic term as opposed to solidifying "Baristas" as our brand.  If we are unsuccessful in deterring others from utilizing our name, and our likeness to promote their products, then we could suffer an adverse effect which could cause material harm to our Company and its value to shareholders.

 

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We may incur additional indebtedness which could reduce our financial flexibility, increase interest expense and adversely impact our operations.

 

In the future, we may incur significant amounts of additional indebtedness in order to make acquisitions or continue our business plan.  Our level of indebtedness could affect our operations in several ways, including the following:

 

 

 

 

 

 

A high level of indebtedness increases the risk that we may default on our debt obligations.  We may not be able to generate sufficient cash flows to pay the principal or interest on our debt, and future working capital, borrowings or equity financing may not be available to pay or refinance such debt.  If we do not have sufficient funds and are otherwise unable to arrange financing, we may have to sell significant assets or have a portion of our assets foreclosed upon which could have a material adverse effect on our business, financial condition and results of operations.

 

There is currently a volatile, sporadic and illiquid market for our common stock.

 

Our securities are currently quoted on the OTCQB under the symbol "BCCI." We, at times, have a volatile, sporadic and illiquid market for our common stock, which is subject to wide fluctuations in response to several factors, including, but not limited to:

 

Furthermore, our stock price may be impacted by factors that are unrelated or disproportionate to our operating performance.  These market fluctuations, as well as general economic, political and market conditions, such as recessions, interest rates or international currency fluctuations may adversely affect the market price and liquidity of our common stock.

 

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Investors may face significant restrictions on the resale of our common stock due to federal regulations of "penny stocks."

 

We are subject to the requirements of Rule 15(g)9, promulgated under the Exchange Act, as long as the price of our common stock is below $5.00 per share.  Under such rule, broker-dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser's consent prior to the transaction.  The Securities Enforcement Remedies and Penny Stock Reform Act of 1990, also requires additional disclosure in connection with any trades involving a stock defined as a penny stock.  Generally, the SEC defines a penny stock as any equity security not traded on an exchange or quoted on NASDAQ that has a market price of less than $5.00 per share.  The required penny stock disclosures include the delivery, prior to any transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it.  Such requirements could severely limit the market liquidity of the securities and the ability of purchasers to sell their securities in the secondary market.

Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders have limited protections against interested director transactions, conflicts of interest and similar matters.

The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and NYSE MKT Exchanges and the Nasdaq Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance.  These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than legally required, we have not yet adopted these measures.

 

Because our Directors are not independent directors, we do not currently have independent audit or compensation committees.  As a result, our Directors have the ability to, among other things, determine their own level of compensation.  Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters and any potential investors may be reluctant to provide us with funds necessary to expand our operations.

 

We intend to comply with all corporate governance measures relating to director independence as and when required.  However, we may find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of the Sarbanes-Oxley Act of 2002.  The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of Directors and executive officers.  The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles.

 

 

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Because we are a small company, the requirements of being a public company, including compliance with the reporting requirements of the Exchange Act and the requirements of the Sarbanes-Oxley Act and the Dodd-Frank Act, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.

 

As a public company with listed equity securities, we must comply with the federal securities laws, rules and regulations, including certain corporate governance provisions of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act and the Dodd-Frank Act, related rules and regulations of the SEC, with which a private company is not required to comply.  Complying with these laws, rules and regulations will occupy a significant amount of time of our sole director and management and will significantly increase our costs and expenses, which we cannot estimate accurately at this time.  Among other things, we must:

In addition, being a public company subject to these rules and regulations may require us to accept less director and officer liability insurance coverage than we desire or to incur substantial costs to obtain coverage.  These factors could also make it more difficult for us to attract and retain qualified members of our Board of Directors.

 

We estimate that we will incur approximately $60,000 per year in legal and accounting expenses as a direct result of becoming a publicly reporting company.  If we are unable to produce revenues from our business plan in sufficient amounts to pay these fees, in addition to our regular operating costs and execution of our business plan, we could cease to become a reporting company.  Additionally, these expenses could limit our ability to invest sufficient funds in the execution of our business plan and our business could fail.

Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion in conjunction with the audited financial statements and the corresponding notes, the unaudited financial statements and the corresponding notes included elsewhere in this information statement.  This Management's Discussion and Analysis of Financial Condition and the Results of Operations contains forward-looking statements.  The matters discussed in these forward-looking statements are subject to risk, uncertainties, and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements.  Please refer to "Risk Factors" for a discussion of the uncertainties, risks and assumptions associated with these statements.

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Overview

Baristas Coffee Company, Inc., is a Nevada corporation, originally formed on October 18, 1996, doing business as Baristas.  The Company was formerly known as Innovative Communications, Inc.  Baristas provides its customers the ability to drive up and order their choice of a custom-blended espresso drinks, freshly brewed coffee, or other beverages.  Our fiscal year end is December 31.

Results of Operations

 

		Three Months Ended
		March 31,
		2015				2014				$ Change				% Change
Direct costs		$	119,269			$	99,617			$	19,652				19.73
Compensation			147,591				129,259				18,332				14.18
Depreciation and amortization			44,110				40,471				3,639				8.99
General and administrative			114,116				42,797				71,319				166.64
Professional expenses			45,018				11,809				33,209				281.22
Stock-based compensation			119,350				10,000				109,350				1,093.50
Total Operating Expenses		$	589,454			$	333,953			$	255,501				76.51

		Three Months Ended
		March 31,
		2015				2014				$ Change				% Change
Beneficial conversion fee		$	121,500			$	-			$	121,500				100.00
Impairment loss on marketable securities			1,620,230				-				1,620,230				100.00
Interest expense			23,543				85,703				(62,160	)			(72.53	)
Gain on disposal			-				(32	)			32				(100.00	)
Loss on loan settlement			26,170				-				26,170				100.00
Total Other Expenses		$	1,791,443			$	85,671			$	1,705,772				1,991.07

		Years Ended December 31,
		2014				2013				$ Change				% Change
Compensation		$	616,614			$	627,656			$	(11,042	)			(1.76	)
Depreciation and amortization			175,401				132,990				42,411				31.89
Direct costs			433,604				369,939				63,665				17.21
General and administrative			710,680				880,728				(170,048	)			(19.31	)
Professional expenses			114,253				35,849				78,404				218.71
Stock-based compensation			2,485,275				633,687				1,851,588				292.19
Total Operating Expenses		$	4,535,827			$	2,680,849			$	1,854,978				69.19

		Years Ended
		December 31,
		2014				2013				$ Change				% Change
Beneficial conversion fee		$	411,030			$	568,569			$	(157,539	)			(27.71	)
Interest expense			33,015				115,740				(82,725	)			(71.47	)
Fair value adjustment on loan receivable			(137,500	)			-				(137,500	)			100.00
Loss on disposal			-				89,969				(89,969	)			(100.00	)
Loss on loan settlement			313,988				-				313,988				100.00
Total Other (Income) Expenses		$	620,533			$	774,278			$	(153,745	)			(19.86	)

 

 

The Company's liquidity may be affected by general decrease in revenues during the holiday months and by the need to allocate startup costs for potential expansion.

 

	Three Months Ended
	March 31,
	2015				2014
Net cash used in operating activities		$	(83,609	)		$	79,155
Net cash used in investing activities			(4,354	)			(166,430	)
Net cash provided by financing activities			110,000				90,933
Net increase in cash		$	22,037			$	3,658

Category		March 31, 2015				December 31, 2014				December 31, 2013
Cash		$	43,508			$	21,471			$	-
Current assets			158,967				138,112				30,737
Current liabilities			3,953,422				3,745,630				1,184,339
Working capital deficiency		$	(3,794,455	)		$	(3,607,518	)		$	(1,153,602	)
Change from the previous period			5.2	%			212.7	%			20.2	%

---

Funding Requirements: We expect to incur substantial expenses and generate ongoing operating losses for the foreseeable future as we prepare for the ongoing development and launch of our sports bar business, grow the existing base of our coffee store locations and support business and further expand this business into additional facilities and locations. If we are unable to raise an adequate amount of capital, however, we could be forced to curtail or cease operations. Our future capital uses and requirements depend on numerous forward-looking factors.

These factors include the following:

·

the time and expense needed to complete the successful launch of the sports bar business;

 

·

the expense associated with building a network of coffee shops to market the brand;

 

·

the degree and speed of developing our franchises with BMOC.

During 2014, we entered joint venture agreements to launch franchises in new states and as well to develop a sports bar. We have yet to achieve profitability as a result of the Company's non-operating expenses, and the issuance of shares of our common stock to third parties for various services rendered. As we grow, the use of our common stock as currency will decline when our cash availability grows.

 

In view of these matters, realization of certain of the assets in the accompanying balance sheet is dependent upon our continued operations, which in turn is dependent upon our ability to meet our financial requirements, raise additional financing, and the success of our future operations.

 

Additional funding may not be available to us on acceptable terms or at all. In addition, the terms of any financing may adversely affect the holdings or the rights of our stockholders. For example, if we raise additional funds by issuing equity securities or by selling debt securities, if convertible, further dilution to our existing stockholders would result. To the extent our capital resources are insufficient to meet our future capital requirements, we will need to finance our future cash needs through public or private equity offerings, collaboration agreements, debt financings or licensing arrangements.

 

If adequate funds are not available, we may be required to terminate, significantly modify or delay the development and launch of our businesses, reduce our planned commercialization efforts, or obtain funds through means that may require us to relinquish certain rights that we might otherwise seek to protect and retain. Further, we may elect to raise additional funds even before we need them if we believe the conditions for raising capital are favorable.

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

 

Recent Accounting Pronouncements

The Company has adopted all recently issued accounting pronouncements that management believes to be applicable to the Company. The adoption of these accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.

 

---

 

The company's corporate offices are located at 411 Washington Avenue N., Kent, Washington 98032.

The issuer's subsidiary, Pangea Networks, leases approximately 2,000 square feet at its corporate headquarters and training facility which allows it to store goods and services, train employees, build, maintain or convert its locations, and conduct general business activities.  In addition it leases and operates ten drive-through locations, which are approximately 300 square feet, each varying by location.  The Company does not own any real property.

The following table sets forth as of March 31, 2015 , the number and percentage of the outstanding shares of common stock which, according to the information supplied to the Company, were beneficially owned by (i) each person who is currently a director, (ii) each executive officer, (iii) all current directors and executive officers as a group, and (iv) each person who, to our knowledge, is the beneficial owner of more than 5% of the outstanding common stock.

 

Title of Class	Name and address of beneficial owner		Nature of Beneficial Ownership		Amount of beneficial ownership( 1, 2, 3, 4 )				Percent of class
Common Stock	Barry Henthorn 411 Washington Ave., Kent, WA  98032		Direct			70,754,217				18.85	%
Common Stock	T. Scot Steciw 411 Washington Ave., Kent, WA  98032		Direct			61,693,561				16.48	%
	All directors and executive officers as a group (2 persons)					132,240,778				35.33	%

 

23

Directors and officers

Our executive officers and directors of the Company are as follows:

The following are brief biographies of the officers and directors:

Barry Henthorn

 

Mr. Henthorn, CEO, CFO, and Director, has held these positions with Baristas since 2009.  Mr. Henthorn has a long history in founding start-up companies as well as providing business guidance and funding. An inventor and pioneer in the development and marketing of telecommunications technologies, Mr. Henthorn has been advising US corporations in a variety of industries since the early 1990's. While CEO of Emerald City Cellular, he developed the free cellular phone. While CEO of Innovative Communications Technologies, he was the architect of the VOPT voice protocol, which pioneered the elimination of charges for long distance calling, While CEO of ReelTime, he developed the ability to stream DVD quality video over the internet. Mr. Henthorn has been featured for his contributions in publications such as The New York Times, Washington CEO, The Seattle Times, The Wall Street Journal, Variety, and others. Mr. Henthorn previous experience with public companies and his background in managing business and providing business consultation advice makes him suitable to be a director.

Troy Scott Steciw

 

President and Director with Baristas Coffee Company since 2009, Mr. Steciw duties include refining Baristas operational processes, increasing revenues and generating profits. Mr. Steciw has been involved in virtually every aspect of the construction industry for nearly 20 years. Mr. Steciw has held executive management positions with ThyssenKrupp, a Fortune 100 Company, and served as Associate Partner with the Iinternational engineering firm Syska Hennessy Group for over ten years.   Mr. Steciw has also worked with a private investor group developing 40 townhomes in South Seattle.  Mr. Steciw has a Bachelor of Science Degree in Business Management from Boston University.  The Company believes Mr. Steciw's experience managing large projects and involvement in substantial business transactions make him suitable to be a director.

Family Relationships

There are no familial relationships among our officers and directors.

Involvement in Certain Legal Proceedings

During the past ten years, none of our officers, directors, promoters or control persons have been involved in any legal proceedings as descried in Item 404(f) of Regulation S-K.

Compliance with Section 16(a) of the Exchange Act

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of the our common stock and other equity securities, on Form 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the Securities and Exchange Commission regulations to furnish our company with copies of all Section 16(a) reports they file.

 

Based solely on our review of the copies of such reports received by us, and on written representations by our officers and directors regarding their compliance with the applicable reporting requirements under Section 16(a) of the Exchange Act, we believe that, with respect to the fiscal year ended December 31, 2014 , our officers and directors, Barry Henthorn and T. Scott Steciw, have not yet filed a Form 3 reporting their beneficial ownership of the Company's common stock.

24

Board Committee

 

The Company does not have a formal Audit Committee, Nominating Committee or Compensation Committee.  As the Company's business expands, however, it will reassess this process.

 

 

 

(1)

On March 1, 2015, Messrs. Henthorn and Steciw signed an employment agreement which provides for compensation of 5,000,000 shares of common stock each per year for the years 2009 through 2015 (totaling 30,000,000 shares each), and 5,000,000 shares each per year for the years 2016 through 2020 (totaling 30,000,000 shares each).  The shares have not been issued, and will not be issued until there are sufficient authorized shares to do so.

 

Other than disclosed above, no other board members received compensation in any form for their services as board members.

Shareholder loans

The Company has issued a number of notes with various maturities dates to shareholders, for advances.   These notes are convertible at the previous day's closing market price and accrue interest at 8% per annum.  The outstanding balances at March 31, 2015 and December 31, 2014 were $615,115 and $564,115, respectively . The Company plans to pay the loans back as cash flows become available.

Our Board of Directors has determined that it does not have a member that is "independent" as the term is used in Item 7(d) (3) (iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended.

From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business.  We are not currently involved in any legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations.  We may become involved in material legal proceedings in the future.

26

Market Information

The Company's common stock currently trades on the OTCPK under the symbol "BCCI."  The Company recently made a formal application to the NASDAQ Capital Markets, under the reserve symbol "BAPI".  This application has not yet been approved, and may be rejected.  Trading in our common stock has been very sporadic over the past several years.  The following table shows the high and low bid price for each of the last fiscal quarters for the two most recent fiscal years, as reported by otcmarkets.com .

Stock Options and Warrants

The company does not have any outstanding stock options or warrants.

Holders of Common Stock

As of June 30, 2015 , there were  297,349,374 shares issued and outstanding, held by approximately  69 shareholders of record.  The Company currently has 300,000,000 authorized shares of its common stock, par value $0.001.

Dividends

We have never declared or paid any cash dividends on our common stock, and we do not anticipate paying any dividends on our common stock in the foreseeable future.  We intend to retain all earnings, if any, for the foreseeable future for use in the operation of our business and to fund future growth of our business.

---

 

31

 

For the Three Months Ended March 31, 2015 :

No convertible preferred shares were issued during the three months ended March 31, 2015.

 

For the  Year Ended December 31, 2014 :

 

 

For the Year Ended December 31, 2013:

 

On October 25, 2013, the Company issued 5,913,258  shares of Series A Preferred Stock to our two officers and directors of the Company in settlement of debt of $88,700.  The above referenced securities were offered and sold in reliance on the exemption from registration afforded by Section 4(2) under the Securities Act.

 

---

 

 

The following is a list of notes, including names, amounts and terms of each note.  The principal cash paid amount is the original amount due on each respective note, as well as amount the Company received in consideration of the issuance of each note.

 

Name		Date of the Note		Maturity Date (If Applicable)		Principal Amount ($)		Interest Rate before Maturity (%)		Interest Rate after Maturity (If Applicable) (%)		Converision Price (and Discount to Market % if Applicable)
Barry Henthorn		April 26, 2013		April 26, 2014		7,085.38		0%		10%		$0.0150	and	50%	of market price on conversion
Barry Henthorn		May 31, 2013		May 31, 2014		5,000.00		0%		10%		$0.0250	and	50%	of market price on conversion
Barry Henthorn		June 3, 2013		June 3, 2014		5,000.00		0%		10%		$0.0250	and	50%	of market price on conversion
Barry Henthorn		June 13, 2013		June 13, 2014		5,000.00		0%		10%		$0.0250	and	50%	of market price on conversion
Barry Henthorn		June 25, 2013		June 25, 2014		4,000.00		0%		10%		$0.0250	and	50%	of market price on conversion
Barry Henthorn		June 28, 2013		June 28, 2014		5,000.00		0%		10%		$0.0250	and	50%	of market price on conversion
Barry Henthorn		October 9, 2013		October 9, 2014		6,000.00		0%		10%		$0.0250	and	50%	of market price on conversion
Barry Henthorn		October 21, 2013		October 21, 2014		3,850.00		0%		10%		$0.0150	and	50%	of market price on conversion
Barry Henthorn		November 18, 2013		November 18, 2014		2,000.00		0%		10%		$0.0250	and	50%	of market price on conversion
Barry Henthorn		August 5, 2014		August 5, 2015		10,000.00		5%		15%		$0.0300	and	50%	of market price on conversion
Barry Henthorn		December 6, 2014		December 6, 2015		10,000.00		5%		15%		$0.0250	and	50%	of market price on conversion
Barry Henthorn		February 4, 2015		February 4, 2016		10,000.00		5%		15%		$0.0150	and	50%	of market price on conversion
Barry Henthorn		February 19, 2015		February 4, 2016		10,000.00		5%		15%		$0.0200	and	50%	of market price on conversion
Barry Henthorn		February 23, 2015		February 23, 2016		4,000.00		5%		15%		$0.0150	and	50%	of market price on conversion
Barry Henthorn		March 9, 2015		March 8, 2016		5,000.00		5%		15%		$0.0200	and	50%	of market price on conversion
Barry Henthorn		March 23, 2015		March 22, 2016		2,500.00		5%		15%		$0.0200	and	50%	of market price on conversion
T. Scott Steciw		May 18, 2012		May 18, 2013		30,265.00		0%		10%		$0.0250	and	50%	of market price on conversion
T. Scott Steciw		December 31, 2012		December 31, 2013		6,647.50		0%		10%		$0.0250	and	50%	of market price on conversion
T. Scott Steciw		May 31, 2013		May 31, 2014		5,000.00		0%		10%		$0.0250	and	50%	of market price on conversion
T. Scott Steciw		May 31, 2013		May 31, 2014		5,000.00		0%		10%		$0.0250	and	50%	of market price on conversion
T. Scott Steciw		May 31, 2013		May 31, 2014		4,000.00		0%		10%		$0.0250	and	50%	of market price on conversion
T. Scott Steciw		June 11, 2013		June 11, 2014		4,000.00		0%		10%		$0.0250	and	50%	of market price on conversion

T. Scott Steciw		June 15, 2013		June 15, 2014		5,000.00		0%		10%		$0.0250	and	50%	of market price on conversion
T. Scott Steciw		June 16, 2013		June 16, 2014		5,000.00		0%		10%		$0.0250	and	50%	of market price on conversion
T. Scott Steciw		October 3, 2013		October 3, 2014		5,000.00		0%		10%		$0.0250	and	50%	of market price on conversion
T. Scott Steciw		October 9, 2013		October 9, 2014		6,000.00		0%		10%		$0.0250	and	50%	of market price on conversion
T. Scott Steciw		October 21, 2013		October 21, 2014		11,500.00		0%		10%		$0.0250	and	50%	of market price on conversion
T. Scott Steciw		November 18, 2013		November 18, 2014		2,000.00		0%		10%		$0.0250	and	50%	of market price on conversion
T. Scott Steciw		August 5, 2014		August 5, 2015		10,000.00		5%		15%		$0.0300	and	50%	of market price on conversion
T. Scott Steciw		December 11, 2014		December 11, 2015		9,750.00		5%		15%		$0.0200	and	50%	of market price on conversion
T. Scott Steciw		February 10, 2015		February 10, 2016		5,000.00		5%		15%		$0.0150	and	50%	of market price on conversion
T. Scott Steciw		February 23, 2015		February 23, 2016		4,000.00		5%		15%		$0.0150	and	50%	of market price on conversion
T. Scott Steciw		March 30, 2015		March 29, 2016		1,500.00		5%		15%		$0.0150	and	50%	of market price on conversion
Ron Henthorn		December 31, 2006				53,174.34						$0.0250	and	50%	of market price on conversion
Ron Henthorn		July 2, 2012				74,373.65		0%		10%		$0.0250	and	50%	of market price on conversion
Ron Henthorn		September 17, 2012				58,860.00		0%		10%		$0.0250	and	50%	of market price on conversion
Ron Henthorn		December 14, 2012				70,507.08		0%		10%		$0.0250	and	50%	of market price on conversion
Ron Henthorn		March 7, 2013		March 7, 2014		6,960.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		March 14, 2013		March 14, 2014		9,574.00		10%				$0.0250	and	50%	of market price on conversion

Ron Henthorn		April 10, 2013		April 10, 2014		3,410.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		April 15, 2013		April 15, 2014		5,500.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		April 23, 2013		April 23, 2014		5,000.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		May 9, 2013		May 9, 2014		6,000.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		May 23, 2013		May 23, 2014		3,262.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		June 5, 2013		June 5, 2014		31,000.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		June 12, 2013		June 12, 2014		3,000.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		June 25, 2013		June 25, 2014		4,000.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		June 25, 2013		June 25, 2014		7,781.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		July 19, 2013		July 19, 2014		4,377.56		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		August 16, 2013		August 16, 2014		10,024.86		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		August 21, 2013		August 21, 2014		5,000.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		September 27, 2013		September 27, 2014		8,000.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		October 1, 2013		October 1, 2014		2,500.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		October 7, 2013		October 7, 2014		4,073.95		0%		6%		$0.0250	and	50%	of market price on conversion
Ron Henthorn		October 9, 2013		October 9, 2014		6,200.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		November 8, 2013		November 8, 2014		3,740.00		0%		10%		$0.0250	and	50%	of market price on conversion
Ron Henthorn		November 15, 2013		November 15, 2014		7,000.00		25%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		December 11, 2013				7,000.00		0%		10%		$0.0250	and	50%	of market price on conversion
Ron Henthorn		December 11, 2013				3,000.00		0%		10%		$0.0250	and	50%	of market price on conversion
Ron Henthorn		December 31, 2013		December 31, 2014		2,500.00		5%		15%		$0.0250	and	50%	of market price on conversion
Ron Henthorn		January 6, 2014		January 6, 2015		1,500.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		January 8, 2014		January 8, 2015		2,807.52		5%		15%		$0.0300	and	50%	of market price on conversion
Ron Henthorn		January 13, 2014		January 13, 2015		2,000.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		January 17, 2014		January 17, 2015		5,000.00		5%		15%		$0.0300	and	50%	of market price on conversion
Ron Henthorn		February 5, 2014		February 5, 2015		5,000.00		5%		15%		$0.0300	and	50%	of market price on conversion
Ron Henthorn		February 20, 2014		February 20, 2015		4,000.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		March 5, 2014		March 5, 2015		10,000.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		March 6, 2014		March 6, 2015		7,500.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		March 11, 2014		March 11, 2015		7,000.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		March 14, 2014		March 14, 2015		15,000.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		April 7, 2014		April 7, 2015		7,000.00		5%		15%		$0.0100	and	50%	of market price on conversion
Ron Henthorn		April 11, 2014		April 11, 2015		8,500.00		5%		15%		$0.0100	and	50%	of market price on conversion
Ron Henthorn		April 14, 2014		April 14, 2015		3,500.00		5%		15%		$0.0100	and	50%	of market price on conversion
Ron Henthorn		April 24, 2014		April 24, 2015		30,000.00		5%		15%		$0.0100	and	50%	of market price on conversion
Ron Henthorn		August 1, 2014		August 1, 2015		35,000.00		5%		15%		$0.0300	and	50%	of market price on conversion
Ron Henthorn		August 18, 2014		August 18, 2015		15,000.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		December 10, 2014		December 10, 2015		3,200.00		10%				$0.0250	and	50%	of market price on conversion
Ron Henthorn		January 20, 2015		January 20, 2016		5,000.00		10%		10%		$0.0250	and	50%	of market price on conversion

Ron Henthorn		February 23, 2015		February 23, 2016		4,000.00		5%		15%		$0.0150	and	50%	of market price on conversion
Capital Consulting		April 2, 2013		April 2, 2014		25,000.00		5%		15%		$0.0200
Capital Consulting		April 24, 2013		April 24, 2014		25,000.00		5%		10%		$0.0200
Capital Consulting		May 14, 2013		May 14, 2014		25,000.00		5%		15%		$0.0275
Capital Consulting		June 8, 2013		June 8, 2014		25,000.00		5%		15%		$0.0250
Capital Consulting		July 5, 2013		July 5, 2014		20,000.00		5%		15%		$0.0200
Capital Consulting		August 4, 2013		August 4, 2014		10,000.00		5%		15%		$0.0105
Capital Consulting		October 25, 2013		October 25, 2014		8,000.00		5%		15%		$0.0150
Capital Consulting		December 16, 2013		December 16, 2014		5,000.00		5%		15%		$0.0100
Capital Consulting		December 30, 2013		December 30, 2014		5,000.00		5%		15%		$0.0100
Capital Consulting		February 14, 2014		February 14, 2015		5,000.00		5%		15%		$0.0100
Capital Consulting		March 7, 2014		March 7, 2015		5,000.00		5%		15%		$0.0135
Capital Consulting		April 4, 2014		April 4, 2015		5,000.00		5%		15%		$0.0300
Capital Consulting		May 5, 2014		May 5, 2015		30,000.00		5%		15%		$0.0500
Capital Consulting		May 15, 2014		May 15, 2015		20,000.00		5%		15%		$0.0500
Capital Consulting		June 5, 2014		June 5, 2015		25,000.00		5%		15%		$0.0500
Capital Consulting		July 1, 2014		July 1, 2015		25,000.00		5%		15%		$0.0450
Capital Consulting		July 16, 2014		July 16, 2015		30,000.00		5%		15%		$0.0350
Capital Consulting		August 12, 2014		August 12, 2015		20,000.00		5%		15%		$0.0250
Capital Consulting		August 28, 2014		August 28, 2015		15,000.00		5%		15%		$0.0250
Capital Consulting		September 19, 2014		September 19, 2015		17,500.00		5%		15%		$0.0250
Capital Consulting		October 7, 2014		October 7, 2015		10,000.00		5%		15%		$0.0250
Capital Consulting		November 3, 2014		November 3, 2015		5,000.00		5%		15%		$0.0200
Capital Consulting		December 3, 2014		December 3, 2015		10,000.00		5%		15%		$0.0135
Capital Consulting		January 15, 2015		October 15, 2015		20,000.00		5%		15%		$0.0150
Capital Consulting		February 12, 2015		November 12, 2015		10,000.00		5%		15%		$0.0180
Capital Consulting		March 4, 2015		December 4, 2015		10,000.00		5%		15%		$0.0250
Capital Consulting		March 27, 2015		December 27, 2015		13,000.00		5%		15%		$0.0200
Prime Vector		November 19, 2014		November 19, 2015		10,000.00		10%		10%		$0.0250	and	50%	of market price on conversion
Prime Vector		March 19, 2015		March 18, 2016		5,000.00		5%		15%		$0.0200	and	50%	of market price on conversion
Prime Vector		March 23, 2015		March 22, 2016		2,500.00		5%		15%		$0.0200	and	50%	of market price on conversion

 

 

 

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The Company is authorized to issue up to 300,000,000 shares of common stock.  As of March 31, 2015 , there are 299,683,313 shares of common stock issued and outstanding. The holders of the Company's common stock have equal ratable rights to dividends from funds legally available therefore, when, as and if declared by the Board of Directors and are entitled to share ratably in all of the Company's assets available for distribution to holders of common stock upon the liquidation, dissolution or winding up of the Company's affairs. Holders of shares of common stock do not have preemptive, subscription or conversion rights.

 

Holders of shares of common stock are entitled to one vote per share on all matters which shareholders are entitled to vote upon at all meetings of shareholders. The holders of shares of common stock do not have cumulative voting rights, so that the holders of more than 50% of our outstanding voting securities can elect all of the Company's directors.

 

The payment of dividends, if any, in the future rests within the discretion of our Board of Directors and will depend, among other things, upon our earnings, capital requirements and financial condition, as well as other relevant factors. We have not paid any dividends since our inception and do not intend to pay any cash dividends in the foreseeable future, but intend to retain all earnings, if any, for use in our business.

 

 

 

None.

 

 

 

36

In regards to indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors or officers pursuant to the foregoing provisions, we are informed that, in the opinion of the Commission, such indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.

The financial statements of the Company appear at the end of this report beginning with the Index to Financial Statements on page F-1.

None.

37

The information required by this item is contained under the section "Financial Statements" immediately following the signature page of this Registration Statement and is incorporated herein.

The following documents are filed as exhibits hereto:

 

Exhibit No.	Description	Incorporated by Reference to
3.1	Articles of Incorporation filed October 18, 1996	Exhibit 3.1 to Form 10 filed on July 22, 2014
3.2	Certificate of Amendment filed March19, 1999	Exhibit 3.2 to Form 10 filed on July 22, 2014
3.3	Certificate of Amendment filed November 30, 1999	Exhibit 3.3 to Form 10 filed on July 22, 2014
3.4	Certificate of Amendment filed March 16, 2000	Exhibit 3.4 to Form 10 filed on July 22, 2014
3.5	Certificate of Amendment filed July 12, 2000	Exhibit 3.5 to Form 10 filed on July 22, 2014
3.6	Articles and Plan of Merger filed January 12, 2001	Exhibit 3.6 to Form 10 filed on July 22, 2014
3.7	Amended and Restated Articles filed February 8, 2010	Exhibit 3.7 to Form 10 filed on July 22, 2014
3.8	Certificate of  Amendment filed May 12, 2010	Exhibit 3.8 to Form 10 filed on July 22, 2014
3.9	Certificate of Designation, Number, Voting Powers, Preferences and Rights of Series A Preferred Stock, filed December 13, 2011	Exhibit 3.9 to Form 10 filed on July 22, 2014
3.10	By-Laws	Exhibit 3.10 to Form 10 filed on July 22, 2014
10.1	Binding Letter of Agreement by and between Baristas Coffee Company, Inc. and BMOC USA Partners LLP	Exhibit 10.1 to Form 10 filed on July 22, 2014
10.2	Shareholder Loan Agreement Example	Exhibit 10.2 to Form 10/A filed on November 13, 2014
10.3*	Promissory Notes with our Company and various investors
21.1	Subsidiary of the Company	Exhibit 21.1 to Form 10 filed on July 22, 2014

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		BARISTAS COFFEE COMPANY, INC.
		(Registrant)
Date:  July 24, 2015		/s/ Barry Henthorn
		Barry Henthorn, CEO

 

 

 

 

 

 

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F - 1

INDEX TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited interim consolidated financial statements of Baristas Coffee Company Inc. and related notes thereto is filed as part of this Form 10:

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F - 3

 

F - 4

		Three Months Ended March 31,
		2015				2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(2,033,243	)		$	(77,078	)
Adjustment to reconcile net income to net cash provided by operations:
Beneficial Conversion Fee			121,500				-
Depreciation and amortization			44,110				40,471
Impairment loss on marketable securities			1,620,230				-
Loss on loan settlement			26,170				-
Minority interest in net loss of consolidated entities			(15,670	)			(23,808	)
Stock-based and non-cash compensation			119,350				10,000
Changes in operating assets and liabilities:
Accounts receivable			-				(2,141	)
Prepaid			1,182				-
Accounts payable and accrued liabilities			32,762				129,394
Gift card payable			-				2,317
Net cash used in operating activities			(83,609	)			79,155
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment			(4,354	)			(158,953	)
Purchase of intangible assets			-				(7,477	)
Net cash used in investing activities			(4,354	)			(166,430	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes payable			60,500				-
Repayment on notes payable			(1,500	)			(4,000	)
Proceeds from issuance of shareholder loans			51,000				-
Repayment on shareholder loans			-				(20,067	)
Proceeds from minority interest			-				115,000
Net cash provided by financing activities			110,000				90,933
Net increase in cash and cash equivalents			22,037				3,658
Cash and cash equivalents - beginning of period			21,471				-
Cash and cash equivalents - end of period		$	43,508			$	3,658
Supplemental Cash Flow:
Cash paid for interest		$	-			$	-
Cash paid for income taxes		$	-			$	-
Noncash investing and financing activities:
Stocks issued for interest		$	921			$	-
Notes payable settled by stocks		$	15,000			$	-