is working (too hard) for a living
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There was a store in San Antonio, which 'relocated' in 2012 (actually, I think the second was opened while the first was still open, but that is a minor detail), it is now closed.
In October of 2012 the company announced two additional stores would open in San Antonio by the end of the year, that didn't happen.
In early 2012/late 2011, the company announced five stores opening in the Phoenix area by the end of March, 2012 -- obviously that didn't happen.
And, there was NJ store announced in 2011, I think it was, it also didn't happen.
Not if you bought stock at .15 a share...
.004s nice!
"Not much dilution"? 50% from 6/30/2011 to 6/30/2013.
And, who knows how much for the $1.7M media buy announced on October 1; we won't know until either a subsequent event is presented with (overdue) Q3 2013 financials, or with Q4 financials due next spring.
We do know, however, that $1.7M is more than 25% of BCCI's market value. We also know that $1.7M is a lot of advertising for a company with less than $1.7M in revenues for the twelve months ended June 30, 2013.
Nevertheless,we hope that the dilution is less than 25% as the $1.7M is likely 'list price' for the advertising, not the last minute not yet sold prices that we hope BCCI is paying (and someone is watching).
Lack of funds is likely a primary reason for no audited financials, as auditors cannot accept 'in kind' compensation for their work, that is, no stock.
Also it may well be that company is unable to reconstruct its numbers in sufficient detail to enable auditing.
It is logical that audited financials would show up with a regularly scheduled financial statement.
The next one due is for Q3 (through 30 Sept 2013). For SEC reporting companies, these are due 45 days after the end of a quarter, or November 14/15.
However, BCCI is not an SEC reporting company -- although if they want to uplist, they need to go there. So far, however, they are never on time. Q1 financials came out in June, as I recall, and Q2 financials came out at the end of August.
Readers will be interested in several things with the upcoming financials:
- Are they audited?
- Per store sales.
- Ice cream sales -- hopefully a big number, given the 200 stores which reportedly were getting ice cream in April as we were reminded in a recent post
- Resolution of the $8M in 'unidentified assets' which arose as the company reversed the inappropriate below market recording of expenses related to stock for services which enabled quarterly operating profits to be recorded.
- Reporting of the company cost of the Big Buck advertising purchase (how many of what kind of shares); although this happened on October 1, it should be reported as a significant subsequent event (would have to, if the financials were audited).
I will take the 'under' on audited; I do not think it was coincidental that the advertising buy happened on October 1 -- IMO the company wants to delay reporting this as long as possible, as it will totally sink operating profit in addition to being hugely dilutive.
EEGC market cap is about $1.5M.
When you compare that to what EEGC is requesting from SmartWin, or Mr. Bendall's stated value for the lease (to say nothing of his stated value for the faser technology, or the US Navy supply contract) -- you can see the market's view of the likelihood of any of these events happening.
Just another way to buy a lottery ticket.
Ice cream 'just now showing up' at C-Town in the Northeast?
Given that the press release was dated April 13 and summer is long since over, 'just showing up' would indicate terrible execution.
On the other hand, if the ice cream did get into 200 stores in April, I would have expected to hear fantastic things about volume when the most recent financials were published.
How much would you have to sell to stay on retailers' shelves? Let's say 2 boxes a week (think actually much more, but bear with me). At $4 per box over 10 weeks of second quarter and 200 stores, that would be $80,000 in revenue -- certainly worth talking about in a financial release (would have been more than 15% of total revenue!!), and showing as a second source of revenue.
Would seem to me much more logical to put the ice cream into the Cape Coral market, say, where significant marketing dollars are being put into establishing the brand in a warm weather market.
Note that BCCI gave Caliph Diaries $500K worth of stock in second quarter of 2012 to make ice cream distribution happen, it would be nice to see a return on that dilution, err, investment.
Hopefully the company will share ice cream revenue results for the summer months when Q3 results are published. If not, investors can draw their own conclusions about the financial success of the ice cream.
Yes, the business model does not work, which is why potential franchisees have been hard to find.
The Prime Equity research report reported the company objective to have per store sales go from $11K/month to $20K in 2014 -- without saying how that would be accomplished.
The net is, you have to invest too much capital for too little return.
And the only reason the total enterprise has been 'profitable' is that BH and others are taking no salary -- and third parties are being paid in stock which is expensed at $.001 per share.
With the most recent quarterly report, those expenses were re-cast as 'Unidentified assets' -- which will eventually be written off in any audit, but finally at the right level. So net, BCCI will have nominal if any shareholder equity combined with huge dilution, not a positive situation.
Per the Prime Equity Research Report of January, 2012, it is expensive to open a store -- $100K for equipment, plus 30% of annual revenue in working capital ($35K, if $10k/month revenue) plus $25K franchise fee.
And then, 7% of ongoing revenue for franchisees.
Hard to make this pencil out on $120K of revenue per year. The two Montana stores are apparently down to one -- as owned stores. San Antonio is at 0 or 1; Phoenix announced five stores in early 2012, but are now at 0 or one.
So, no good proof points for prospective investors.
Perhaps the recent Florida openings will help.
To me feels more like incompetence than scam -- although the various non-existent technologies sold by Malcolm to EEGC for tens of millions of shares do give one pause.
If Malcolm still has all his shares, then incompetence; if he dumped those shares, then scam.
Initially, you said BH always does what he says he will do.
Now, a long post to try to explain why he has not done what he said he would do, and that it is no loss if he doesn't.
Your comments deserve further review.
Store Openings. You are correct that the 100 store plan appeared in the Prime Equity Research report (a research report paid for by a 'third party'). But, let's look at the verbiage:
Baristas expects to open up to 100 coffee stands (50 company-owned and 50 franchised) by Q4-2012.
How do you assess the reality TV series in this context. Or audited financials? Or 100 store openings in 2012, including 50 franchise stores? Or NASDAQ listing? Or Tully's purchase? Or .....
He and his team have been doing exactly what they said they would do, every single time
Not sure that 51% owned by BCCI counts as a franchise. However, it is a positive that a third party investor has put in $$$, now let's see revenue and additional store openings. A 'cluster' of stores in a geography could potentially support some level of advertising.
There is no doubt that BCCI is a going operation with revenues and products. On buildings, likely they have leases which are more a liability than an asset, particularly if locations have to be shut down (at least one in the last year), but I take your point.
But the real question is whether BCCI has a sufficiently robust business and financial model to make a positive return on investment reasonably likely.
What do we know about that?
- Extensive share dilution as documented by ppv, including the most recent dilution for advertising at a level equal to total annual revenue for the company, including national advertising although BCCI has activity in only 5.5 states (NY a half for some ice cream).
- Questionable profits. They have only been shown as a result of providing shares worth .04 to .10 each to professionals and business partners (e.g. Caliph Diaries) and putting them on the books as expenses at .001 per share.
The per share issue has finally been recognized and put on the most recent balance sheet at the proper rate -- totaling over $8M, or five years worth of revenues!!! But they are classified as 'unidentified tangible and intangible assets,' with restatements of the purpose to which they were issued. For example, the $500K worth of shares issued for Caliph Diaries was originally recorded as Stock Issued for Ice Cream Funding, and is now considered Purchase of an Asset.
IMO auditors will require most if not all of the $8M will be written off (you must identify the assets and they must meet the GAAP definition of an asset) -- but perhaps at one time, leaving intact reported historical quarterly profits. Not sure the rules for requiring prior period adjustments, but historical profits may be gone also.
Will be interesting to see how the stock issued (number of shares unknown (why??), but likely 10% dilution) for $1.7M worth of advertising is recorded. Perhaps a 1 in 90 day coincidence, but that deal was announced on the first day of the last quarter of the year, which maximizes the amount of time absolutely required to report the details. Unless the company reports a material 'subsequent event' in its Q3 report, which it should do -- since they thought it was material enough to issue a PR.
- Constant Promotion. The company is doing an excellent job of creating some level of stock excitement. Consider reality show (promo video on YouTube near you, with several historical PRs demonstrating widespread yet unrealized interest), ice cream (unknown revenues -- and you know they would be stated if significant), and NASDAQ symbol (for which anyone can apply), and the infamous paid research report late in 2011 talking about 100 store openings in 2012. And also, the occasional PRs about people with impressive backgrounds 'joining' the company -- but if they are so impressive, why such anemic store growth and lack of franchisees? At the very least, you will get to see the stock jump up and then settle back down (not sure the ihub definition of 'pump and dump,' but this seems close).
If the above pattern is one in which you wish to invest, that is your privilege -- you will certainly be entertained, but you can do that by reading this board.
Scam or not scam -- all in the definition.
Fact of the matter is that the business model is not profitable.
As payperview has pointed out, the company has given out tens of millions of shares for services rendered, and put them on the expense (and stockholder equity) accounts at par value (.001/share). Someone has finally told them this isn't appropriate, so in Q2 they were changed into $8M worth of 'unidentified tangible and intangible assets.' $8M represents the market value of the shares when issued.
Making lemonade of lemons, BCCI noted that this change increased company equity!
As a former auditor, I will tell you that assets which can not be identified, are not assets, and will be written off IMO -- thus wiping out all reported BCCI coffee profits and then some.
Although, BCCI is trying to rewrite history; their Q2 2012 financial statements, for example, showed 5M shares valued at $5K issued for 'ice cream distribution funding'; suddenly, the Q2 2013 statements show these shares, now correctly valued at $500K, as an 'asset purchase.' That is one HECK of a lot of ice cream; hard to believe that much was bought in Q2 2012 -- if sold, you would think we would have heard a lot about it!! And if not sold, after 18 months would it still be good??
And this is before the most recent dilution to buy $1.7M of advertising, likely with 40M or so shares (combination of preferred and common). Advertising is also an expense, and must be written off, IMO. As I previously noted, unless BCCI makes a 'subsequent events' disclosure in its Q3 financial statements -- which it should, as $1.7M is quite material (a years worth of sales!!!) -- we won't see the accounting for this program until 2013 financial statements are published sometime in the spring.
Audited, perhaps??
In terms of future value, BCCI has has had difficulty attracting investors required to finance new stores, which is why it did not achieve its heavily promoted goal of 100 store openings in 2011. Perhaps Cape Coral will have a positive result that can be a model for other investors -- but at what cost in terms of all the stated advertising? How does that amount of advertising compare to anticipated Cape Coral annual sales, wonder if we will be told?
How do you figure?
Today is a big day for BCCI for securing the funding necessary to move the company forward.
With an EEGC market cap of $2M, 'word on the street' assigns different words to B+S than 'big stuff.'
Source for "more debt" statement? PR says:
The investment was in exchange for a combination of stock at a premium to market.
The market was not impressed by Mr. Stilson's appointment, pps has gone down 10% since the press release.
Hopefully for shareholders, he was given options rather than dilutive stock.
We will know more with the next, hopefully audited, financials. Or Not.
In the Fall of 2010, Thomas Metzger, said to be very experienced in franchising with such restaurants as the Sizzler, was hired as COO. Not even on the masthead today -- the current President is experienced in construction.
In July of 2011, BCCI announced the hiring of Robert Palmer as Director of Franchise Development. Mr. Palmer was reported to have previously been President of various franchise-based companies, including one he founded which made its way to NASDAQ.
Despite the reported hiring of such luminaries, the company didn't even file state-required franchising documents until late last year -- and that excluded the 'home' state of Washington, finally filed this year.
And, how many franchises have in fact opened up? Certainly nowhere near the 50 that the company said were planned for 2012 alone? Maybe one or two?
So, we do have to take this most recent addition with a grain of salt, while watching Barista's reality show on TV.
Agree, won't care about past if company uplists; BUT IMO the company will not meet the requirements for uplisting no matter how many PRs are put out or committees formed with distinguished individuals.
To go NASDAQ, the audit must show sufficient net worth.
IMO, much of the net worth (which I don't believe was enough anyway, a listing expert can comment) suddenly added in the recently released unaudited financials will not be there when the audit is completed; further, I predict that most if not all of previously reported profits will also evaporate.
Re:
This is looking better every day...keeps going up on good news...
Re your assertion:
They own all of the locations and there are twelve not 8.
The Company had 10 stores operating during the current reporting period.
??? 700,000 at .007 is a great deal, where is the risk in that?
Not sure your definition of cash flow positive.
Per their recent financials (Statement of Cash Flow) --
- They started the year with $80K in cash.
- They have $80K in cash at June 30.
- But they raised $150K through sale of stock YTD (but, the Statement of Shareholders/Stockholders Equity shows $150K in Q1 + $45K in Q2 -- arithmetic not a strong suit for this accounting team...).
To further add to the confusion, the Q1 Statement of Cash Flow shows $26,773 for sale of Capital stock in the quarter, but the Q2 Statement of Cash Flow shows $45K in Q2 and $150K YTD (45 + 27 = 150?).
(IMO, is not rocket science to have financial statements consistent with each other -- but apparently a challenge for our intrepid team).
Part of the issue appears to be confusion on the issuance of 15,000,000 shares in Q1. The Q1 financials said this was an investment in Baritas Acquisition Partners (remember -- the abortive attempt to acquire a portion of Tully's), while the Q2 financials say it was a sale of stock for cash. You would think they would know why they issued 15,000,000 shares (6%). But then, you would also think they would know WHEN they issued shares, and the historical view of that has changed since the last quarterly report.
And the above discussion of 'cash flow positive' doesn't begin to speak to the dilution suffered through issuance of stock for professional services, ice cream distribution, etc. 33% total dilution in the last fifteen months alone! Using extreme dilution to say you are 'cash flow' positive is disingenuous at best....
However, to the favorable side of dilution, mention of 5,400,000 shares of preferred stock reportedly issued in Q2 2012 for conversion of debt magically disappeared from the financials during the quarter. Note the preferred total of 1,460,000 at the bottom of the Statement of Shareholders/Stockholders Equity June 30, 2013 while column 3 of the corresponding tables at March 31, 2013 and December 31, 2012 shows 6,860,000 preferred shares outstanding.
Further confusion but consistent with the company's arithmetic issues, the 5,400,000 preferred shares have never shown up on the balance sheet. Even the quarter of issuance!
But, back to cash flow positive -- per prior discussion, they haven't been profitable when you properly account for the dilution. Which they have started to do -- but will complete when much (most?) of 'Unidentified and Intangible Assets' are properly re-classified to Accumulated Deficit, thereby reducing assets and equity.
For example, how can payment of shares to Caliph for ice cream distribution be considered payment for an asset; certainly, they weren't paying for the brand. They were paying for some inventory (long since either sold or thrown out) and distribution development. The former is 'cost of goods sold' a year later, and the latter is normal operating expense.
BTW, not sure why there were in such a hurry to get out these clearly flawed financials -- Q2 2012 financials were not issued until September 25, 2012. Waiting till then would have given another month for clean up. Perhaps these were required for a pending 'pump and dump,' certainly today has been good to the stock.
All IMO, of course. Hopefully revised financials, or the next report, will clear up all of the confusion.
My bet -- and hope for shareholders -- is the bad numbers are caused by incompetence.
The 'Unidentified and Intangible Answers' solution is likely interim -- they felt they had to get something out because they said they would, but didn't have the time or energy to decide on the specific part of the 'debit' side of the balance sheet to assign each of the transactions.
However, we are only talking about 50 transactions, seems like that could have been taken care of in a day or two, certainly less than a week.
And why they had to restate the actual number of shares outstanding at the end of prior quarters is beyond me, it is really incompetence to not know your shares outstanding.
The numbers shown will NOT pass an audit; I would expect to see a thorough restatement whether before the next quarterly results or interim, don't know. When that restatement comes out, I would expect a significant reclassification from 'assets' to 'accumulated deficit.' If not, it will happen at time of audit (should there ever be one).
And oh by the way, I just noticed issuance of 15,000,000 shares at .01 per share in Q1 2013 to raise $150K (approximately 6% dilution -- suggests BCCI market value of <$3M as seen by the investor), a quarter during which the weighted dollar average of public transactions was north of $.05/share.
IMO.
It actually gets worse.
As I noted in my post, the company's financial statements (Statement of Shareholders/Stockholders Equity) say that 4,500,000 shares were sold at .001 per share in Q2, 2013 to generate $45K of cash -- but I now realize that is a mathematical impossibility. Hard to know which is the wrong number, the pps or the $ raised (I am assuming that 45,000,000 shares were not issued, as that would have caused the company to exceed the number of authorized shares).
Note that .01/share -- if that is a corrected number in the equation -- is well less than half of the average trading price during the quarter.
A least, we can solve the mystery of where the new equity comes from. Recall that in prior quarters, stock was issued for professional fees at $.001 per share, an amount questioned by PPV and myself as inappropriate since it could be sold on the public market at a much higher amount.
It is now in fact being recorded as a much higher per share level, with retroactive adjustment. So, in Q2 2012, a quarter which previously showed a profit, we now see $700K of 'paid in capital' spent on professional fees and services, which if reported that way at the time would have more than wiped out reported profits.
But there's more -- these fees are not going into an increase in accumulated deficit, they are being considered 'Unidentified and Intangible Assets.'
Also, the 5,000,000 shares issued the ice cream company for distribution costs are now shown as an 'asset purchase' at .10/share, and are part of the 'Unidentified and Intangible Assets.' There are other 'asset purchases' using shares, now shown at a higher valuation, not sure what they were for -- perhaps related to Montana store purchase?
Note there is also a change in the paid in capital related to shares issued for extinguishment of debt, now reported at a higher pps. Hard to see how this goes into the 'Unidentified and Intangible Asset' category, but it appears to have done so (caveat: I could be wrong on how to report this, have to go back to old financials which I do not immediately have).
The number of common shares outstanding at the end of prior quarters has also been restated, without explanation -- you think they would know how many certificates were out there at a given point in time. And, 5,400,000 preferred shares put on the books at $5,400 for extinguishment of debt in Q2 2012 seem to have disappeared altogether, as preferred shares outstanding have dropped from 6,860,000 on March 31, 2013 to 1,460,000 with no corresponding increase in common shares.
Net, an audit is required to determine whether $8M of assets have been created, or whether some of these amounts would best be added to accumulated deficit as a result of value impairment or use for "expensable" (versus "capitalizable") items. Plus, the holders of the aforementioned 5.4M preferred shares might like a recount.
You are starting to see it.
They put expenses on their books at the shares' par value ($.001/share), but the shares can be sold by the recipient for market value, let's say .02 - .10 over the last couple of years.
So, BCCI shows profits -- but will auditors let them stand? Not sure we will ever know, auditors require cash payment rather than shares to maintain their independence. So while the 'auditor' word appears in these financials, they are still unaudited numbers.
More interestingly, in Q2 2013 BCCI reports selling 4,500,000 treasury shares at $.001 per share to raise cash -- excuse me, if the public market is .03 per share, why not sell them as a secondary on the public market?
Maybe because no-one would pay more than $.001/share privately - but meanwhile the buyer gets a 30:1 return, and huge dilution for prior shareholders.
Or, maybe an insider paid $.001/share to be resold on the public market.
Something wrong here.
Conspicuous in the absence: 'real profits'
That's what counts, is BCCI a business model which works?
- 'Starbucks meets Hooters' can resonate; but
- Can it make money?
The only reason unaudited financials have shown a profit is that many professional services -- and the expenses of the ice cream distribution company a year ago -- have been paid in shares, put on the company's expense books at .001 per share, but salable by the recipients at many times that.
I continue to look forward to the audited financials committed by BCCI as part of their NASDAQ listing process. Meanwhile, we all get to enjoy reduced pps and significant dilution.
I am getting tired of this debate between ppv and bcci. Seems hugely semantic.
Facts are very clear.
- ICTN went public at $120/share.
- At some point, its business model failed and it decided to reinvent itself.
- There was a big reverse split -- and insiders issued themselves a whole bunch of new shares, tremendously diluting loyal ICTN shareholders.
- The company acquired/combined with Pangea Networks, changed its name to BCCI, and somewhere in there started selling coffee.
So:
- BCCI is the successor company to ICTN.
- Shareholders who bought stock in ICTN at the IPO at $120 and held on, now hold BCCI stock at $.03.
- The highest anyone bought BCCI stock was at .81 or so (someone can correct me), during the coffee shop stock bubble, and also now hold BCCI stock at $.03.
One fact in debate is whether BCCI has ever been profitable, as audited financials have not been published. The company's practice of paying professionals in stock which can be sold at market price, but put on the books at $.001 per share, has resulted in reported profits but has not been subject to audit.
What is 'accretive dilution' for BCCI?
The only reason the company shows profits is that it pays for many services with stock which the receivers can sell, but the stock goes on the books as an expense at .001 per share.
At least, the difference between 'book' value and 'market' value is becoming smaller by the day, now only a 1:25 ratio.
Certainly looking forward to audited financials which must come out to achieve NASDAQ listing (among other requirements which are equally unlikely to happen).
What cash?
I want to see how 'ole Henthorn' will act with the cash
Strange price action.
(Per chart on yahoo) It took a $16,400 (1.6M shares) order to move the price from $0.0088 to $.01 early in the day, and then a $12 order (1,000 shares) moved it from .010 to .012 at the close.
Certainly an up day, but not sure I'd bank on that last 20% bump.
Regarding 'patience on the time frame' for uplisting -- when do you expect the required two years worth of audited financials to be available? I can go back and hunt -- but I seem to recall a promise of 2013 uplisting.
BUT -- with valuation and earnings that do not meet minimum uplisting requirements, and no audited financials, uplisting is a pipe-dream.
As previously stated, anyone can reserve a symbol for a fee. We will see in the next published financials, but that reservation fee has likely paid significant dividends for the company and its shareholding by reducing the number of shares required to be issued to pay for professional fees, based on the subsequent pps spike which reduces the number of shares required to pay for $X of professional fees and ice cream distribution.
I think there are market capitalization requirements for NASDAQ listing as well as audited financials, perhaps someone else on the board can advise. For reference, BCCI market cap currently well under $10M.
For sure there are pps requirements, but they can be easily managed with an RS.
Would be good to know ice cream revenue -- and profit -- against the value of stock provided to Calip to begin the process.
Hopefully ice cream revenue and COGS will be separate line items in the unaudited financials for Q2 2013 -- though I am betting NOT.
No argument on RS as an acceptable tradeoff for NASDAQ listing, just responding to WallStreetMyWay concern.
The bigger issue for NASDAQ listing is audited financials. These will require cash to create, and cash to audit -- unlike the other professionals to whom BCCI has proferred stock, auditors are unable to accept stock due to strict 'conflict of interest' standards.
NASDAQ has a minimum share price for listing -- initial and ongoing listing. There is no way that price will be met without a reverse split.
Not really -- periodic loss should be a lot higher, so the 'accumulated deficit' should be a lot higher.