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EX-31 - JV GROUP, INC.ex31-1.txt
EX-32 - JV GROUP, INC.ex32-1.txt

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                -----------------

                                    FORM 10Q
                                -----------------
(Mark One)

[ X ]       QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934

                For the quarterly period ended December 31, 2013

[    ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
            ACT
            For the transition period from __________ to ___________

                        Commission file number: 000-21477

                                 JV GROUP, INC.
             (Exact name of registrant as specified in its charter)

       Delaware                                             27-0514566
       --------                                             ----------
(State of Incorporation)                              (IRS Employer ID Number)

                       7609 Ralston Road, Arvada, CO 80002
                       -----------------------------------
                    (Address of principal executive offices)

                                  303-422-8127
                                  ------------
                         (Registrant's Telephone number)

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 past 12 months (or for such shorter  period that the registrant was required
to file such reports),  and (2) has been subject to the 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 Web site, if any, every  Interactive  Data File required
to be submitted and posted  pursuant to Rule 405 for Regulation S-T  (ss.232.405
of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark whether the  registrant is a large  accelerated  file, 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.

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 ] Indicate the number of share outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of February 11, 2014, there were 98,879,655 shares of the registrant's common stock issued and outstanding.
PART I - FINANCIAL INFORMATION Page Item 1. Financial Statements (Unaudited) 1 Consolidated Balance Sheets - December 31, 2013 and June 30, 2013 2 Consolidated Statements of Operations - For Three and Six Months Ended December 31, 2013 and 2012 3 Consolidated Statements of Cash Flows - For the Three and Six Months Ended December 31, 2013 and 2012 4 Notes to the Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. Quantitative and Qualitative Disclosures About Market Risk - Not Applicable 14 Item 4. Controls and Procedures 14 PART II - OTHER INFORMATION Item 1. Legal Proceedings -Not Applicable 15 Item 1A. Risk Factors - Not Applicable 15 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 15 -Not Applicable Item 3. Defaults Upon Senior Securities - Not Applicable 15 Item 4. Mine Safety Disclosures - Not Applicable 15 Item 5. Other Information - Not Applicable 15 Item 6. Exhibits 16 SIGNATURES 17 1
PART I ITEM 1. FINANCIAL STATEMENTS JV GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in USD) December 31, June 30, 2013 2013 -------------------------------- ASSETS Current assets Cash and cash equivalents $ 6,227 $ 4,774 Prepaid expenses and other current assets 52,672 56,517 -------------------------------- Total current assets 58,899 61,291 Property and equipment, net of $502,101 and $439,455 accumulated depreciation, respectively 259,183 317,756 -------------------------------- Intangible assets, net of $294,588 and $277,486 accumulated amortization, respectively 25,652 42,721 -------------------------------- Total assets $ 343,734 $ 421,768 ================================ LIABILITIES & STOCKHOLDERS' DEFICIT Current liabilities Accounts payable $ 126,222 99,561 Accrued liabilities 21,191 5,307 Prepayments, clients 138,587 106,617 Notes payable 452,790 452,439 Advances, related parties 1,051,226 984,600 -------------------------------- Total current liabilities 1,790,016 1,648,524 Total liabilities 1,790,016 1,648,524 -------------------------------- Stockholders' deficit Preferred stock, $0.01 par value: 25,000,000 shares authorized, no shares - - issued and outstanding. Common stock, $0.01 par value: 1,000,000,000 shares authorized 988,797 988,797 98,879,655 shares issued and outstanding at December 31, 2013 and June 30, 2013 Other comprehensive income 4,868 5,792 Accumulated deficit (2,439,947) (2,221,345) -------------------------------- Total stockholders' deficit (1,446,282) (1,226,756) -------------------------------- Total liabilities and stockholders' deficit $ 343,734 $ 421,768 ================================ See accompanying notes to consolidated financial statements. 2
JV GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX AND THREE MONTHS ENDED DECEMBER 31, 2013 AND 2012 (Amounts in US Dollars) (Unaudited) Three Months Ended Six Months Ended December 31, December 31, 2013 2012 2013 2012 ------------------------------------ ------------------------------ Revenue $ 158,679 $ 186,264 $ 309,883 $ 351,663 Cost of revenue 20,059 20,014 40,096 40,233 ------------------------------------ ------------------------------ Gross profit 138,620 166,250 269,787 311,430 Operating expenses General and administrative 113,777 129,492 203,498 215,291 Rent and rates 87,164 112,215 199,953 224,256 Amortization 8,558 8,600 17,102 71,563 Depreciation 34,512 40,355 68,900 83,596 ------------------------------------ ------------------------------ Total operating expenses 244,011 290,662 489,453 594,706 ------------------------------------ ------------------------------ Loss from operations (105,391) (124,412) (219,666) (283,276) Other income Interest and other income - - 1,935 - Other expense - - (871) - ------------------------------------ ------------------------------ Total other income - - 1,064 - ------------------------------------ ------------------------------ Net loss $ (105,391) $ (124,412) $ (218,602)$ (283,276) ==================================== ============================== Other comprehensive income Foreign currency translation adjustment 58 25 (924) (676) ------------------------------------ ------------------------------ Total comprehensive loss $ (105,333) $ (124,387) $ (219,526) $ (283,952) ==================================== ============================== Loss per common share- basic: $ (0.00) $ (0.00) $ (0.00) $ (0.00) ==================================== ============================== Weighted average common shares outstanding: Basic 98,879,655 98,879,655 98,879,655 98,879,655 ==================================== ============================== See accompanying notes to condensed consolidated financial statements. 3
JV GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT FOR THE SIX MONTHS ENDED DECEMBER 31, 2013 (Amounts in USD) (Unaudited) Accumulated Common Stock Accumulated Comprehensive Shares Amount Deficit Profit / (Loss) Total ----------------- ----------- ----------------- ----------------- ---------------- Balance, June 30, 202013 98,879,655 $ 988,797 $ (2,221,345) $ 5,792 $ (1,226,756) Foreign currency translation - - - (924) (924) Net loss - - (218,602) - (218,602) ----------------- ----------- ----------------- ----------------- ---------------- Balance, September 30, 2013 98,879,655 $ 988,797 $ (2,439,947) $ 4,868 $ (1,446,282) ================= =========== ================= ================= ================ See accompanying notes to consolidated financial statements. 4
JV GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED DECEMBER 31, 2013 AND 2012 (Amounts in USD) (Unaudited) 2013 2012 -------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (218,602) $ (283,276) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 68,900 83,230 Amortization 17,102 71,563 Changes in operating assets and liabilities: Prepaid expenses and other current assets 3,889 5,536 Accounts payable and accrued liabilities 42,544 49,589 Prepayments from clients 31,887 29,679 -------------------------------- Total cash flow used in operating activities (54,280) (43,679) CASH FLOW FROM INVESTING ACTIVITIES Acquisition of assets (10,953) (5,262) Disposal of assets 872 -------------------------------- Total cash flow used in investing activities (10,081) (5,262) CASH FLOW FROM FINANCING ACTIVITIES Advances from officers and directors 75,932 47,188 Payments on advances from officers and directors (10,062) (6,450) -------------------------------- Total cash flow provided by financing activities 65,868 40,738 Effect of exchange rate changes on cash (56) (134) -------------------------------- NET CHANGE IN CASH 1,453 (8,337) CASH AT BEGINNING OF PERIOD 4,774 10,407 -------------------------------- CASH AT END OF PERIOD $ 6,227 $ 2,070 ================================ SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION Cash paid for interest $ - $ - -------------------------------- Cash paid for income tax $ - $ - -------------------------------- See accompanying notes to consolidated financial statements. 5
JV GROUP, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements For the Six Months Ended December 31, 2013 and 2012 (Amounts in USD) (Unaudited) NOTE 1 - BUSINESS AND BASIS OF PRESENTATION Company History ASPI, Inc. ("APSI") was formed in Delaware in September 29, 2008. On April 25, 2012, ASPI filed an amendment to its Certificate of Incorporation to change its name from ASPI, Inc. to JV Group, Inc. ("JV Group.") In addition, at that time, JV Group increased the number of authorized common shares from One Hundred Million (100,000,000) shares to One Billion (1,000,000,000) shares. Business JV Group operates primarily as an office service provider through its wholly-owned subsidiary, Prestige Prime Office, Limited ("Prestige"). Prestige provides office space that is fully furnished, equipped and staffed, located at premier addresses in central business districts with convenient access to airport or public transportation. Services include advanced communication systems, 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. Basis of Presentation The accompanying consolidated financial statements include the accounts of JV Group, Inc., a Delaware corporation, its wholly-owned subsidiaries, Mega Action Limited ("Mega"), a British Virgin Island Corporation, and Prestige, a Hong Kong Special Administrative Region Corporation (JV Group and its subsidiaries are collectively referred to as the "Company"). All significant intercompany accounts and transactions have been eliminated in consolidation. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted 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 revenues and expenses during the reporting periods. Actual results could differ from those estimates. Judgments and estimates of uncertainties are required in applying the Company's accounting policies in certain areas. The following are some of the areas requiring significant judgments and estimates: a) Going concern; and b) Depreciable life for property, plant and equipment and intangible assets. The relevant amounts could be adjusted in the near term if experience differs from current estimates. Cash and Cash Equivalents The Company considers all liquid investments purchased with an initial maturity of three months or less to be cash equivalents. Cash and cash equivalents include demand deposits and money market funds carried at cost which approximates fair value. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation ("FDIC"). 6
JV GROUP, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements For the Six Months Ended December 31, 2013 and 2012 (Amounts in USD) (Unaudited) Foreign Currency Translation The financial statements of JV Group's wholly-owned subsidiaries, Prestige and Mega are measured using the local currency (the Hong Kong Dollar (HK$) is the functional currency). Assets and liabilities of Prestige and Mega are translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at average rates of exchange in effect during the period. The resulting cumulative translation adjustments have been recorded as a component of comprehensive income (loss), included as a separate item in the statement of operations. The Company is exposed to movements in foreign currency exchange rates. In addition, the Company is subject to risks including adverse developments in the foreign political and economic environment, trade barriers, managing foreign operations, and potentially adverse tax consequences. There can be no assurance that any of these factors will not have a material negative impact on the Company's financial condition or results of operations in the future. Fair Value of Financial Instruments Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk. In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are: Level 1 - inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. Level 2 - inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - inputs are generally unobservable and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques. The carrying value of the Company's financial assets and liabilities which consist of cash, accounts payable, and advances from related parties in management's opinion approximate their fair value due to the short maturity of such instruments. These financial assets and liabilities are valued using Level 7
JV GROUP, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements For the Six Months Ended December 31, 2013 and 2012 (Amounts in USD) (Unaudited) 3 inputs, except for cash which is at Level 1. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, exchange, or credit risks arising from these financial instruments. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed principally on the straight-line method over the estimated useful life of each type of asset which ranges from three to five years. Major improvements are capitalized, while expenditures for repairs and maintenance are expensed when incurred. Upon retirement or disposition, the related costs and accumulated depreciation are removed from the accounts, and any resulting gains or losses are credited or charged to income. Intangible Asset On September 8, 2011, the Company entered into an Agreement to purchase certain leaseholds and as a result recognized certain intangibles, such as customer lists. These intangible assets are being amortized over a weighted average period of 1.7 years at a rate of HK$1,953,870 per year. At December 31, 2013, accumulated amortization was translated to equal US$294,588 and amortization expense for the six months ended December 31, 2013 was US$17,102 (US$8,588 for the three months ended December 31, 2013.) Revenue Recognition The Company recognizes revenue when it is earned and expenses are recognized when they occur in accordance with FASB ASC 605 "Revenue Recognition" ("ASC 605"). The Company recognizes revenue from its office service operations. Clients pay a monthly fee and such fees are recognized at that time. Advertising The Company put advertisements on local newspaper and the internet in order to attract potential customers. It is recognized as expense when it occurs. The Company paid $6,772 and $8,112 as advertising cost for the six months ended December 31, 2013 and 2012, respectively ($3,202 and $3,876 for the three months ended December 31, 2013 and 2012, respectively.) Net Loss per Common Share Basic net loss per common share is calculated by dividing total net loss applicable to common shares by the weighted average number of common and common equivalent shares outstanding during the period. For the three and six months ended December 31, 2013 and 2012, there were no potential common equivalent shares used in the calculation of weighted average common shares outstanding as the effect would be anti-dilutive. Impairment of Long Lived Assets Long-lived assets are reviewed for impairment in accordance with the applicable FASB standard, "Accounting for the Impairment or Disposal of Long-Lived Assets." Under the standard, long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. An impairment charge is recognized for the amount, if any, when the carrying value of the asset exceeds the fair value. 8
JV GROUP, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements For the Six Months Ended December 31, 2013 and 2012 (Amounts in USD) (Unaudited) Stock-Based Compensation Beginning January 1, 2006, the Company adopted the provisions of and accounts for stock-based compensation using an estimate of value in accordance with the fair value method. Under the fair value recognition provisions of this statement, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the requisite service period, which generally is the vesting period. The Company elected the modified-prospective method, under which prior periods are not revised for comparative purposes. The valuation method applies to new grants and to grants that were outstanding as of the effective date and are subsequently modified. Other Comprehensive Income (Loss) The Company recognizes unrealized gains and loss on the Company's foreign currency translation adjustments as components of other comprehensive income (loss). Recent Accounting Pronouncements There were various other accounting standards and interpretations issued in 2013 and 2012, none of which are expected to have a material impact on the Company's financial position, operations, or cash flows. NOTE 3 - GOING CONCERN The Company's financial statements for the six months ended December 31, 2013 and 2012 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company reported a net loss of $218,602 for the six months ended December 31, 2013 and an accumulated deficit of $2,439,947 at December 31, 2013. At December 31, 2013, the Company had total current assets of $58,899 and total current liabilities of $1,790,016 for a working capital deficit of $1,731,117. The Company's ability to continue as a going concern may be dependent on the success of management's plan discussed below. The financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. To the extent the Company's operations are not sufficient to fund the Company's capital requirements, the Company may attempt to enter into a revolving loan agreement with financial institutions or attempt to raise capital through the sale of additional capital stock or through the issuance of debt. At the present time, the Company does not have a revolving loan agreement with any financial institution nor can the Company provide any assurance that it will be able to enter into any such agreement in the future or be able to raise funds through the further issuance of debt or equity in the Company. During the 2014 fiscal year, the Company intends to continue its efforts in growing its office service operations. 9
JV GROUP, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements For the Six Months Ended December 31, 2013 and 2012 (Amounts in USD) (Unaudited) NOTE 4 - PROPERTY AND EQUIPMENT At December 31, 2013 and June 30, 2013, Property and Equipment consisted of: December 31, June 30, 2013 2013 -------------------- --------------------- Furniture and Fixtures $ 598,173 $ 593,536 Office Equipment 138,284 138,284 Computer Equipment 24,701 25,391 -------------------- --------------------- 761,284 757,211 Accumulated Depreciation (502,101) (439,455) -------------------- --------------------- Total $ 259,183 $ 317,756 ==================== ===================== Property and equipment held by Prestige have an original cost basis valued in Hong Kong Dollars. During the six months ended December 31, 2013, computer equipment and office equipment increased by $10,953 due to the purchases of equipment, during the same period, Prestige disposed of computer and office equipment at a loss of $,872. Other changes in value are a result of foreign currency exchange differences. During the six months ended December 31, 2013 and 2012, depreciation expense was $68,900 and $83,596 ($34,312 and $40,355 for the three months ended December 31, 2013 and 2012 respectively.) NOTE 5 - ADVANCES, RELATED PARTIES On September 8, 2011, the Company entered into an Agreement to purchase certain leaseholds from an unrelated third party in exchange for 25,000,000 of shares of the Company's restricted common stock and a $450,000 promissory note. The $450,000 promissory note has a term of six months and therefore became due on March 1, 2012. The promissory note does not accrue interest. At December 31, 2013, the promissory note is still outstanding and includes an additional $2,790 to account for exchange rate differences. During the six months ended December 31, 2013 and December 31, 2012, Mr. Hung advanced funds of $49,730 and $9,675 respectively, to support the operations of Prestige. During the six months ended December 31, 2013 and December 31, 2012, the company paid Mr. Hung $10,062 and $6,450 respectively, of the funds owed. 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 six months ended December 31, 2013 and December 31, 2012, Ms. Look, an officer and director of the Company and manager of Mega, advanced additional funds of $26,200 and $37,513 respectively to both the Company and its subsidiary Mega. She is owed$157,020 and $130,724 as of December 31, 2013 and June 30, 2013, respectively. Such funds are unsecured, bear no interest, and are due on demand. 10
JV GROUP, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements For the Six Months Ended December 31, 2013 and 2012 (Amounts in USD) (Unaudited) NOTE 6 - PREPAYMENTS, CLIENTS Clients pay a deposit on the Company's provided services upon entering into a lease agreement with the Company. These deposits are recognized by the Company not only as deposits for services, but also as a corresponding liability. At December 31, 2013 and June 30, 2013, the Company had $138,587 and $106,617, respectively in prepayment liabilities. NOTE 7 - COMMITMENTS AND CONTINGENCIES Prestige operates from Silvercord, No.30 Canton Road, Tsimshatsui, which is a premier commercial building in Hong Kong. The center is located on two floors and occupies approximately 10,000 square feet. We paid $ 199,953 and $224,256 for the lease of our center for the six months ended December 31, 2013 and 2012, respectively. The Company's minimum annual rent rate for the following two years are: Fiscal Year Ended June 30, Annual Rent -------- ----------- 2014 $158,286 2015 $247,083 NOTE 8 - STOCKHOLDERS' DEFICIT The authorized capital stock of the Company is 1,000,000,000 shares of common stock with a $0.01 par value and 25,000,000 shares of preferred stock with a par value of $0.01 per share. At December 31, 2013 and June 30, 2013, the Company had 98,879,655 shares of its common stock issued and outstanding and no shares of preferred stock issued and outstanding. During the six months ended December 31, 2013 and December 31, 2012, the Company did not issue any shares of its common stock. NOTE 9 - SUBSEQUENT EVENTS The Company has evaluated it activities subsequent to the six months ended December 31, 2013 and found no reportable subsequent events. 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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. ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not Applicable ITEM 4. CONTROLS AND PROCEDURES Disclosures Controls and Procedures We have adopted and maintain disclosure controls and procedures (as such term is defined in Rules 13a 15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under the SEC's rules and forms and that the information is gathered and communicated to our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Accounting Officer (Principal Financial Officer), as appropriate, to allow for timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer functions are performed by one individual. As required by SEC Rule 15d-15(b), our Chief Executive Office/Chief Accounting Officerr carried out an evaluation under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period covered by this report. Based on the foregoing evaluation, our Chief Executive Officer/Chief Financial Officer has concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic SEC filings and to ensure that information required to be disclosed in our periodic SEC filings is accumulated and communicated to our management, including our Chief Executive Officer/Chief Accounting Officer, to allow timely decisions regarding required disclosure as a result of the potential deficiency in our internal control over financial reporting. Management's Quarterly Report on Internal Control over Financial Reporting. With the participation of our Chief Executive Officer/Chief Accounting Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the " Exchange Act ")), as of the end of the period covered by this report. Based upon such evaluation, our Chief Executive Officer/Chief Financial Officer have concluded that, as of the end of such periods, our disclosure controls and procedures were effective in ensuring that (i) information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms and (ii) information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 15
There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended December 31, 2013, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 1A. RISK FACTORS Not Applicable to Smaller Reporting Companies. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS The Company did not make any unregistered sales of its securities from January 1, 2013 through December 31, 2013. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. ITEM 5. OTHER INFORMATION None. 16
ITEM 6. EXHIBITS Exhibits. The following is a complete list of exhibits filed as part of this Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K. Exhibit 31.1 Certification of Chief Executive and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act Exhibit 32.1 Certification of Principal Executive and Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act Exhibit 101.INS XBRL Instance Document (1) Exhibit 101.SCH XBRL Taxonomy Extension Schema Document (1) Exhibit 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document (1) Exhibit 101.DEF XBRL Taxonomy Extension Definition Linkbase Document (1) Exhibit 101.LAB XBRL Taxonomy Extension Label Linkbase Document (1) Exhibit 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document(1) ------------ (1) Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections. 17
SIGNATURES Pursuant to the requirements of Section 12 of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. JV GROUP, INC. (Registrant) Dated: February 14, 2014 By: /s/ Look Yuen Ling ------------------- Look Yuen Ling President, Chief Executive Officer and Chief Financial Officer 1