is working (too hard) for a living
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The only reason one would expect something from Mr. Bendall, is he promised something six months ago after the final license decision.
But then he also promised faser technology, medical waste technology, Tasmania drilling, etc.
So those expecting this most recent promise to be met are likely also in the market for a well known bridge.
In April, 2013 -- a year ago -- BCCI put out a PR saying that franchising documents had been filed for half the country (not stated if half was geographic or population). The only visible results since then have been the two stores in Cape Coral (and apparent closure of AZ and TX stores, locations opened with great fanfare and expectations of multiple subsequent stores).
Hopefully the financials for Q4 will reflect strong sales for Cape Coral, but company does not disclose -- nor are they required to -- individual store results. And, I am not sure if we know (help, someone??) whether this is a franchise or owned store. For franchises, company gets a one time set up fee plus 7% of revenues plus a marketing fee of 1% of revenues (per the company sponsored Prime Equity report of two years ago, reality could be different at this point). So, if a franchise, store revenue would not appear.
I believe that if the company signs a significant franchise agreement, they will not wait for formal financials to announce it, at least they haven't in the past. Reference New Jersey, Texas, Arizona, Florida.
With respect to financials, the annual financials are due out by April 15, but it is not unusual for smaller companies to have delays. BCCI has delayed quarterly and annual financials in the past, so a delay now would not be a shock or reason for concern. Trading a delay for audited financials would be a no-brainer, but most observers would bet the under re: audited results.
I think that was what Tim was saying, just in shareholder doublespeak.
Further compensation may depend on whether there are restrictions on when the shares can be sold. If there is no restriction, seems to me it would be 'buyer beware'; my guess is that the number of shares issued contains a 'cushion.'
For example, it is hard for me to believe BCCI got $500,000 worth of 'ice cream distribution' value from Caliph Diaries, but that was the market value of the 5,000,000 shares which were paid.
BCCI has been giving out shares for services for several years; however, to the best of my knowledge they have not disclosed that there are restrictions on disposition.
There is a question in 'Item 3' of the financial report, 'List any restrictions on the transfer of security,' top of page 5 in the most recent report (Q3 2013). The company says 'NONE.' I am not a reporting expert, so not sure whether this specifically answers your question about prior security issuance. With respect to any restrictions on issuance of the shares issued and/or committed on October 1, 2013 for $1.7M worth of advertising, must wait for the next report and hope it is disclosed there.
PITG: BCCI didn't receive funds for advertising, they obtained $1.7M 'worth' of advertising on October 1 in return for as yet unspecified equity securities -- we should know more when the 2013 financials are made public (expected April 15, although delays are frequent for small companies).
I tried to get more details from the press release, however for some reason the announcing press release is not on the company's website. I did find the following quote from my post 26761 at the time, taken from the PR:
The investment was in exchange for a combination of stock at a premium to market.
So, $216 of trading (77K shares times .00028/share).
People should be excited about this why??
There were 275M common shares O/S as of September 30, 2013 (prior to whatever dilution occurred on October 1 to buy $1.7M of advertising).
$6/share implies a market value of $1.6B. This is a bit much for a company with annual sales running below $2M/year. For those into PE ratios, cumulative 2013 profit through September 30 was $120K, which translates to $160K for the year. Thus, $6 pps would be a PE ratio of 100,000+ to one.
Semantics. Asus and ppv both have points:
- PPV. BCCI is a 'successor company' (same stock base and 'founder') to a company which went public at $120/share.
- Asus. The people who were interested in investing in the prior technology company, are not the same ones investing in the current incarnation, a Hooters meets Starbucks coffee company which certainly has a conceptual appeal.
The question is whether there is money to be made. Two parts of this discussion:
- Stock. I think the answer is yes, as Mr. Henthorn does an excellent job of getting publicity for his company; unfortunately, to date the publicity items have not led anywhere substantive (reality tv, ice cream, NASDAQ, audited financials, 'under the radar' stock pick, advertising, etc.).
Current active initiatives include advertising ($1.7M worth, dwarfing annual revenues -- cost of which will hopefully be known when 2013 financials are published (due April 15, but delays can happen)) and franchising (originally announced as a key initiative in the sponsored Prime Equity Research report of Jan 2012 and in the hiring of industry renowned restaurant franchising experts, not sure it they are still with the business).
Worth noting some apparent (no numbers issued to date) recent franchise success in Florida after 'flubs' in TX and AZ, where multiple stores have been opened and closed over the last two years. Certainly, companies 'live and learn,' that is how you gain success.
IMO, company hopes that advertising will drive franchising interest -- why else advertise where the company has no outlets as they have announced they are doing? Note company makes $25K/franchise outlet up front, plus 7% of revenues, and the franchisee has to pay for equipment and remodeling, and is exposed for ongoing real estate and utility costs (per the PER report, likely individual franchisees can negotiate their own deal). And it could well be that franchisees may be better at operations than BCCI has been to date.
For traders, the trick is how do you time your buys and sells.
- Company. Less obvious here, but doesn't feel positive. The company's published financials have shown operating profits, but IMO that is due to management receiving little or no cash compensation and incorrect accounting of stock issued for services. There is now $7M of such stock, further dwarfing annual revenues, on the balance sheet as "Unidentified...Assets,' for example $500K for ice cream distribution; IMO a significant part of the $7M has to be written off to expense at some point resulting in lifetime to date huge losses for the coffee company with relatively nominal growth for the level of investment.
But perhaps stock 'investment' has been for 'corporate' stuff (ice cream, etc), such that a franchisee would have not have to include such 'expenses' in their pro-formas. Investors hoping for company success have to hope that is the case, but insufficient detail from financial statements to reach a conclusion.
So, view of BCCI depends on your perspective.
Let me try to explain the transaction issue by using a specific example.
To get into the ice cream business, BCCI gave Caliph Diaries (presumably, financial statements don't say who) 500,000 shares for 'ice cream distribution funding.' You can see that in the Q2 2012 report. As you point out, accounting is 'double entry.' So, using .001 per share (par value), they 'debited' expense for $5K and 'credited' shareholder equity for $5K.
Their Q2 2013 report said that in the process of doing the audit, they realized that they were 'accounting for shareholder equity' incorrectly. So, what they then did was to put those shares on the stockholder equity side at $500,000 (.10/share, market value at the time), AND re-categorize the expense instead as an 'Unidentified Tangible and Intangible Asset' for $500,000 - part of the total $8M or so in that category. The 5,000,000 shares are now shown as 'Purchase of an Asset' in the shares table
IMO, they were right the first time to call this an expense -- but it should have been for $500K, not $5K. Ice cream distribution funding is not, per GAAP, an 'asset.' But $500K as an expense in Q2 2012 would have been more than revenue for the quarter, and $8M as an expense would have dwarfed lifetime revenue, so company didn't want to show that.
If an audit is ever done -- and published -- much if not all of the $8M 'asset' will go away. I am sure that BCCI will try to do in such a way as to mask the issue -- for example, simply reduce the assets to $0 (or a number close to that) and reduce shareholder equity accordingly, thus never running these expenses through the profit and loss, enabling naïve investors to continue to believe the myth of profitability.
But I'm not sure an audit will ever be done. This company has no cash, and auditors do not accept payment in shares (I know, I was one many years ago).
Your understanding of BCCI volume needs to be corrected:
More sold shares, means more investments coming in for BCCI to allocate.
Perfect post.
Three years agoJAG Capital talked about 10 locations in the San Antonio area over three years, they have opened two and both are closed.
Says something about the BCCI business model, perhaps they have now changed it.
Ice cream distribution deal was announced 2 years ago, and cost 5,000,000 shares. Should have been expensed at $500K (.10 per share), two quarters worth of Revenues, and more 'profit' than ever reported. Instead, was expensed at $5,000 (.001).
In the Q2 2013 report, this expense was (incorrectly, IMO) reclassified as 'purchase of an asset' and put on the balance sheet as part of 'Unidentified tangible and intangible assets.'
From a business perspective, there is no way this $500K was money well spent (two years later, I venture that less than $100K of ice cream has been sold). For those who would say it is just shares -- sorry, it is dilution; company would have been far better off selling those shares to the secondary market and spending the cash on the core business.
Actually, the shares issued as payment for services were reported in operating -- but at .001 per share (par value), rather than the price at which the shares could be sold when issued (market value).
Some of us complained about this as it happened, but nothing changed until the Q2 2013 report. Interestingly, the verbal focus was on 'misstatement of equity':
Shareholders/Stockholders Equity – From inception the calculations of Equity have been materially improperly calculated. This is the result of an overly conservative approach from the beginning that developed into an inaccurate representation of equity. Simply put, the equity had been calculated based on par value and not at actual value which resulted in an understatement of equity. Although subject to adjustment upon final audit review the equity reported herein is accurate to the best of the ability of the Company and has been derived from worksheets developed by the auditors
Looked at the website, checked out the locations.
Interesting that the two Phoenix-area locations, and the TX location, are not shown. Guess they closed.
No -- company's own release (march or june quarterly report, I forget) announced that the $7M in unidentified, intangible assets resulted from reversing .001 expense entries, instead putting them on the balance sheet at the price where they should have been recorded. That they would 'figure out what to do' with the asset value in the future. Hopefully, proper treatment will show up in Q4 financials due out in the next month.
The other one to watch in that report is the treatment of the 1.7M in advertising, to see how it was paid for and recorded. This transaction was 'coincidentally' announced on October 1, so did not need to appear in the Q3 financials. Although it certainly qualified as a significant 'subsequent event' at almost two times annual sales, likely with significant dilution, not a word.
Have you read financials? Balance Sheet in particular??
I am late to the discussion of this latest run up, but $7M+ of 'unidentified and intangible assets' is not good for a company with less than $2M of annual revenues.
Particularly since those assets were originally classified as expenses at .001 per share for the shares issued, rather than the .02 to .10 per share that should have been used.
To uplist, they will have to be audited at which time they will be reclassified to expense, likely through a prior period adjustment. Will result in significant negative book value.
IMO, company has no chance of meeting nasdaq listing standards. So hard to understand positive 'unbiased' analyses.
Having said that, hats off to the insiders for creating this run, into which they can sell.
d
How many coffee companies depend on their website to sell coffee?
BCCI has opened two sites each in Texas and Arizona, none of which are on the website. Are they closed, or not worth talking about?
The new website was at least good for a pump and dump for the insiders, meanwhile the share price is back to where it was prior to announcement.
The stock ran last spring when the company announced it was applying for NASDAQ listing and had secured a stock symbol.
It came back to earth -- and has remained there -- as investors realized that anyone could get a stock symbol, and the company was unlikely to achieve listing, which requires certain financial metrics as well as audited financials.
The current run appears related to a penny stock promotion; last thing I saw there (by clicking on a poster's url) was that the newsletter reaffirmed its positive rating although the stock had gone nowhere (from a closing perspective) since the original recommendation at .03 per share.
(Last paragraph is IMO; perhaps someone can advise of recent substantive company accomplishments which have led to the run-up. I can't explain the run from .022 to .03 prior to the newsletter's recommendation other than inside information, which would of course be illegal so hopefully there is another answer).
As PPV has mentioned -- great if you can make money on this stock by timing runs. That is different than considering it as an investment based on the business plan (sales and profits per shares outstanding based on GAAP (required for NASDAQ listing)).
There is no 'solid income' here.
Company shows income on its unaudited financials because it is does not properly record expense related to share issuance.
They were recording expense at the par value of the shares issued (.001/share), then realized (as part of auditing process? don't know) that this was incorrect.
So, that was reversed, and so -- voila -- $7M of 'unidentified and intangible assets' appeared on the books after Q2 2014. For example, some of these dollars relate to the payments made to the ice cream distributor, which under GAAP should have been expensed -- as they originally were, at .001/share -- not capitalized as they are now. Making lemonade out of lemons, the company noted the huge increase to 'shareholder equity.'
But should auditing be completed, all (or almost all) of these assets will be written off, reducing shareholder's equity. And this write off will dwarf the (since inception as a coffee kiosk company) REVENUES of BCCI, much less the profits.
And this is to say nothing of the $1.7M of advertising bought on October 1 (and therefore not accounted for until CY 2013 financials are published in April or whenever) -- a huge number for a company with less than that in annual sales. The company has not yet disclosed how many shares (common and/or preferred) were issued for this advertising.
So, for fun go back to stock price a year ago today, two years ago today, three years ago today, etc. What have you got?
I bet it is not a positive return on investment.
And BTW, while you are doing that compare it to NASDAQ index or Russell 5000 or ???
BCCI forecasted 100 branches by the end of 2012 in a paid research report at the end of 2011. Maybe they have 12 now, hard to tell with openings and closings.
Fully agree with paragraph one.
I was just trying to say that fact of a partnership in one state, and owning corporation in another, is not sufficient information to prove tax fraud.
However, you have added additional data which would certainly suggest something amiss.
Hope you bought at the .22 close, not at the .26 intra-day high.
The concept of structurally organizing to minimize taxes is hardly unusual -- see Tim Cook discussing his strategies in a congressional hearing; and see also the many US corporations that pay minimal taxes for such reasons.
However, the objective of the structure should be to minimize the tax load on the corporation, not on those having a fiduciary responsibility to the corporation.
I still contend we don't know quite enough to reach a conclusion, other than we know enough from the principals' prior history to have concerns that the structures are not primarily focused on the financial welfare of BCCI shareholders.
Not sure what you mean by 'never let me down.'
Please advise on which months in the last two years you could buy BCCI on a particular day of the month -- say the 31st -- as you suggest here, and sell when it reached 75% higher in the next 60 days. There may have been 1 or 2 (I haven't looked), but that would be less than 10%, hardly conducive with 'never let me down.'
To say never let me down, you would need to show that such a strategy has made money.
I don't care to spend the time to run a spreadsheet, but I would suggest that if you had bought $100 worth of shares at the end of each month over the past two years, and either waited for a 75% pop ANYTIME after that to sell that particular holding, or held on waiting for that pop -- your monthly purchases of shares would be worth somewhere around $40 average at this point.
Or, perhaps there is some other technical 'trigger' (inside information doesn't count) which says buy now and you can sell within the next 60 days for a 75% profit. If so, please share that one so we can empirically test it.
I don't think there is sufficient public information to determine structure.
Could be the corporation owns (at least part of) the partnership -- I have seen that before. But then, there can be other partners, and could be that is where the cash goes, if any.
Certainly, one smells a bit of a rat when the 'other side' of the Florida joint venture is at least in part owned by a (former?) BH associate (if I recall an earlier post correctly).
Plus, we have the underlying problem that the Baristas business model, even as reported, is hugely unprofitable, funded only by significant stock dilution.
(For those that argue the company has reported profits -- that is right, but only because they have not properly reported cost of the stock issued for expenses, $7M or so of which sits on the balance sheet as 'unidentified intangible assets').
For those who believe in Santa Claus and the tooth fairy, the forthcoming audited financials will explain all.
Liking a product can absolutely stimulate company inquiry.
However, to make money -- the objective of an investment, yes?? -- the business model has to make sense.
In this case, it doesn't. There has been tremendous dilution from share issuance which has not shown up in the company's expense statements, even though the dilution was because of stock payment for expenses.
So, we have an unprofitable company (under GAAP) which is diluting shareholders.
Or, to make money, one has to time an investment with the 'pump and dump' announcements which show up but never happen, in this case reality shows, audited financials, ice cream, NADSDAQ listing (a classic here being the doubling or price when BCCI merely applied for a symbol -- very cheap to do).
Look at the stock price chart. Other than a major run when all coffee stocks ran, the only other 'runs' have been with company announcements which have not proven to be true.
Caveat emptor.
Business model is not great.
Most of the $6.9M in 'unidentified and intangible' assets on the balance sheet will ultimately be reclassified to expense (where it should have been in the first place), or written off directly to shareholder eequity.
Then there is the $1.7M of advertising expense incurred starting October 1.
These are Big Bucks for a company running about $2M/year in revenue.
Volume up, pps down about 20% from .025 level to .020.
To me, suggests negative non-public information.
But certainly a buying opportunity for those who have recently spoken of loading up the boat.
Something down -- stock price!
I am not a technician, but .020 seems like a breakthrough on the downside. Has it been this low in 12 months??
But if company is willing to sell stock privately for .001 per share, as they have done per their Q3 financials (even with expected 'when buyers can sell' restrictions), why should investors pay even .02 per share on the public market?
Thanks, Playing --
When BCCI announced the NASDAQ listing, Mr. Henthorn said it would take 'six months,' which of course has long since come and gone.
BCCI has spoken about audited financials; indeed, the Q2 financials -- published in August -- implied that the audit was almost done. Indeed, I think the verbiage was the same in the recently published Q3 financials, some 4 months later.
I think they announced they had applied to 26 or so states for franchising -- I'm not sure they ever announced the number of approvals. More important is the number of states in which franchising is actually happening -- and that is likely three or less (FL, TX, AZ at the most).
A number of posts this week have spoken about time to 'load up.' I would simply suggest they contact Mr. Henthorn directly; during Q3, BCCI sold stock directly for .001 per share, per the publishedfinancials. That's right, a 95% discount to current share price. While those shares likely have a 'don't sell too soon' covenant, for those expecting $1 per share, the return opportunities are much more significant than buying on the open market.
No argument from me about Baristas being a real business.
There are kiosks which sell coffee. That is a fact, not debatable.
But, I would strongly argue about whether it is a business which will bring a positive return to people who buy its stock:
- Multiple store openings are announced, but do not happen (Arizona, New Jersey, etc.)
- Officers are paid no salary, thus understating expenses;
- Investments are made in ancillary areas which do not pay off (ice cream, reality show, proposed Tully's purchase).
- Stock is issued to pay for services, but the value of the stock is not appropriately recorded in the expenses of the company (now on balance sheet at a level of $7M for 'unidentified and intangible assets,' they will end up as expense should an audit ever happen).
- Promises are made about uplisting, audited financials, etc., but nothing happens.
- Grandiose growth forecasts are presented to paid research services (100 store openings in 2012), but they don't come true (less than ten -- in fact, less than ten in 2012 AND 2013 combined.
So yes, there is a business. But marginal business. In its own financials, BCCI says: "The revenue from current operations is minimal."
Will it make money? In my opinion, no -- note that 75% of restaurants fail. Were they a business, yes, but doesn't mean they were successful.
For those who prophesize financial success for this business, I would be interesting in reading about the financial metrics which drive to that conclusion. I just haven't seen them. But I have seen 50% dilution in the last couple of years, and the stock is near a multi-year low (with the overall market at an all-time high) with continuing 'going concern' comments even in the unaudited financials.
Most recent quarter, 3% quarter on quarter growth despite ice cream reported to be in hundreds of stores during the peak summer season for the first time.
The stock given away has now been placed on the balance sheet -- at the appropriate per share price, rather than the .001 previously used for expensing.
It is categorized as 'unidentified and intangible' assets -- almost $7M, or a MULTIPLE of lifetime revenues! An audit will reclassify these assets to expense.
For example -- the $500K worth of stock issued in Q2 2012 to establish ice cream distribution (see Q2 2012 financials; now shown as 'purchase of an asset' in current financials).
Not an asset by any means -- and even if it were, it would be valued at $0, given ice cream sales in the 18 months since.
For those interested in integrity of the financials, consider the following:
- YTD (Year To Date) revenues, and cost of goods, are the same in the published Q2 and Q3 financials, in the 'Comparative Statement of Operations.'
- Even more interesting, YTD expenses went DOWN from Q2 to Q3.
These numbers make no sense to me, outside of the concept that the financials are totally contrived.
Am I mis-reading?? I deal in data, not emotion -- happy to be shown wrong. But this company said in the notes that they are taking numbers from the pending audited financials, scary -- or not truthful. Pick your poison.
More interesting is the growth hypothesis.
Revenues increased from 448K in Q2 to 464K in Q3(<3%). Not much during a summer season when ice cream was said to be available in hundreds of stores. So, were there no ice cream sales or did coffee sales decline dramatically??
I need to correct myself.
I said that the company sold 650,000 shares for 45,000, as that is what the Statement of Shareholders/Stockholders Equity said in the Q3 financials. This would have meant a per share price of .069 -- not bad, with the company's stock never above .04 during the quarter.
But, the Comparative Statement of Cash Flow in the Q3 financials shows that the shares were sold for $6500, or .01 per share (not the .001 shown in the other statement
So, for those interested in investment in the company, looks like a 60% discount from market can be obtained by offering to buy company stock.
Go for it.
Selling at .025/share?
The company's Q3 financials say that 650,000 shares were 'issued for cash' at .001 for $45K during the most recent quarter.
Aside from the math (or, maybe .001 was rounding, can't go lower than that??) -- suggests that those who want to invest in the company can do so at a significantly lower price than available on the pink sheets just by directly contacting Mr. Henthorn.
There will likely be some restrictions on when shares can be sold -- but at a purchase price of .001, could live with that.
Or, perhaps the financials are wrong?? How could that be??
I will comment later on the financials as a whole, but the same schedule said that 1M shares were issued for 'professional services and/or services,' with no price or value stated? Folks, how can that happen for a company with their audited financials almost completed? This is like saying 1+1 = . Blank! Not even a wrong answer, but rather no answer. Ouch
Agree.
IMO, the issue is that BH and company are not taking salaries -- and to properly account would result in that observation, which would make people realize the weakness of the overall value proposition.
I'm looking forward to see how they account for the 'shares for advertising' transaction announced on October 1 -- a date which postpones required disclosure, unless you believe in the GAAP requirement to disclose material subsequent events.
My bet is the currently overdue Q3 financials do not talk about that transaction.
Define 'the information' from BCCI which is accurate.
We know that 'forward looking information' -- about stores opening in the next three months, for example -- have not been accurate. Reference NJ 2.5 years ago, Phoenix two years ago, and San Antonio a year ago.
And we could also talk about the paid 'research report' by Prime Equity Research, which projected 100 stores to be opened by the end of 2012 (half franchise, half company owned) -- per information provided by the company.
In terms of 'historical' information, even the company has admitted that reports have not been accurate. The Q2 2013 financials reclassified shares issued at .001 per share for expense items in previous financials, into an $8M 'unidentified and intangible asset' account as the shares should have been priced at market value at time of issuance, not par value. A big number, against $1.5M in annual revenue. And a clear statement that prior financials were wrong.
Meanwhile, the Q3 2013 numbers are now 30 days past the 'deadline' for SEC reporting companies, a level to which BCCI aspires. Maybe BCCI is waiting for the audit to be completed? Or perhaps, to be paid for, as auditors do not work against IOUs or stock -- they need cash so there is not a potential conflict of interest.
Or perhaps they don't want to make visible of reclassification of $8M of 'unidentified and intangible assets' to expense (and shareholder equity).
Back to the main point: what information previously issued by the company, other than an actual store opening, has been accurate? Uplisting?? Reality show?? 200 stores selling ice cream??