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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2011

[ ] 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: 333-168911

BERKELEY COFFEE & TEA, INC.
(Exact name of registrant as specified in its charter)

Nevada

80-0385523

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

Building B, #439, Jinyuan Ba Lu, Jiangqiao Town
Jiading District, Shanghai, 201812, China
(Address of principal executive offices) (Zip Code)

011-86-15021337898
(Registrant’s telephone number, including area code)


(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 [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)

Yes [x]     No [ ] (Not Required)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

[ ]

Accelerated filer

[ ]

Non-accelerated filer

[ ]

Smaller reporting company

[x]

(Do not check if a smaller reporting company)

  

  

  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ]     No [X ]


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:  

There were 11,133,333 shares outstanding of common stock of the registrant at October 31, 2011.  








BERKELEY COFFEE & TEA, INC.

INDEX

 


PART I - FINANCIAL INFORMATION

3

Item 1 Financial Statements

3

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations

14

Item 3 Quantitative and Qualitative Disclosures About Market Risk

17

Item 4 Controls and Procedures

17

PART II - OTHER INFORMATION

18

Item 1 Legal Proceedings

18

Item 1A Risk Factors

18

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds

19

Item 3 Defaults Upon Senior Securities

20

Item 4 (Removed and Reserved)

20

Item 5 Other Information

20

Item 6 Exhibits

20











PART I - FINANCIAL INFORMATION

Item 1 Financial Statements

BERKELEY COFFEE & TEA, INC.

(A DEVELOPMENT STAGE COMPANY)

UNAUDITED FINANCIAL STATEMENTS

AS OF OCTOBER 31, 2011


TABLE OF CONTENTS




 

 

 

 

 

FINANCIAL STATEMENTS

 

 

 

 

Unaudited Balance Sheets as of October 31, 2011 and April 30, 2011  

 

 

 

 

Unaudited Statements of Operations for the three and six  months ended October 31, 2011 and 2010 and the period of inception (March 27, 2009) to October 31, 2011

 

 

 

 

Unaudited Statement of  Changes in Stockholders’ Equity for the  period of inception (March 27, 2009) to October 31, 2011

 

 

 

Unaudited Statements of Cash Flows for the six  months ended October 31, 2011 and 2010 and the period of inception (March 27, 2009) to October 31, 2011  

 

 

 

Notes to the unaudited Financial Statements  










BERKELEY COFFEE & TEA, INC.

(A Development Stage Company)

UNAUDITED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

October

 31,

2011

 

 

April

30,

2011

  A S S E T S

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

  Cash and cash equivalents

$

156,134

 

$

344,890

 

 

  Receivables, related party  

 

64,800

 

 

-

 

 

  Inventory

 

-

 

 

54,000

 

 

  Prepaid expenses

 

155,000

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 TOTAL CURRENT ASSETS

 

375,934

 

 

398,890

 

 

 

 

 

 

 

 

 

 

 

Equipment , net

 

2,771

 

 

-

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

$

378,705

 

$

398,890

 

 

 

 

 

 

 L I A B I L I T I E S  &  S T O C K H O L D E R S’  E Q U I T Y  

 

 

 

 

 

 

 

 

 

 

 

 

 

        CURRENT LIABILITIES

 

 

 

 

 

 

 

 Accounts payables and accruals

$

8,935

 

$

8,921

 

 

 Share offering subscription

 

-

 

 

4,000

 

 

   

 

 

 

 

 

 

 

 

 

TOTAL CURRENT LIABILITIES

 

8,935

 

 

12,921

 

 

 

 

 

 

 

 

 

 

 COMMITMENTS AND CONTINGENCIES

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 Common stock, 75,000,000 shares authorized,

 

 

 

 

 

 

 

 

$0.001 par value; 11,133,333 shares and 10,300,000 shares issued and outstanding respectively.  

 

11,133

 

 

10,300

 

 

 Additional paid-in capital

 

670,167

 

 

511,000

 

 

 Accumulated deficit

 

(311,530)

 

 

(135,331)

 

 

 TOTAL STOCKHOLDERS' EQUITY

 

369,770

 

 

385,969

 

 

 

 

 

 

 

 

 

 

 

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  

$

378,705

 

$

398,890

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to the financial statements

 

 

 

 

 









 BERKELEY COFFEE & TEA, INC.

(A Development Stage Company)

UNAUDITED STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three

Months

Ended

October

31,

2011

 

Three

Months

Ended

October

31,

2010

 

Six

Months

Ended

October

31,

2011

 

Six

Months

Ended

October

31,

2010

 


For the

Period From

Inception

(March 27,

2009) to

October

31,

2011

 

 

 

 

 

 

 

 

 

 

 

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

            Sales

 

$

-

$

-

$

64,800

$

-

$

64,800

            Cost of goods sold

 

 

-

 

-

 

54,000

 

-

 

54,000

 

 

 

-

 

-

 

10,800

 

-

 

10,800

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

102,897

 

9,144

 

186,999

 

16,142

 

322,330

 

 

TOTAL OPERATING EXPENSES

 

102,897

 

9,144

 

186,999

 

16,142

 

322,330

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(102,897)

 

(9,144)

 

(176,199)

 

(16,142)

 

(311,530)

 

LOSS BEFORE INCOME TAXES

 

(102,897)

 

(9,144)

 

(176,199)

 

(16,142)

 

(311,530)

 

INCOME TAX BENEFIT

 

 

-

 

-

 

-

 

-

 

-

 

NET LOSS

 

$

(102,897)

$

(9,144)

$

(176,199)

$

(16,142)

$

(311,530)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED NET LOSS PER COMMON SHARE

$

(0.01)

$

(0.00)

$

(0.02)

$

(0.00)

 

 

 

WEIGHTED AVERAGE NUMBER OF

 

 

 

 

 

 

 

 

 

 

 

 

COMMON STOCK SHARES OUTSTANDING,

 

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED

 

 

10,519,928

 

7,800,000

 

10,409,964

 

7,800,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 See accompanying notes to the financial statements

 

 

 

 

 

 

 

 

 

 








 

BERKELEY COFFEE & TEA, INC.

(A Development Stage Company)

UNAUDITED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

Number

of Shares

 

Amount

 

Additional

Paid-In

Capital

 

Deficit

Accumulated

During

Development

Stage

 

Total

Stockholders'

Equity

Balance as of March 27, 2009 (Inception)

 

 

                   -

$

-

$

-

$

-

$

-

Stock issued for expenses at $0.001 per share

 

  2,100,000

 

 2,100

 

                     -

 

                              -

 

 2,100

Net loss from Inception to April 30, 2009

 

                   -

 

              -

 

                     -

 

                 (2,100)

 

 (2,100)

Balance as of April 30, 2009

 

 

 2,100,000

 

2,100

 

                     -

 

(2,100)

 

                   -

 

 

 

 

 

 

 

 

 

 

 

Stock issued for cash at $0.001 per share

 

 4,200,000

 

4,200

 

                     -

 

                        -

 

4,200

Stock issued for cash at $0.01 per share

 

 1,000,000

 

1,000

 

9,000

 

-

 

10,000

Stock issued for expenses at $0.01 per share

 

500,000

 

500

 

4,500

 

-

 

5,000

Net loss for year ended April 30, 2010

 

                  -

 

              -

 

                     -

 

                (6,011)

 

  (6,011)

Balance as of April 30, 2010

 

 

7,800,000

 

7,800

 

13,500

 

(8,111)

 

13,189

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for cash at $0.20 per share

 

 

2,500,000

 

2,500

 

497,500

 

-

 

500,000

Net loss for year ended April 30, 2011

 

 

-

 

-

 

-

 

(127,220)

 

(127,220)

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of April 30, 2011

 

 

10,300,000

 

10,300

 

511,000

 

(135,331)

 

385,969

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for prepaid expense at $0.20 per share

 

 

700,000

 

700

 

139,300

 

-

 

140,000

Stock issued for cash at $0.15 per share

 

 

133,333

 

133

 

19,867

 

-

 

20,000

Net loss for six months ended October 31, 2011

 

 

-

 

-

 

-

 

(176,199)

 

(176,199)

Balance as of October 31, 2011

 

 

  11,133,333

$

11,133

$

 670,167

$

(311,530)

$

369,770

See accompanying notes to the financial statements








BERKELEY COFFEE & TEA, INC.

(A Development Stage Company)

UNAUDITED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

Six

Months

Ended

October

31, 2011

 

 

Six

Months Ended

October

31, 2010

 

 

For the Period

From

Inception

(March 27,

2009) to

October

31, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow from operating activities:

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

$

          (176,199)

 

$

       (16,142)

 

$

        (311,530)

 

Non-cash items not involving cash:

 

 

 

 

 

 

 

 

 

 

 

Amortization and depreciation

 

 

251

 

 

-

 

 

251

 

 

Shares issued for expenses and services

 

 

-

 

 

-

 

 

7,100

 

 

Changes in other assets and liabilities:

 

 

 

 

 

                  

 

 

                  

 

 


Accounts payables increase/ (decrease)

 

 

            14

 

 

                 3,053

 

 

             8,935

 

 

Inventory (increase)/ decrease  

 

 

54,000

 

 

 

 

 

-

 

 

Receivables (increase)/ decrease

 

 

(64,800)

 

 

 

 

 

(64,800)

 

 

Prepaid expenses (increase)/ decrease

 

 

(15,000)

 

 

 

 

 

(15,000)

 

 

Share offering subscription increase/(decrease)

 

 

(4,000)

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

        (205,734)

 

 

          (13,089)

 

 

  ( 375,044)

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

Purchase of equipment

 

 

(3,022)

 

 

-

 

 

(3,022)

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

                    (3,022)

 

 

                  -

 

 

              (3,022)

 

 

 

 

 

 

 

-

 

 

-

 

 

-

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

           20,000

 

 

           10,000

 

 

          534,200

 

Net cash provided by financing activities

 

20,000          

 

 

           10,000

 

 

          534,200

 

 

 

 

 

 

 

 

 

 

Net increase (decrease)  in cash

 

 

(188,756)            

 

 

(3,089)                   

 

 

156,134        

Cash, beginning of period

 

 

                    344,890

 

 

                  4,161

 

 

                  -

Cash, end of period

 

$

          156,134

 

$

                1,072

 

$

          156,134

SUPPLEMENTAL DISCLOSURES:

 

 

 

 

 

 

 

 

 

Cash paid for interest and income taxes:

 

 

 

 

 

 

 

 

 

Interest

 

$

                    -

 

$

                -   

 

$

                -   

 

Income taxes

 

$

                    -

 

$

                -   

 

$

                -   

Non-cash transactions:

 

 

 

 

 

 

 

 

 

 

Common stock issued for prepaid expenses

 

$

140,000

 

 

-

 

$

140,000

 

 

 

 

 

 

 

 

 

 See accompanying notes to the financial statements

 

 

 

 

 

 

 

 









BERKELEY COFFEE & TEA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

October 31, 2011

 

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS


Berkeley Coffee & Tea, Inc. (hereinafter "Company" “We” “Our” or "Berkeley Coffee”) was incorporated in the State of Nevada on March 27, 2009.  The Company is in the development stage and has commenced limited marketing and sale of coffee. The Company’s plan is to be a marketer and distributor of coffee produced in China to potential customers in the United States, Canada and Europe.  


The Company is a development stage company as defined in ASC 915 “Development Stage Enterprises”, as it is devoting substantially all of its efforts to establish a new business and planned principal operations have commenced. The Company filed an S-1 Registration statement with the Securities and Exchange Commission which was declared effective January 28, 2011. On March 31, 2011, the Company completed the equity financing of $500,000 by selling 2,500,000 shares of common stock at $0.20 each. The funds raised were applied to implement the Company’s business plan as contained in the S-1 registration statement.    


NOTE 2 – BASIS OF PRESENTATION


The foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. These unaudited interim financial statements should be read in conjunction with the audited financial statements for the year ended April 30, 2011. In the opinion of management, the unaudited interim financial statements furnished herein includes all adjustments, all of which are of a normal recurring nature necessary for a fair statement of the results for the interim period presented.


The preparation of financial statements in accordance with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company's financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions and could have a material effect on the reported amounts of the Company's financial position and results of operations.


Certain amounts from prior periods have been reclassified to conform to the current period presentation. This reclassification has resulted in no changes to the Company’s accumulated deficit or net losses presented.


NOTE 3 - GOING CONCERN UNCERTAINTY


The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of the business. The Company has incurred material losses from operations. At October 31, 2011, the Company had an accumulated deficit of $311,530, in addition to limited cash, limited revenue and unprofitable operations. For the periods ended October 31, 2011 and October 2010, the Company sustained net losses of $176,199 and $16,142 respectively. These factors, among others, indicate that the Company may be unable to continue as a going concern for a reasonable period of time. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern. The Company's continuation as a going concern is contingent upon its ability to obtain additional financing and to generate revenue and cash flow to meet its obligations on a timely basis. Management raised equity financing of $500,000 by selling 2,500,000 shares of common stock at $0.20 each and an additional $20,000 from sale of 133,333 shares at $0.15 each. Success of the $520,000 financing has mitigated these factors however any failure to generate revenue will raise substantial doubt about the Company's ability to continue as a going concern.









NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


This summary of significant accounting policies is presented to assist in understanding the financial statements. The financial statements and notes are representations of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.


Accounting Methods


The Company's financial statements are prepared using the accrual basis of accounting in accordance with the accounting principles generally accepted in the United States of America.


Advertising and Promotion Costs


Advertising and promotion costs are expensed as incurred.


Cash and Cash Equivalents


Cash equivalents comprise certain highly liquid instruments with a maturity of three months or less when purchased. As at October 31, 2011, cash and cash equivalents consist of cash only.


Comprehensive Income


The Company has adopted ASC 220, "Reporting Comprehensive Income", which requires inclusion of foreign currency translation adjustments, reported separately in its statement of stockholders' equity, in other comprehensive income. The Company had no other comprehensive income for the period ended October 31, 2011.    


Concentration of Credit Risk


The Company maintains the majority of its cash in commercial accounts at a major financial institution. Although the financial institution is considered creditworthy and has not experienced any losses on its deposits, at October 31, 2011, the Company's cash balance did exceed Federal Deposit Insurance Corporation (FDIC) limits.


Derivative Instruments


The Financial Accounting Standards Board issued ASC 815, "Accounting for Derivative Instruments and Hedging Activities" (hereinafter "ASC 815"). The statement establishes accounting and reporting standards for derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change. The Company has not entered into derivative contracts to hedge existing risks or for speculative purposes.


Earnings (Loss) Per Share


The Company adopted ASC 260, which provides for calculation of "basic" and "diluted" earnings (losses) per share. Basic earnings (losses) per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity similar to diluted earnings per share.


Foreign Currency Translation


The financial statements are presented in United States dollars. The Company maintains United States dollars as the functional currency. Foreign monetary assets and liabilities are translated into United States dollars at the rates of exchange in effect at the balance sheet dates. Non-monetary items are translated at historical rates. Revenue and expense items are translated using the rate in effect on the date of the transactions.  









Inventory


Inventories are stated at the lower of cost or market. The cost for inventories is determined using the first-in, first-out method. Inventories principally consist of coffee beans. The Company had no green bean coffee in inventory on October 31, 2011.   


Fair Value of Financial Instruments


Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot always be determined with precision. Changes in assumptions can significantly affect estimated fair values.


The Company's financial instruments consist of cash, receivables, accounts payable and prepaid expense. The carrying amounts of these financial instruments approximate fair value due to the short-term nature of these items. Management is of the opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.


Organization and Start-up Cost


All costs and expenses for the start-up activities, including organization costs, are expensed as incurred.


Offering Expenses


Offering expenses represent costs associated with the preparation and filing of a Registration Statement under an S-1 offering to sell 2,500,000 shares of the Company’s common stock at a price of $0.20 per share for gross proceeds of $500,000. Such costs primarily consist of professional fees and consulting services. The offering expenses were charged to expenses as incurred.  


Property and Equipment


Property and equipment are recorded at cost. Depreciation for property and equipment is calculated using the straight-line method over estimated useful lives of five to seven years. Leasehold improvements are generally amortized over the shorter of seven years or the term of the related leases. Major remodels and improvements are capitalized. Maintenance and repairs that do not improve or extend the life of the respective assets are charged to expense as incurred.


Provision for Income Taxes


Income taxes are provided based upon the liability method of accounting pursuant to ASC 740, "Accounting for Income Taxes." Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the "more likely than not" standard imposed by ASC 740 to allow recognition of such an asset.


Revenue Recognition


The Company derives its revenue from sale of coffee beans. Our revenue is recognized in the period when persuasive evidence of an arrangement exists, delivery occurs, the sales price is fixed or determinable and collectability is reasonably assured.  Coffee is considered delivered when title and risk have been transferred to the customer.   


Receivables


Trade accounts receivable are recorded at net realizable value and do not bear interest. No allowance for doubtful accounts was made during the period ended October 31, 2011 based on management's best estimate of the amount of probable credit losses in existing accounts receivable. The Company evaluates its allowance for doubtful accounts based upon knowledge of its customers and their compliance with credit terms. The evaluation process includes a review of customers' accounts on a regular basis. The review process evaluates all account balances with amounts outstanding 60 days and other specific amounts for which information obtained indicates that the balance may be uncollectible. As at October 31, 2011, and April








30, 2011 there was no allowance for doubtful accounts. The Company does not have any off-balance-sheet credit exposure related to its customers.  


Stock Issued for Services


Transactions in which common stock is issued for services are recorded at the fair value of the services received or the fair value of the stock issued, whichever is more reliably measurable.


Share offering Subscription


Share offering proceeds received by the Company from subscribers pursuant to the prospectus offering of 2,500,000 shares of the common stock at $0.20 per share are recorded as a current liability untill the offering is closed and subscribed shares are issued to the investors.  The Company completed and closed the offering on March 31, 2011 after it received gross proceeds of $500,000.


Use of Estimates


The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses and the accompanying notes during the reporting period. Accordingly, actual results could differ from those estimates.


Recent Accounting Pronouncements


In June 2009, the FASB established the Accounting Standards Codification (“Codification” or “ASC”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.


Statement of Financial Accounting Standards (“SFAS”) No. 165 (ASC Topic 855), “Subsequent Events”, SFAS No. 166 (ASC Topic 810), “Accounting for Transfers of Financial Assets-an Amendment of FASB Statement No. 140”, SFAS No. 167 (ASC Topic 810), “Amendments to FASB Interpretation No. 46(R),” and SFAS No. 168 (ASC Topic 105), “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles- a replacement of FASB Statement No. 162” were recently issued. SFAS No. 165, 166, 167, and 168 have no current applicability to the Company or their effect on the financial statements would not have been significant.


Accounting Standards Update (“ASU”) ASU No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures – Overall, ASU No. 2009-13 (ASC Topic 605), Multiple-Deliverable Revenue Arrangements, ASU No. 2009-14 (ASC Topic 985), Certain Revenue Arrangements that include Software Elements, and various other ASU’s No. 2009-2 through ASU No. 2011-09 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant. The Company has reviewed all the recent accounting pronouncements up through No. 2011-09 and these updates have no current applicability to the Company or their effect on the financial statements and the Company’s current accounting and reporting.  


NOTE 5 - PROPERTY AND EQUIPMENT

The following is a summary of property and equipment and accumulated depreciation:

 

 

October 31, 2011

 

 

April 30, 2011

 

 

 

 

 

 

Office equipment

 

3,022

 

 

-

Less accumulated amortization

(251)

 

 

-

 

$

2,771

 

$

-











Depreciation expense was $251 and nil in each of the periods ended October 31, 2011 and October 31, 2010 respectively.

NOTE 6 - RELATED PARTY TRANSACTIONS


Since inception, the Company’s sole officer and director purchased 7,300,000 shares of common stock for $2,100 payment of Company expenses and $14,200 cash payment to the Company.   


The Company sold $54,000 in stock of Indonesian (Mandheling and Java) coffee, to DTS8 Coffee (Shanghai) Co. Ltd. for $64,800. Sean Tan is also the Chief Executive Officer of DTS8 Coffee (Shanghai) Co. Ltd., a Shanghai, China, based coffee roaster and wholesaler. The Company and DTS8 Coffee (Shanghai) Co. Ltd. in the normal course of operations entered into the transaction which is considered to be a related party transaction. The coffee sale was in the normal course of operations of the Company, and was measured at the exchange amount, which is the fair market value amount of consideration established and agreed to by both parties.  As of October 31, 2011, $64,800 is recorded as Receivable from related party.

NOTE 7 - COMMITMENTS AND CONTINGENCIES


Refer to Note 3 above – “Going Concern Uncertainty”


NOTE 8 - COMMON STOCK


At October 31, 2011, the authorized capital was 75,000,000 common shares with a par value of $0.001 and 11,133,333 common shares were issued and outstanding.

a.

March 2009, the Company issued 2,100,000 common shares at $0.001 per share for $2,100 of Company expenses paid.   

b.

February 2010, the Company issued 4,200,000 common shares at $0.001 per share for cash proceeds of $4,200.

c.

March 2010, the Company issued 500,000 common shares at $0.001 per share for $5,000 of Company expenses paid.

d.

March 2010, the Company issued 1,000,000 common shares at $0.01 per share for cash proceeds of $10,000. The $10,000 was received on June 22, 2010.  

e.

March 2011, the Company issued 2,500,000 common shares at $0.20 per share for cash proceeds of $500,000. \

f.

October 2011, the Company issued 700,000 common shares at $0.20 per share as a payment of $50,000 for legal services and $90,000 for coffee consulting services. As of October 31, 2011, $140,000 is considered as a prepayment for services to be rendered in the future.  

g.

In October 2011, the Company issued 133,333 shares at $0.15 per share for cash proceeds of $20,000.


NOTE 9 - CONTRACTS AND AGREEMENTS       


On March 31, 2011, the Company entered into a management agreement with Sean Tan, the Company’s sole officer and director to serve as the President and Chief Executive Officer of the Company. Mr. Tan’s engagement commenced on March 1, 2011, and shall continue on a year-to-year basis until terminated by either party upon sixty days prior written notice to the other party.  The Company shall make monthly management fee payments of six thousand dollars ($6,000) to Mr. Tan, in arrears, on the last day of each month.   


On May 1, 2011, the Company entered into an agreement with Li Hui Juan, to serve as Manager of the Company in China.  Li Hui Juan’s engagement commenced on May 1, 2011, and will end on April 30, 2012, unless terminated by the Company only upon ten days prior written notice. The Company has made an advance payment of thirty thousand dollars ($30,000) for twelve (12) months of service. The Company expensed $7,500 for the three months to October 31, 2011, and the balance of $15,000 is recorded as prepaid expenses.


On October 4, 2011, the Company entered into an agreement with the Company’s attorney, to provide legal services to the Company valued at $50,000 in exchange for 250,000 shares of the Company’s common stock. The engagement will end on April 30, 2012. The total fees and retainer deposits under this agreement was $50,000 to October 31, 2011. The balance of $50,000 is considered a prepayment for future legal services.


On October 4, 2011, the Company entered into an agreement with a coffee consultant to provide coffee quality related consulting services. The services were valued at $90,000 in exchange for 450,000 shares of the Company’s common stock.








The engagement will end on April 30, 2012. Consulting fees charged to expenses to October 31, 2011 was nil and the balance of $90,000 is considered a prepayment for future services.


 NOTE 10 – CONCENTRATION RISK


The Company plans to purchase green bean coffee from China. Consequently, any political, economic and social unrest and/or instability in the coffee growing areas of China may adversely affect the Company’s business operations. In particular, instability in the coffee growing regions of China could result in a decrease in the availability of coffee beans needed for the continued operation and growth of the Company’s business. It could also lead to an increase in the purchasing costs and increased operating costs. This may adversely affect the Company’s business.  

 

NOTE 11 – SUBSEQUENT EVENTS


The Company has evaluated the subsequent events from the balance sheet date through the date the financial statements were issued, and determined that no other significant events have occurred.











Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Statements

All references in this Form 10-Q to the “Company,” “Berkeley,” “we,” “us,” or “our” are to Berkeley Coffee & Tea, Inc.

This report contains “forward-looking statements” that involve risk and uncertainties.  Berkeley Coffee & Tea, Inc. uses forward-looking statements that you can identify by words or terminology such as "may", "should", "could", "predict", "potential", "continue", "expect", "anticipate", "future", "intend", "plan", "believe", "estimate" and similar expressions (or the negative of these expressions).  Except for historical information, this report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and statements regarding our expectations, hopes, beliefs, intentions or strategies regarding the future. All statements other than statements of historical facts included in this report, including, without limitation, statements under “Management’s Plan of Operations,” regarding our financial position, business strategy and other plans and objectives for future operations, and future product demand, supply, costs, marketing, transportation and pricing factors, are forward-looking statements.  Actual results, levels of activity, performance, achievements and events are most likely to vary materially from those implied by the forward-looking statements. All forward-looking statements included in this report are based on information available to us on the date hereof, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements and we assume no obligation to update such forward-looking statements. Although we believe that the assumptions and expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that such expectations will prove to have been correct or that we will take any actions that may presently be planned. Certain important factors that could cause actual results to differ materially from our expectations are disclosed elsewhere in this report. All written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by such factors. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein.  Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto.  Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

THE FOLLOWING PLAN OF OPERATION SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND THE RELATED NOTES ELSEWHERE IN THIS QUARTELY REPORT.  THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS BASED UPON CURRENT EXPECTATIONS THAT INVOLVE RISKS AND UNCERTAINTIES, SUCH AS OUR PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS.  OUR ACTUAL RESULTS AND THE TIMING OF CERTAIN EVENTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH UNDER "PLAN OF OPERATIONS” AND ELSEWHERE IN THIS QUARTELY REPORT.

Review of operations for the period March 27, 2009 (date of inception) to October 31, 2011

Since inception, March 27, 2009, our operation has been restricted to development activities that has included travel to Yunnan Province, China, (the coffee growing area), meeting with coffee farmers/exporters, cup tasting and evaluation of the coffee produced, discussions with potential customers in the United States, and preparation and filing of the Registration Statement with the Securities and Exchange Commission which was declared effective January 28, 2011. On March 31, 2011, the Company completed the equity financing of $500,000 by selling 2,500,000 shares of common stock at $0.20 each. We purchased Indonesian (Mandheling and Java) coffee and sold to DTS8 Coffee (Shanghai) Co. Ltd. for $64,800. During the period we evaluated 2011 coffee crops from farmers in Yunnan, China, to purchase and carried out a marketing and   promotion to large roasters and retailers to sample the coffees. We plan to sell the coffee to the potential customers in the United States.  

Effective September 30, 2011, the Company was assigned the symbol “BKCT” to trade the common stock on the OTC Bulletin Board.  










Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.  The Company has incurred material recurring losses from operations. For the six months ended October 31, 2011, the Company incurred a loss of $176,199. As of October 31, 2011, the Company had an accumulated deficit of $311,530, limited cash, limited revenue and unprofitable operations.  For the three months ended October 31, 2011 and 2010, the Company sustained net losses of $102,897 and $9,144. These factors, among others, indicate that the Company may be unable to continue as a going concern for a reasonable period of time. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern. The Company's continuation as a going concern is contingent upon its ability to obtain additional financing and to generate revenue and cash flow to meet its obligations on a timely basis. Management raised equity financing of $500,000 by selling 2,500,000 shares of common stock at $0.20 each and additional $20,000 from sale of 133,333 shares at $0.15 each. The $520,000 financing has mitigated these factors, however, any failure to generate revenue will raise substantial doubt about the Company's ability to continue as a going concern.

Provided below is selected financial data about our Company as of  October 31, 2011, and April 30, 2011. The financial statements and notes thereto are included in this Report under “Financial Statements”.

Balance Sheet Data:

 

 

October 31, 2011

 

 

 

April 30, 2011

Cash  

$

156,134

$

 

 

 344,890

Total assets

$

378,705

$

 

 

398,890

Total liabilities

$

8,935

$

 

 

12,921

Stockholders’ equity

$

369,770

$

 

 

385,969

Liquidity and Capital Resources

As of October 31, 2011, we had $156,134 cash in the bank, $64,800 in receivables, prepaid expenses of $155,000, accounts payable and accruals of $8,935. Since inception, March 27, 2009, we have generated limited revenue and incurred accumulated losses of $311,530 to October 31, 2011.  Our net losses for the six months ended October 31, 2011 and 2010, were $176,199 and $16,142. Effective March 31, 2011, we completed an offering of 2,500,000 shares of common stock, under our S-1 Registration Statement, and received gross proceeds of $500,000. In October 2011, we issued 133,333 Restricted Rule 144 shares of common stock for a total cash payment of $20,000 to an accredited investor. The $20,000 raised was allocated to the working capital. For the three months ended October 31, 2011, we generated zero in revenue, and incurred a net loss of $102,897. For the six months ended October 31, 2011, we generated $64,800 in revenue, with cost of goods sold at $54,000 and $10,800 in gross profits and incurred a net loss of $176,199. The general and administration expenses for the six months ended October 31, 2011, was $186,999 which included professional fees $33,150, management fees $36,000, consulting $72,000, and office supplies & expenses $45,849. The accumulated general and administration expenses incurred since inception, March 27, 2009, to October 31, 2011, was $322,330 which included $13,600 for travel, professional fees $80,442, management fees $69,050, coffee consulting $129,209, and office supplies $30,029.  We do not have any long-term debts or obligations.

In October 2011, we filed a Registration Statement on Form S-8 and registered 700,000 common shares to our attorney and coffee consultant for an aggregate consideration of $140,000 as payment for the future services in lieu of cash. The fair value of these shares was estimated at $140,000. During the six months ended October 31, 2011, the fair market value of the services charged to expenses was nil and $140,000 was considered a prepayment for legal and coffee consulting services to be rendered.

Plan of Operation

We were successful with the offering of 2,500,000 shares of common stock at $0.20 per share under our S-1 Registration Statement, and received gross proceeds of $500,000.  This provided the Company with sufficient funds to implement its business plan.  Specifically, our plan of operation for the next 12 months requires us to:








Purchase coffee from farmers/exporters in Yunnan, China.  The coffee season in China runs from October to March.  We plan to commence purchasing coffee in late 2011, and to continue to do so through-out the coffee season.  Thereafter, we plan to continue purchasing the limited amounts of late and early season crops.  The late and early season coffee crops are usually available until the next coffee season.  During the next twelve months, we plan to purchase and sell coffee to our potential customers in the United States.  Each container load will contain approximately three hundred (300) sixty-kilogram (60 kg) bags of green bean coffee or approximately 18,000 metric tonnes.  The sale price of the coffee will be mutually negotiated with the customers using the current New York “C” coffee contract market prices as the benchmark price.  Any revenue we earn will be reinvested back into the Company and used for working capital.


Lease office facilities in Reno, Nevada and hire at least one employee as support staff.  We anticipate in January 2012, leasing about 500 square feet of office space in Reno, Nevada, for general corporate, sales and customer service purposes and hiring one employee.


Commence to market and sell coffee.  We have commenced marketing the coffee grown in Yunnan, China. We have commenced delivering coffee samples to interested potential customers in the United States.  Supplying of coffee samples and visiting of potential customers will continue throughout the next 12 months.  

The Company does not have any off-balance sheet arrangements.

Recent Accounting Pronouncements

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flows.

In June 2009, the FASB established the Accounting Standards Codification (“Codification” or “ASC”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.

Statement of Financial Accounting Standards (“SFAS”) No. 165 (ASC Topic 855), “Subsequent Events”, SFAS No. 166 (ASC Topic 810), “Accounting for Transfers of Financial Assets-an Amendment of FASB Statement No. 140”, SFAS No. 167 (ASC Topic 810), “Amendments to FASB Interpretation No. 46(R),” and SFAS No. 168 (ASC Topic 105), “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles- a replacement of FASB Statement No. 162” were recently issued. SFAS No. 165, 166, 167, and 168 have no current applicability to the Company or their effect on the financial statements would not have been significant.

Accounting Standards Update (“ASU”) ASU No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures – Overall, ASU No. 2009-13 (ASC Topic 605), Multiple-Deliverable Revenue Arrangements, ASU No. 2009-14 (ASC Topic 985), Certain Revenue Arrangements that include Software Elements, and various other ASU’s No. 2009-2 through ASU No. 2011-09 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.

Critical Accounting Policies & Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make a variety of estimates and assumptions that affect (1) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and (2) the reported amounts of revenues and expenses during the reporting periods covered by the financial statements.

Our management routinely makes judgments and estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions affecting the future resolution of the uncertainties increase, these judgments become even more subjective and complex.  Although we believe that our estimates and assumptions are reasonable, actual results may differ significantly from these estimates.  Changes in estimates and assumptions based upon actual results may have a








material impact on our results of operation and/or financial condition.  We have identified certain accounting policies that we believe are most important to the portrayal of our current financial condition and results of operations.  Our significant accounting policies are disclosed in Note 4 to the Financial Statements included in this Report.

Off-Balance Sheet Arrangements

We have no 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 is material to our stockholders.

Item 3 Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4 Controls and Procedures

Evaluation of Controls and Procedures


We recently evaluated the effectiveness of our disclosure controls and procedures, as required by paragraph (b) of Rule 13a-15 or Rule 15d-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this report, being October  31, 2011. This evaluation was conducted with the participation of our principal executive officer and our principal accounting officer.


Disclosure controls are those controls and other procedures designed to ensure information we are required to disclose in the reports we file pursuant to the Securities Exchange Act of 1934 is correctly recorded, processed, summarized and reported. We maintain a system of internal accounting controls that is designed to provide reasonable assurance assets are safeguarded and transactions are executed and properly recorded in accordance with management’s authorization. This system is continually reviewed and augmented by written policies and procedures, the careful selection and training of qualified personnel and an internal audit program to monitor its effectiveness.


Our management does not expect our disclosure controls or our internal controls over financial reporting will prevent all error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, but not absolute, assurance the objectives of a control system are met. Further, any control system reflects limitations on resources, and the benefits of a control system must be considered relative to its costs. These limitations also include the realities that judgments in decision-making can be faulty and breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of a control. A design of a control system is also based upon certain assumptions about potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.


Changes in Internal Control over Financial Reporting

Based upon their evaluation of our controls over financial reporting, as required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Securities Exchange Act of 1934, our principal executive officer and principal accounting officer have concluded that our disclosure controls are, and will be, effective in providing reasonable assurance that material information relating to us is accumulated and communicated to management, including our principal executive and principal financial officer(s), or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. There were no changes in our internal controls that occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.








PART II - OTHER INFORMATION

Item 1 Legal Proceedings

As of the date of this report, there is no litigation pending or threatened by or against the Company.  However, from time to time we may be subject to legal proceedings and claims in the ordinary course of business. Such claims, even if not meritorious, would result in the expenditure by us of significant syndicated financial and managerial resources.

Item 1A Risk Factors

Seasonality and Other Factors That May Affect Our Future Results

a)

We are aware there are other companies conducting similar activities, and the demand for coffee is affected by consumer taste and preferences. As a development stage company with little operating capital in a rapidly evolving and highly competitive coffee industry, we will encounter financial difficulties. The coffee market is highly fragmented and coffee brands are being established across multiple distribution markets. Several competitors are aggressive in obtaining distribution to roaster retailers, commercial roasters, gourmet roasters and retailers and coffee brokers. We will only begin to penetrate those markets which give other competitors advantages over us based on their earlier entry into these distribution markets. Competition in the coffee market is intense, as relatively low barriers to entry encourage new competitors to enter the coffee market. The new market entrants may have substantially greater financial, marketing and operating resources than us, which may adversely affect our ability to implement our business plan.

b)

A significant portion of our anticipated revenue will be realized during China’s coffee harvest season, which is from October to March.  Any coffee tree and/or coffee bean diseases and/or severe adverse weather conditions, such as a prolonged period of drought and rain, would have an adverse effect upon the production and supply of quality coffee at a reasonable price, which, in turn would directly impact our ability to market and sell coffee in the United States. Decreased availability of quality coffee would have an adverse effect on our purchasing costs, revenue and profitability, and would jeopardize our ability to grow our business.    

c)

We plan to purchase coffee from China.  Therefore, any economic, political and social unrest and/or instability in coffee growing regions of China may adversely impact our business operations.  It could result in a decrease in the availability of quality coffee needed for our continued operation and growth of our business. It could also lead to an increase in our purchasing costs and increased operating costs.    

d)

Coffee trades on the commodities market. The supply and price of coffee is affected by multiple factors in the various producing countries, including: weather, political and economic conditions.  We plan to sell our coffee on a negotiated basis based upon the supply and demand at the time of purchase/sale.  The benchmark (beginning) price will be directly tied to the then current prevailing price of New York “C” futures coffee contracts trading on the New York Coffee, Sugar & Cocoa Exchange.  If the cost of coffee increases, we may not be able to pass along those costs to our customers because of the competitive nature of the coffee industry.  If we are unable to pass along increased coffee costs, our margins will decrease and profitability will suffer accordingly.   

e)

Our business strategy is centered on a single product; coffee produced in China.  If the demand for coffee decreases, our business could suffer.  If we fail to continue developing and maintaining the quality of the coffee we sell or allow the quality to diminish, our operations, revenue and profitability could be adversely affected.  

f)

Our ability to continue with our business plan is subject to our ability to continue generating additional revenue. Our ability to continue as a going concern is an issue raised by our auditors in their audit report as a result of our limited revenue and accumulated losses of $135,331 at April 30, 2011 and $311,530 as of October 31, 2011. There are no assurances that we may be successful in generating any additional revenue. To fund the ongoing operations, we may be forced to find alternate sources of financing, which at this time cannot be assured. If we are unsuccessful in securing such financing on acceptable terms, our potential as a going concern could be affected and our ability to continue with our business would be harmed. In such event, we may curtail or cease our operations.

g)

We may need additional capital. We require substantial working capital to fund our business. If we do not generate enough cash from operations to finance our business in the future, we will need to raise additional funds through public or private financing. Selling additional stock could dilute the equity interests of our stockholders.  If we borrow money, we will have to pay interest and may also have to agree to restrictions on our operating flexibility. The borrowing of








additional monies may put a strain on the Company’s cash flow and ability to develop and or expand its products and business.  There are no guarantees that we will be able to obtain additional financing or that if such financing is available that it will be on terms satisfactory to the Company. See “Management’s Discussion and Analysis of Financial Condition and Operations".

h)

Our Chief Executive lacks coffee sales experience and may have difficulty selling the Chinese grown coffee to potential customers in the United States. Our ability to implement the sales and marketing strategies are partially dependent on our Chief Executive’s ability to increase awareness and recognition of Chinese grown coffee in the United States. We may fail to implement our sales and marketing strategies or we may use our resources on sales and marketing strategies that ultimately prove to be unsuccessful.  Consequently, our revenue and operating results may be adversely affected.  

i)

Our management is engaged in other activities, including being a Chief Executive Officer of DTS8 Coffee (Shanghai) Co. Ltd., a coffee roaster and wholesaler based in Shanghai, China, that could divert his time away from our business operations and could conflict with our business interests, harming our ability to market and sell coffee.  If our officer and director is unable to devote sufficient time to our business operations, our ability to operate at a profit could be harmed. Our officer and director may have difficulty in allocating time, services and functions between the other business ventures in which he may be or become involved.  Specifically, Sean Tan has been our President, Chief Executive Officer and Treasurer and our sole director since our inception.  Sean Tan is a self-employed businessman and does not dedicate his entire business hours to our operations.  However, the potential for conflicts of interest will still exist between the Company and Sean Tan for future business opportunities. As such, our business may be impaired and we may have to curtail and cease our operation and the investors may lose their entire investment.

j)

Sean Tan is the Chief Executive Officer of DTS8 Coffee (Shanghai) Co. Ltd., which roasts and sells roasted coffee.  While DTS8 Coffee (Shanghai) Co. Ltd. is not in the business of selling raw green coffee beans, as is the business of the Company, there may be potential for conflicts or competition for the purchase of raw green coffee beans.  If a conflict of interest or competition for the purchase of the raw green coffee beans arises and is not resolved in favor of the Company, the Company may lose potential business. Failure to establish alternative suppliers for sources of raw green coffee beans could result in a failure to implement the Company’s business plan.  

Factors That May Affect Owning Berkeley Coffee & Tea, Inc. Common Stock

a)

As of the date of this report, our sole officer and director owns approximately 66% of our outstanding shares of common stock, this allows him to control matters requiring approval of our shareholders. Such concentrated control of the Company may adversely affect the price of our common stock, because it may be more difficult for the Company to attract investors.  Investors will know that matters requiring stockholders’ consent will likely be decided by our officer and director.  Our officer and director can control matters requiring approval by our stockholders, including the election of directors.  Moreover, if our officer and director elects to sell a substantial number of his shares, investors will likely lose confidence in our ability to earn revenue and will see such a sale as a sign that our business is failing.  Each of these factors, independently or collectively, will likely harm the market price of our stock.


b)

There has not been a market for our common stock.  We cannot predict the extent to which a trading market will develop or how liquid a market might become.


c)

The Penny Stock Reform Act (Securities Exchange Act Sect. 3(a)(51A)) defines a penny stock as an equity security that is not registered on a national stock exchange or authorized for quotation on NASDAQ, and that sells for under $5.00 per share.  The Company will be considered a penny stock under said Act.  A purchase of a penny stock is an extremely high risk stock purchase that could result in the entire loss of an individual’s investment. Since the Company stock will be considered a penny stock, a broker-dealer is required to provide a risk disclosure statement detailing the inherent risks in investing in a penny stock to a customer prior to recommending the sale of its stock.  This could severely limit the ability to create a market for shares of the Company’s stock and make it difficult for an investor to liquidate his or her shares.

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds

In October 2011, we issued 133,333 Restricted Rule 144 shares of common stock for a total cash payment of $20,000 to one  (1) accredited investor, as that term is defined in Regulation D promulgated under the Securities Act of 1933 (“Act”) and the shares are exempt from registration as contained in Section 4(2) of said Act based upon the fact that the shares were  issued in a private transaction without the use of general solicitation or advertising to only one investor who we believe are capable of evaluating the merits and risks of an investment in our common stock.








In October 2011, we filed a Registration Statement on Form S-8 and registered 700,000 common shares to our attorney and  coffee consultant for an aggregate consideration of $140,000 as payment for the future services in lieu of cash.  The fair value of these shares was estimated at $140,000. During the six months ended October 31, 2011, the fair market value of the services charged to expenses was nil and $140,000 was considered a prepayment for legal and coffee consulting services to be rendered.

Stock Repurchase

The Company does not have any stock repurchase plan.

Item 3 Defaults Upon Senior Securities

– None –

Item 4 (Removed and Reserved)

Item 5 Other Information

No material changes were made to the procedures by which security holders may recommend nominees to the Company’s board of directors.  

Item 6 Exhibits

Exhibit No.

Description

Location

3.1

Articles of Incorporation

Previously Filed

3.2

Bylaws

Previously Filed

14.1

Code of Ethics

Previously Filed

31

Section 302 Certification

Included

32

Section 96 Certification

Included

101

XBRL Exhibits

Included

*  XBRL Information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended and otherwise is not subject to liability under these sections.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BERKELEY COFFEE & TEA, INC.

By:

/s/ Sean Tan

 

 

Sean Tan

 

 

President, Chief Executive Officer

Chief Financial Officer, Treasurer

Secretary, Controller and sole Director

 

 

(Principal Executive Officer, Principal Financial Officer

 

 

and Principal Accounting Officer)

 

 

Date:  December 7, 2011