is working (too hard) for a living
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Understating annual and accumulated deficit on the 'debit' side of the ledger, and understating total equity on the 'equity' side.
If you hold shares, they ARE appropriately showing the level of dilution you are experiencing. That is, they are correctly showing the number of shares issued.
SHOULD be $400k of equity and expense, agreed.
BUT, in Q2 2012 BCCI booked $5K in expense, $5K in equity for the $400K worth of stock (based on estimated SP in Q2 2012).
There is a reason BCCI shows a profit -- they pay for various fees and debt settlement (some of which was never on the books to begin with!!) with stock. The receiver gets to sell at market value, BCCI records the expense at .001/share, or a discount of 97.5% based on current SP of $.04!!
Magic! But, is it GAAP?
We all look forward to the audited financials in support of Mr. Henthorn's plan to list on NASDAQ this year. Though I am looking forward, I am not holding my breath....
Careful of half the story from Barry.
The distribution agreement with Calip Dairies cost BCCI 5M shares in Q2 2012, or about 2% dilution, per (unaudited) 2012 financials
Based on average Q2 2012 selling price, these shares were worth $400K on the open market (almost two years worth of reported profits from selling coffee).
BCCI could have sold (or perhaps traded them) to investors for $400K to enable expansion of the core coffee business, or given them to Calip Dairies for their services, which eventually resulted in ice cream on store shelves almost a year later.
The financial benefits of this overall transaction await fuller disclosure from BCCI of revenues and costs -- production, marketing, and overhead.
I don't know what the result of such disclosure will be, I am just saying we need more data to reach a conclusion
From my MBA-trained perspective, the concept of brand extension 2500 miles away from brand awareness doesn't make sense, but the proof will be in the numbers. Look forward to seeing them as part of the company's push to financial transparency and uplisting.
Read the PR Very Carefully (emphasis added):
PSD currently warehouses and delivers "Baristas Coffee Creations" and other Dairy products to all of the Baristas Coffee locations in the region and will be expanding its distribution to additional locations as well.
There is likely debt not on books.
Recall $1M+ which suddenly showed up in Q4 2011. Then in Q2 2012, 12M shares ($1M worth) were issued to clear up debt, but none came off the balance sheet so it must have been unrecorded debt.
The two above facts are reasonably good evidence that there is additional unrecorded debt, IMO.
$400K worth of stock was paid to fund ice cream distribution (5M shares in Q2 2012, per reported financials, assuming .08/share). Will be interesting to see what revenue is reported. The fact that there is none on shelves where there was some, is not an encouraging sign.
No ice cream in your store, one month later? And not due to sold out??
Anybody else have ice cream information, positive or negative?
I was about to reply to Jamming's daily re-announcement of ice cream in stores, that I was looking forward to a BCCI press release advising us of its success and the $ value of the reorder to BCCI's revenue line.
Oh, I forgot -- we paid the ice cream company in BCCI stock to get ice cream on the shelves in the first place. Perhaps BH has decided he is getting tired of the dilution despite the minimal expense hit, given the to date strategy of putting it on the expense books at 1/50th of what the receiver can get when it is sold.
Don't repost PRs; anyone interested in BCCI will look at the website, and see many of them.
But if you want to repost -- how about the one three years ago announcing a store in New Jersey (still not there); or, the one in Dec 11/Jan 12 announcing five stores in Phoenix area by March 31, 2012 (one opened in June, 2012, but open/closed several times since; plus a Tempe store this year).
Filing papers to enable franchise sales -- so what; actual franchise sales, which deliver revenue, much more interesting, but to date not happening.
Metzger was brought on in 2010 to focus on expanding the Baristas business model and brand throughout North America.
I'm not impressed by the results; in December, 2011 the company expected to open 100 stores in 2012 -- half franchise, half owned. We now know -- due to 2013 filings -- that the company was not even legally able to franchise in at least half of the states.
And so far this year, there has been one store opening?
I reach one of two conclusions:
- He is not very good at a raw start-up, at this stage in his reportedly illustrious career; or,
- He is not spending any time on BCCI.
Yes, GAAP would require store labor to be in COGS. However, if BCCI did this, it would likely show very little overhead expense, which would show that senior management is not being paid, except in dilutive stock options.
Significance of that, combined with significant professional fees being paid through share dilution expensed at .001 per share, is that the business model is not sustainable.
Quarterly report shows 10% dilution in the quarter (27% in the last 12 months):
- 5.75M shares for professional fees. Put on the books at .001/share $5,750), but recipients could sell at $.05/share (approximate volume weighted average price in Q1), or $287,500, which of course dwarfs reported earnings of $38K.
- 15M shares for 'investment' in BAPI, the vehicle which was established to acquire Tully's. On books for $15K, but again salable at $750K. Curious that this was done in Q1 (not in Q4 when BAPI announced); combined with the fact that it doesn't show as an investment on the financials, suggests to me that these shares were given to various entities associated with BAPI creation and the Tully's bid, and again may well be considered as the cost of that bid.
- 2.7M shares for conversion of debt, or $2700 (shares salable for $135K), per the statement of shareholder equity. This is a strange one, as the statements of cash flow shows conversion of debt as $0. And, loans payable went up during the quarter. Perhaps this is some sort of debt related to Tempe opening. Or, still more non-recorded debt (recall the $1.4M unrecorded debt which showed up in Q4 2011) -- wonder what the debt of this company really is?
Perhaps someone can explain the current quarter in the right hand set of columns in the statement of shareholder equity (just above the 'Balance as of March 31, 2014 (sic),' I can't.
Also interesting that the 'accumulated deficit' column of this statement, which is supposed to include the quarterly profit/loss, has not had that recorded for last few quarters. It was -1.6M a couple of quarters back, now says -292M which is clearly in error.
These statements aren't on a napkin, they are on tissue paper. Betcha there will be major revisions to this statement in the next quarterly report
PS. More appropriate to say quarterly report than 'Q,' as that implies they actually file their reports -- which they don't, they just publish.
Anyway, thanks for posting the link.
The 2012 report had a $94K Q4 item for 'legal/compliance,' this might have been the past wages.
The $10K is just to complete the package, not to actually raise the money. Note that many firms will get paid based on funding success -- this company likely recognizes the low (zero) likelihood of raising $998 Million for Mr. Bendall, and so is getting its money 'up front.'
What I don't get is why the PR firm should get only $10,000 on completing the bond package. It seems a very cheapskate success fee for rounding up the $998M
In late 2011, the company forecast the opening of 50 franchise store in 2012. Not sure what the final number was, but certainly less than five.
In retrospect, we should have been cynical about the claim at the time, since the company had not even filed the required papers to enable franchising in half of the states, including the most logical next market California.
With papers filed, perhaps more will open. We are now almost halfway through the year, I think BCCI has opened only one store so far (Tempe) -- not sure if franchised or not, I believe PR was silent on the subject; five Phoenix stores were announced almost 18 months ago, to be opened by the end of Q1 2012, so far two have been opened -- and one of those (Fountain Hills) has frequently been closed.
You are right, audited financials are required:
- To list on NASDAQ, as committed by the Company; and,
- To find out true profitability of the company.
I am particularly interested to see how the shares given out for professional and other services are treated by the auditors.
Currently, issued shares are put on the books at .001 per share, but recipients can sell at the market. So, $5K of expense went on the books for ice cream distribution in Q212 (5,000,000 shares), but recipients could sell shares for $375K (at the average sale price of .075 for Q212) which would have wiped out profits for all of 2012.
Even more interesting, this payment probably included 'prepayment' for a certain amount of ice cream production. Thus, profits will be further inflated going forward as there will be no costs for actual production against revenues received.
And this is just 5M of the 25M shares issued for expenses during Q2 of 2012 alone!
And of course, the shareholders take the dilution.
Audited Financials, please!! But, I can see why we likely won't see them: auditors cannot accept shares as payment for services for obvious ethical reasons, and BCCI has no cash.
So, how does BCCI get on NASDAQ as committed? Simply applying for a symbol -- which anyone can do, for nominal cost -- resulted in a tripling of pps, although the symbol is the smallest and the cheapest of barriers to listing.
I don't get it -- but congrats to BH for thereby reducing the amount of dilution he otherwise would have incurred for 2013 professional expenses.
Why do you keep posting old PRs? Waste of space, anyone interested will research the company.
Re:
LOL - $5,000 of "dilution."
Typo?
It is not a matter of opinion that managers are not paid in stock.
BCCI announced a New Jersey store 2 - 3 years ago, but it didn't happen.
maybe they have the franchise set up already to open in NY soon
In 2011 the company announced intent to open five stores in Phoenix by the end of Q1 2012, so the good news is that the company agreed with the concept of concentration in order to afford marketing and brand awareness.
The bad news is, of course, a complete failure of execution.
To your point on ice cream -- why would you ever launch it in a town where you have no stores; if you were to do it at all (and I question that), why not launch in Seattle where there is at least brand awareness (while the news coverage is usually not favorable, at least there is awareness).
And, putting ice cream in the kiosks, without having it in local stores, is crazy:
- How often do four people go to a coffee kiosk -- the logical number to buy the only available offering, a 4 pack.
- Or, how many folks go direct from the kiosk to their home so they can put their ice cream in the freezer.
When you combine with refrigeration costs (capital, space, electricity), it may be no wonder that there have been no pictures of kiosk customers buying the ice cream, as I don't think it makes business sense. BTW, has anyone tried??
Thanks, ppv.
Interesting reading, a couple of early comments:
- Legal/Compliance. If this is to reflect finally paying the baristas, seems like it should be part of personnel.
And, most of personnel, in turn, should be part of COGS, as I think you have pointed out before.
But, that would highlight that senior management is not being paid in cash, which of course further understates expenses.
- Shares. Increased by 34M in 2013, or more than 15%. A number of these shares were as payment for such things as "Professioinal (sic)" services and ice cream distribution funding.
But, the shares are put on the books at .001, together with the expense, which seems to me very misleading since the receivers could reasonably expect to sell them at .05/share (or whatever the average was during the period, likely higher).
Also, some appeared to be for settlement of an acquisition dispute; again, if put on the books at full value, this would imply a higher book value for the purchased equipment, thus higher depreciation expense, which the shareholders would logically want as it would mean lower taxes at some point.
- Audit. For a company allegedly pursuing NASDAQ listing, not just a cheaply acquired NASDAQ symbol, surprising that they would not take advantage of the opportunity to have the financials audited.
Unless you believe there is no intent for attempted listing before next year at the earliest. Which I believe, since the company does not financially qualify -- and the results of an audit might be distasteful.
And now that the 'financials' are out, looks like 'wait til next year' on the audit.
BTW, I opened the posted link (bcci, 24908) to otciq.com and found a ten page Annual Report, with the only numbers being shares outstanding over time (BTW, interesting that 'float' increased 50% in Q4; guess some 'lock ups' expired).
I poked around www.otciq.com, but could not figure out how to separately get to the report.
If you were able to download a report with P&L, Balance Sheet, and Cash Flow, would you be so kind as to post a copy so the rest of us can analyze?
Absolutely agree, BCCI doesn't need ice cream.
So, why did the company spend 2012 resources on ice cream instead of filing franchise documents with the various states, particularly after the paid research report in December 2011 forecasted 50 franchise openings in 2012?
Yet another sign of incompetent management, IMO.
I never said you got it wrong, I was trying to be sarcastic about the company PR, looks like I missed.
Audited financials when? April 2012 BCCI PR:
The Company is in the process of completing the audit of its financials
You are doubting the veracity of a BCCI PR from December?
Now that the product is completed and in the warehouse
Per prior PRs, ice cream was manufactured in the fourth quarter. Will be interesting to see how much of it shows up in the inventory line of the 12/31/2012 balance sheet.
Should also see some ice cream 'research and development' expenses in Q4, if it is real.
As I recall, the initial ice cream bars are packaged in four-packs. This is not a logical offering for a drive-through kiosk targeting single drivers, particularly combined with the logistics and expense of adding freezers to the already cramped kiosks.
It will be interesting to see how long this product stays on the shelves in New York, where there is no Baristas brand recognition.
Anyone read the late filing announcement?
Baristas Coffee Company, Inc. (“the Company”) will be late in filing its quarterly report for the year ended December 31, I 2012.
Unless your shares are free from the company for services rendered (whatever they might be), and then sold with PR issuance, you can't possibly be making money on EEGC.
Thank you Empire Energy for all the money you are making for me
We don't really know BCCI profitability:
- Financials have not been audited. If BCCI is serious about their NASDAQ push, full year 2012 financials will be audited.
- A lot of 'expenses' are paid for in stock -- 50% dilution in the 24 months through September, 2012.
- Year-end 2011 included a prior period adjustment that more than wiped out earnings for the year. It reportedly related to activity prior to the coffee company -- but it still raised a concern for me about the integrity of the company's accounting.
Separately, I am totally surprised at the recent action in the company's stock price. Why does reserving a ticker symbol -- something virtually any company can do -- support a doubling in market value, given that the company does not appear to meet NASDAQ listing requirements?
Maybe also check out the other Phoenix-area store in Fountain Hills (NOT in Scottsdale as suggested by some). It opened in June, soon closed, but is reportedly re-opened (fresh Yelp review, a positive one).
What evidence is there ice cream wasn't manufactured?
All we know for sure is that ice cream was not distributed, which means that the distribution deal with Caliph (was that it?) announced earlier was either a lie, or was perhaps dependent on Caliph either (a) liking the product; or (b) finding someone who would take put it on shelves.
For sure, Caliph was omitted from your quoted PR about ice cream 'ready for distribution.'
We don't know for sure whether the ice cream was made or not.
What we DO know for sure is that it has not appeared on retail shelves for sale, assuming a PR would have accompanied such a momentous event.
Pending 12/31/2012 financials should tell the story on whether the ice cream was actually made (would be in inventory, with accompanying notes explaining accounting for ice cream) -- assuming they are audited in preparation for the proposed 'up listing.'
If not audited -- who knows?
Does Barista's sells drive through coffee, or electricity?
Last year there was a huge 'prior period adjustment,' greater than the sum of the reported earnings for the year. That is, although the company reported 'earnings' of $244K for the year, it ended the year with a 'retained deficit' which was $1M than at the end of the prior year!!
Some said it related to pre-Baristas days, but without an audit who knows?
Interim financials this year have also been unaudited; consequently, any issues that the auditers find -- assuming there will be an audit as will be required for the long-promised 'uplisting' -- will not appear until full year results are posted.
Thus, I contend that we do not know how the full year numbers will turn out.
Annual report good? How do you know?
I am hoping it is audited in support of the company's 'upgraded listing' initiative -- in which case they will have to deal with ice cream costs as well as store closing costs (absorbing costs of canceled real estate leases and undepreciated building improvements).
Similarly, how will they deal with undepreciated equipment -- might hope to deploy, but with no stores opened in almost eight months, and no cash on hand, might be a 'tough sell' for the auditors. At the very least, I expect they will have Q4 equipment depreciation expense not covered by revenue.
Sorry, late to the party.
Stock hanging in where on the 11th, and where did it close on the 13th?
Will ice cream be 'inventory' or 'expense' for Dec 31 financials.
- If expensse, can't be good for Q4 P&L.
- If inventory - will ultimately be expense if not put on the shelves and sold for more than it cost to produce.
Hopefully, these will be audited financials to support the desired listing objective, so observers can have confidence in the determination.
Have we forgotten the Fountain Hills store, open and closed within three months in 2012?
the company recently announced the addition of its first Arizona store, located in Tempe.