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JV GROUP, INC. - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(Edgar Glimpses Via Acquire Media NewsEdge) The following discussion should be read in conjunction with our unaudited financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf. We disclaim any obligation to update forward-looking statements. The independent registered public accounting firm's report on the Company's consolidated financial statements as of June 30, 2013, and for each of the years in the two-year period then ended, includes a "going concern" explanatory paragraph, that describes substantial doubt about the Company's ability to continue as a going concern. PLAN OF OPERATIONS JV Group's strategy is to be a service office provider in the Far East through its wholly-owned subsidiary, Prestige Prime Office Ltd. in Hong Kong. The office space provided is fully furnished, equipped and staffed, located at premier addresses in central business districts with convenient access to airports or public transportation. Services include advanced communication system, network access, updated IT, and world-class administrative support, as well as a full menu of business services and facilities, such as meeting rooms and video conferencing. Prestige intends to provide services that will support the growing trend of mobile and at home working. Supporting workers at home and on the road with services such as Virtual Office and Virtual PA, providing dedicated business addresses as their business base, as well as mail and call handling services. The Company will need substantial additional capital to support its budget. The Company has had minimal revenues. The Company has no committed source for any funds as of date hereof. In the event funds cannot be raised when needed, the Company may not be able to carry out its business plan, may never achieve sales or royalty income, and could fail in business as a result of these uncertainties. The Company may borrow money to finance its future operations, although it does not currently contemplate doing so. Any such borrowing will increase the risk of loss to the investor in the event the Company is unsuccessful in repaying such loans. The independent registered public accounting firm's report on the Company's financial statements as of June 30, 2013, and for each of the years in the two-year period then ended, includes a "going concern" explanatory paragraph, that describes substantial doubt about the Company's ability to continue as a going concern. 12 RESULTS OF OPERATIONS For the Three Months Ended December 31, 2013 Compared to the Three Months Ended December 31, 2012 During the three months ended December 31, 2013 and 2012, we recognized revenues of $158,679 and $186,264 from our service office operations. The decrease of $27,585 is a result of the fluctuation in clients. During the three months ended December 31, 2013 and 2012, we incurred cost of revenues of $20,059 and $20,014, respectively. During the three months ended December 31, 2013 and 2012, we recognized resulting gross profits of $138,620 and $166,250, respectively. The resulting decrease in gross profits is a result of the decrease in revenues. During the three months ended December 31, 2013, we incurred operational expenses of $244,011. During the three months ended December 31, 2012, we incurred $290,662 in operational expenses. The decrease of $46,651 was a result of a decrease of $5,843 in depreciation expense, a decrease of $15,715 in general and administrative expenses and a $25,051 decrease in rents and rates over the prior period. During the three months ended December 31, 2013, we incurred a net loss of $105,391. During the three months ended December 31, 2012, we incurred a net loss of $124,412. The decrease of $19,091 was a result of the decrease of $27,585 in revenues combined with a $46,651 decrease in operational expenses, as discussed above. For the Six Months Ended December 31, 2013 Compared to the Six Months Ended December 31, 2012 During the six months ended December 31, 2013 and 2012, we recognized revenues of $309,883 and $351,663 from our service office operations. The decrease of $41,780 is a result of the fluctuation in clients. During the six months ended December 31, 2013 and 2012, we incurred cost of revenues of $40,096 and $40,233, respectively. During the six months ended December 31, 2013 and 2012, we recognized resulting gross profits of $269,787 and $311,430, respectively. The resulting decrease in gross profits is a result of the decrease in revenues. During the six months ended December 31, 2013, we incurred operational expenses of $489,453. During the six months ended December 31, 2012, we incurred $594,706 in operational expenses. The decrease of $105,253 was a result of a decrease of $14,696 in depreciation expense, a decrease of $11,793 in general and administrative expenses and a $24,303 decrease in rents and rates over the prior period. During the six months ended December 31, 2013, we incurred a net loss of $218,602. During the six months ended December 31, 2012, we incurred a net loss of $283,276. The decrease of $64,674 was a result of the decrease of $41,780 in revenues combined with a $105.253 decrease in operational expenses, as discussed above. LIQUIDITY At December 31, 2013, we had total current assets of $58,899 consisting of $6,227 in cash and cash equivalents and $52,672 in prepaid expenses and other assets. At December 31, 2013, we had total liabilities of $1,790,016, all current. Total liabilities included $126,222 in accounts payable, $21,191 in accrued liabilities, $138,587 in client prepayments, $452,790 in note payables and $1,051,226 in advances from related parties. During the six months ended December 31, 2013, we used funds of $53,408 in our operational activities. During the six months ended December 31, 2013, we recognized a net loss of $218,602, which was adjusted for depreciation of $68,900, amortization expense of $17,102 and loss on fixed assets written off 13 $872. During the six months ended December 31, 2012, we used funds of $43,679 in our operational activities. During the six months ended December 31, 2012, we incurred a net loss of $283,762 which was adjusted for depreciation of $83,230 and amortization expense of $71,563. During the six months ended December 31, 2013, we used $10,953 to acquire computer and office equipment. During the six months ended December 31, 2012, we used $5,262 to acquire computer equipment. During the six months ended December 31, 2013, we received $65,868 from our financing activities. During the six months ended December 31, 2012, we received $40,738 from our financing activities. During the years ended June 30, 2013 and 2012, Mr. Yeung Cheuk Hung, the manager of Prestige and the majority shareholder of the Company, has advanced funds of $181,105 and $363,524, respectively, to support the operations of Prestige. During the year ended June 30, 2013, the Company paid Mr. Hung, $36,298 on the funds owed. During the six months ended December 31, 2013, Mr. Hung advanced funds of $49,730 to the Company and the Company paid him $10062. The Company owes him $894,206 and $853,876 as of December, 2013 and June 30, 2013, respectively. Such funds are unsecured, bear no interest, and are due on demand. During the years ended June 30, 2013 and 2012, Ms. Look, an officer and director of the Company and the manager of Mega, advanced funds of $50,916 and $65,727, respectively to Mega to support operations. During the six months ended December 31, 2013, Ms. Look advanced additional funds of $6,450. Ms. Look is owed $131,399 and $124,853 as of December 31, 2013 and June 30, 2013, respectively. Such funds are unsecured, bear no interest, and are due on demand. Prior to the fiscal year ended June 30, 2013, Ms. Look and officer and director of the Company advanced funds of $5,871 to the Company to support operations. During the six months ended December 31, 2013, Ms. Look advanced an additional $19,750. Ms. Look is owed $25,621 and $5,871 as of December 31, 2013 and June 30, 2013, respectively. Such funds are unsecured, bear no interest and are due on demand. Off-Balance Sheet Arrangements We have no material off-balance sheet arrangements nor do we have any unconsolidated subsidiaries. Short Term On a short-term basis, we generate limited revenues, which are not sufficient to cover operations. Based on our limited operating history in the service office industry, we will continue to have insufficient revenue to satisfy current and recurring liabilities for the near future. For short term needs we will be dependent on receipt, if any, of offering proceeds. Capital Resources We have only common stock as our capital resource. We have no material commitments for capital expenditures within the next year, substantial capital will be needed to pay for working capital. Need for Additional Financing We do not have capital sufficient to meet our cash needs. We will have to seek loans or equity placements to cover such cash needs. 14 No commitments to provide additional funds have been made by our management or other stockholders. Accordingly, there can be no assurance that any additional funds will be available to us to allow it to cover our expenses as they may be incurred. |