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A PR: http://www.otcmarkets.com/stock/BCCI/news/Amazon-Partner-Baristas-Adds-CNBC--TNT--TruTV--BET--CMT--and-Comedy-Central-to-White-Coffee-Television-Campaign-Featuring-Megs-McLean?id=130138&b=y
At least this time the advertising is focused only in Western Washington, Barista HQ. If any posters see an ad -- perhaps share it with us?
Megs' quote in the PR that Barista's white coffee is 'promoting Amazon' is a bit over the top.
BH's quote that Baristas will 'expand geographically' once they 'gage (sic) response' makes little sense for a product sold on Amazon, but perhaps he means they will expand advertising. Wonder how paid for? Perhaps clues in the 10-K due this week, per NTN 10-K filed April 1. But white coffee revenue probably not visible until the Q1 10Q in May.
No mention of VR in Section 6A, Description of Business Operations.
Instead, a discussion of how RLTR will monetize the fact that someone appeared in the media.
Uhhh, interesting; the internet version of paparazzi?
Yet another definition of 'virtual reality.' Although in fairness, maybe I just don't understand RLTR speak.
Assume free app is cat's meow -- RLTR revenue??
Please name RLTR assets which can be monetized.
In VR, Mr. Henthorn wrote an app which can be downloaded for free and apparently shows VR. Interesting -- even cool -- but no revenue.
Sounds like you do see profitable revenue streams in recent PRs, which do not require cash (of which the company has none); please point them out.
I searched 'white coffee' on Amazon, found Baristas with several 'placements' on page 1; the only other 'white coffee' I saw was organic -- and I am sure Barista's would say that is not a competitive product.
So wonder who they compared to? If anyone??
Meaningful that Amazon was not a participant in the PR -- whether due to policy or data, don't know. Logically, if Amazon 'records' are reported, Amazon would have to provide confidential sales data for other products. But not if Barista's determined they were the only product in the category, in which case any sale is a record.
Q1 financials due out in May -- will tell the tale, unless Barista's publishes actual numbers before then.
BCCI management still has a financial interest, as they accepted shares for debt AND the two top guys receive 500K shares (post R/S) per year for a few more years.
Last year's March was a downer, with the high at the beginning of the month and the low at the end. Look it up.
Perhaps this month will be different, but will need some believable news.
Investors have become increasingly cynical about the company's PRs where plans are announced, but store count (going down), revenues (flat at best), and profits (always losses)do not meet raised hopes.
Uplisting requires far more shareholders' equity on the balance sheet.
Since BCCI has an unprofitable core business, detracting from shareholder equity every quarter, seems like they would have to:
- Convert more debt to equity (but, not enough debt to convert); and
- Sell many more shares to the public (note: could acquire an entity with positive shareholder equity, but likely that would require substantial dilution).
Or perhaps they are able to sell enough k-cups and coffee makers to generate profits -- though Amazon-only distribution is unable to get there, IMO. Perhaps a PR will be explicit about 2016 k-cup sales and availability of retail distribution outlets.
The pps requirement could be met with an additional RS.
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Would have closed .001 lower, if not for end of day <$1,000 trade.
Interesting that there was a single 800K share trade earlier in the day, knocked the price down by more than .001 on its own!!
As just stated, need to see some revenues and margins on the k-cups and coffee machines, then the stock will move.
A year ago, there were several PRs about mall store openings, and look where that went; most recent financials still showed the franchise fees, taken to revenue in Q4 2014, as unpaid, and most -- if not all -- of the opened stores have closed.
Hamilton Beach has a $39 K-cup machine on Amazon.com, currently 'sold out.' Mr. Coffee equivalent is $56.
Will be interesting to see distribution plan. In the PR, Mr. Henthorn says
What are your standards for 'nice finish today'?
As I read the chart (as always, open for correction, as I am not an experienced chart reader), there was no activity in the stock until the close, when there was a whopping $700 trade at Friday's close.
I don't think there will be much activity until the company has a visible way to revenue.
Saying you are in the (admittedly) hot Virtual Reality space is not compelling, as evidenced by the current <$150K market cap. Need to have a vehicle to monetize that interest, and if it exists, it has so far been absent from public view.
The Mexico distribution agreement was signed in March.
If they intended to place an order, I would think they would have done so by now -- which would have meant a very different PR. But, I would not expect a distributor to place an order for a new product from a manufacturer with little previous retail experience, including none internationally, until a retail order is in hand.
But perhaps this 'massive' agreement will still bear fruit.
You need to carefully read the PR.
It states that BCCI's chosen Mexico distributor distributes products to WalMart, 7-11, etc. through an affiliate.
It does NOT state that any of those retailers have agreed to take the company's k-cups.
Thus, pps/volume response to this PR has been nominal, as it is a simple re-issue of the March PR, with no published progress made on actually finding a retailer to carry the k-cups, in Mexico or otherwise.
What does RLTR have to sell? Stock?
If a big number, would be in PR.
BCCI's Dec 10 PR said that the initial run was 500/1000 boxes (both numbers in the PR(??)), and that the sell out then was split between the BCCI website and purchases 'by a national fulfillment center,' with a second run being ordered. I don't think the 'national fulfillment center' has been named -- I'm not sure it was Amazon, they likely would not purchase inventory, particularly of an unproven brand.
So, Amazon probably sold the 'second run.'
Hopefully there will be subsequent PRs on volumes and distribution, so financial impact on revenues can be estimated. Better yet, announcement of an overall marketing plan, including product visibility.
Q315 cash loss was $75K, or $25K/month.
That is, the company posted a $125K loss for the quarter, but about $50K of it was non-cash items (stock compensation and depreciation/amortization).
Worth talking about the economics of the Amazon coffee.
Don't know how many boxes have been sold. Initial production run was said to be 500, don't know the second. And, don't know product mix.
500 @ $15 each (assuming white) is $7500 in revenue. Wonder what the profits are, at such a small lot size? Note that Amazon gets their 15% 'off the top.'
Do not expect cash help from the coffee for a while, as $$ have to be put in to grow inventory in support of sales, and how fast that can happen is dependent upon the margins.
What would 'bump' the stock is a PR which says:
- how many boxes have been sold, including future production plans;
- other distribution channels (for example, the Mexican deal, which was really with a logistics company -- any shelf space?)
- funded marketing plan for product/brand awareness.
A couple of years ago, BCCI gave a lot of shares to a company in return for advertising views (much as RLTR did recently). A lot of that advertising was advertorials, 'pumping' BCCI and Barry as innovative. Guess what, in the March/April time frame (worked in 2014, not so much in 2015).
But, the coffee was also advertised last spring in a weekly -- but before it was available. Perhaps that can be tried again, with channels stated.
Fact: Mar15 high close was .0617 March 1.
Low for the month was .039 on March 23, with a 'bounce' to .0435 on the 31st, still well below March 1.
Certainly, the company tried to make March successful for pps, announcing k-cups and the BMOC agreement and store openings in the second half of February. Indeed, 14 PRs in total in Feb/Mar -- contrast that with 5 in the final four months of the year (all this month).
Company thought March would be good -- giving the officers 40% dilution, half retroactively, with new employment agreement effective March 1 (despite obvious materiality, not announced to the public until SEC filings in April -- but perhaps efficient markets at work!).
Unfortunately, the Feb/Mar initiatives don't appear to have worked out so far:
- Q4 BMOC franchising revenue of $75K still not paid as of September 30 financials, published in December. At least some of the announced stores apparently either didn't open, or have already closed, per review of the mall websites.
- As of this writing, no third party distribution has been announced for the k-cups. Amazon distribution was announced in February, but that hasn't happened either (note: Barista Prime Coffeehouse on Amazon is not BCCI coffee).
Net, I don't disagree that this stock goes up and down -- it even hit .80 as part of a general coffee bounce a few years back -- just disagree that you can predict March as a definite up month.
Perhaps 2016 will be stronger.
Mar 2015 pps high at beginning of month, low at the end.
Maybe 2016 will be different
Bigger NASDAQ listing issue is equity requirement.
This requirement would be daunting even if all debt was exchanged for shares; the company's equity position became positive at the end of Q3 15 through such an exchange with the two officers.
Building equity comes through profits -- not likely for many years as operations are significantly unprofitable and the two officers have 4 1/2 years (I think, open to correction) remaining on employment contracts which will add to dilution and further losses.
Or, from issuing more equity (read: still more dilution).
Pps problem could be solved by reverse split; as I recall, one poster reported that Mr. Henthorn advised BCCI would not reverse split until that was the only remaining requirement.
Form 8-K also filed 12/15 announced auditor change.
This may well be why the Q3 financials were late.
On Dec 10, the SEC announced that BCCI's prior auditors, DKM Certified Public Accountants, could no longer practice before the Commission. http://www.accountingtoday.com/news/audit-accounting/sec-suspends-accountants-for-poor-auditing-76657-1.html
Of comfort to BCCI shareholders, the 8-K stated that there were no technical disagreements with DKM, and that BCCI did not consult with the new auditors, Stevenson & Co., about application of accounting principles to any transaction (completed or proposed), or anticipated audit opinion, prior to engagement.
I have reviewed the Q3 15 10-Q, fascinating reading.
Balance Sheet
The company's PR points out that stockholder equity went from a minus figure at the end of June, to positive at the end of September.
- This was accomplished by reducing accounts payable and accrued liabilities to the two officers (p12) by $2,342,400 by issuing 61M shares of stock (note: p. 12 says 60M, p.14 says 61M).
- Good news for common holders is that this equates to about $.038 per share, versus current pps of under .02. In the ongoing set of transactions with the officers, 10M of these shares had been bought from an officer for .0284 per share in April (added to accounts payable at the time). So, company apparently made some money on this transaction, but I'm not 100% on that interpretation.
- An additional $124K of debt was eliminated by issuing about 9M more shares -- in this case, at a then bargain price to debtholders of .014/share, but I am sure required to compensate for risk.
- So, at the end of the quarter the company had 369M shares outstanding, versus 300M at the end of Q2. BUT, this is how you get rid of debt, you issue equity -- as foreshadowed by management in the 'Going Concern' section of the Q2 10-Q (repeated in Q3 10-Q).
- Only point for existing shareholders is almost 25% dilution during the quarter, accomplished very quietly. And Accounts Payable and Accrued Liabilities still total more than one year of revenue.
Also still showing as a receivable are the franchise fees from BMOC taken as revenue in Q4 2015 (almost a year ago). The total receivable of $77,309 has not increased since June 30, indicating that the BMOC stores are closed, or management does not think they will receive the 7% royalty fees payable per the agreement, or (can't rule out) an accounting error. It would certainly be useful to know what is going on with BMOC and the announced stores.
- Interestingly, the company defends its $2.8M of goodwill in part by stating (p. 12):
I think QB is a NASDAQ 'tier,' to which BCCI upgraded a year ago and trumpeted as a sign of progress to full NASDAQ listing.
Not sure how status will be affected by failure to file either the Q3 10-Q or 10-Q NT due November 15.
Could be that management decided it was not worth paying the CPAs to review the Q3 results since full NASDAQ listing is very unlikely (see: equity requirement), and the numbers were likely not very good due to store closings and top management stock compensation expense.
Will be interesting to see if they spend the money for an audit this year.
Great news that k-cups purchased by fulfillment center, frequently that would be on consignment.
Look forward to hearing the name of the purchasing channel.
Insider ownership and O/S needs footnoting.
Both top guys signed multiple year employment contracts in March which will give them many more shares in time (and of course, increase total shares O/S).
Also, the last 10-Q said that the company expected to finance operations through 'equity financing,' which at current pps will also create significant dilution.
And of course, the convertible preferred shares (also mostly held by the two top guys at this point) are not shown in the common O/S.
BH has bad track record on store openings announced in press releases, much less private investor communications.
There may be more, but what I recall:
- In 2012 I think it was, the company announced the opening of a store in New Jersey. Never happened.
- In late 2012 or early 2013, the company announced five stores to open in Phoenix 'in the next 90 days'; two ultimately opened (though not certain if with the expected operator), both closed.
- January 2014, the company announced a third store in SW Florida which never opened; instead, the two existing stores have closed per an IH poster (although, all three still show on the company's website).
- In Spring, 2015, a JV was announced for NY store openings, but none have happened.
Privately, in spring of 2015 one poster told of conversations with BH about many mall store openings. Per my potentially imperfect review of mall websites, only one of those stores is currently open (perhaps another poster can update/correct).
Indeed, as of the end of June, the company had still not been paid the franchise fees for three stores which were recorded in Q4, 2014.
If the company elects to put resources toward committed financial filings versus baristo and k-cup inventory, perhaps we will see if more BMOC stores have in fact been opened, and the prior ones paid for.
With respect to Washington, store count has been constant for years. With current liabilities equal to three years of revenue at the end of Q2, not clear where the company will find the cash -- or the credit -- to open new stores, although the company may have salvaged equipment from stores closed in the last year or two (SW FL (2), AZ (2), TX (2), MT (1)), thereby reducing store opening costs.
Some comments on the k-cup announcement:
- Distribution. Strange to announce something which is not immediately available through multiple channels, for example Amazon as previously promised.
- Pricing. On the baristas.tv website, saw espresso at 12/$9.95, and the 'white coffee' at 12/$14.99.
Compared to some other pricing on Amazon.com, for example Barista Primehouse:
- Specialty: 18/$13.98
- Basic: 24/$.99, and 96/$56.96
Green Mountain, a major manufacturer, sells at 24/14.24.
In summary, Barista's coffee is more expensive.
- Amazon. Once Baristas goes on Amazon.com, they will need to pay Amazon 15% of selling price, per Amazon's standard fee schedule.
- Profit. Given they have no brand recognition outside of the State of Washington, I do not see how they can either (a) premium price, or (b) price to market -- and get the volumes to make money.
While this is a more logical brand extension than ice cream -- I don't see how it can be profitable, even if some 'advertising buy capacity' is left over from 2014 and 2015 'corporate advertising' activities.
What did BH say about Q3 financials?
As an SEC reporting company, BCCI is required to publish quarterly financials 45 days after the end of the quarter via a 10-Q, or file a 10-Q NT (I guess stands for Not Timely) to advise of a delay.
BCCI did neither. Not sure if there are any penalties associated with this, other than a market penalty for transparency and credibility.
But with an 80% drop in pps this year following non-realized announcements about mall stores (I think 1 of 4 is still open, based on mall website review), New York joint ventures (no stores announced), and K-cups (never hit the market) -- maybe there is no more market penalty to be paid.
Better BCCI financial position would show in filings.
And would undoubtedly positively impact pps.
BUT, neither the filing nor notice of late filing has happened for Q3 15 (one or the other due by Nov 15, more than a week ago).
Perhaps you can ask him why not?
Foreshadowed when third SWFL store announced, never opened.
Thought positive price action meant positive Q315 financials as reported in the 10-Q.
But, no 10-Q filed as of this writing, though due November 16. In itself, no big deal as many small companies are late, as BCCI was back in May with the Q1 10-Q and with a 10-Q in 2014.
BUT, also no NT-10-Q for the Q3 10-Q (due if 10-Q is to be late, for example one was filed back in May).
(Above information is per www.secfilings.com)
Surprised to see the positive pps of the past few days with the above facts, which for me raise concerns about the company's ability to continue what has to be an expensive regime of financial audits and SEC reporting particularly in light of their huge negative working capital situation. Note that this regime led to a substantial restatement of prior year results, turning profits into huge losses.
Maybe somebody knows something?
Let's check out 2015:
This is not necessarily true:
Ice cream was an interesting brand extension.
The company paid $500K worth of stock (at the time, stock was $.10/share) to a New York area company to produce the ice cream and market it in the New York area.
That investment has since been written down to $125K on the company's books as 'ice cream intangibles' so hard to argue that it was successful.
It is interesting that you can still buy the ice cream, I suspect this is still the original inventory.
You can't find the word 'ice cream' in its description of its business in its SEC filings.
Certainly, k-cups is a more logical extension, but it has missed the milestones stated in the initial PR. The company spent resources in the spring on k-cup advertising without having a completed product or committed distribution, not good management IMO.
There is no cash investment by Media Funding.
Instead, RLTR is issuing securities -- at a 'premium to market,' meaning value at more than $.0025/share -- in return for advertising inventory 'valued' at $2M. I am guessing that was the inventory's list price before being severely discounted and provided to MFG; it is likely inventory at hard to sell (read: not often seen) placements.
Depending on the amount of the premium, this may be a highly dilutive action.
BCCI did the same thing for $1.7M of advertising on October 2, 2013 (PR for some reason has been removed from BCCI website, but can be found with Google's help). This was apparently used to help launch the first two Cape Coral stores as well as pay for insertion into advertising sections appearing in certain financial periodicals.
Reading the PR, Mr. Hodge appears to be trying to buy awareness of the VR application, which he is hoping will lead to more 'Megs.' Not obvious how that creates revenue for RLTR, although many companies have a 'free' and a(n) (upgraded) 'paid' version; perhaps people with more RLTR knowledge can contribute here.
Judging by the market's tepid response today (at this writing, 24% decline on less than $2000 of volume), this approach is not expected to be successful, although the decline is less than might have been expected from apparent dilution.
I may need to stand corrected on Florida.
I thought I read that the two Cape Coral (near Fort Meyers) stores had closed. However, I can't get back to that reference -- perhaps someone else can.
My current research shows your brother's visit plus:
- Cape Coral Parkway store. Yelp review on July 28, 2015. Yelp shows no phone number, but no indication of closed. Bing shows Open, and a phone number, but it is Ring No Answer. Perhaps they have elected to not have a phone, Yelp usually up to date with this stuff.
- Del Prado store. Yelp review in February, 2015. Yelp shows no phone number, but also no indication of closed. Bing shows Open, and a phone number, but after two rings you get fast busies, suggesting out of service.
- BCCI most recent financials (Q2 15) show that the 49% minority interest in the store lost about $25K in the quarter.
- The company announced a third SW FL store in a February, 2014 PR, but it hasn't opened. The company's Q2 2014 financials show that the 49% minority interest 'contributed' $115K in equipment to BCCI in the quarter, suggesting that they changed their mind about opening a third store.
"Showing Life" -- all in the definition.
As I read the day chart that BCCI shows with posts:
- About $15K in total trades today.
- Except for a $600 trade at the close, the stock would have been down 5% on an overall 'green' day.
(As always, open to correction, chart reading not my expertise).
IMO, investors are still waiting for news on the BMOC relationship (significantly overdue franchise fees, New York JV, etc.) or perhaps on the K-cup coffee project.
Absent something new and cash generating, the company is 'on the edge,' with Accounts Payable and Accrued Liabilities approximating three years of coffee kiosk revenue at June 30 2015 -- and the number of open coffee kiosks has dropped by 25% in the last year or so (closure of Arizona and SW Florida).
I am commenting for board's benefit, not yours.
I agree, you were just the messenger, and I gave you props for having the message -- as well as for going to the meeting where you reported the focus was on 'going public.'
I did not mean to challenge the accuracy of your representation, sorry if it felt that way. I can't imagine why you would present anything other than what you were told.
Hitting 'public replay' is the easiest way to present my data and enable other readers to reference the data upon which I'm commenting.
In the future, will try to remember not to do 'public reply' on your messages, but do need to reference the information in them, I'll just try to do it a different way.
Mr. Henthorn will say what he wants to say.
I am simply providing the actual, written posting requirements to enable IH readers to do their own due diligence. I view NASDAQ as the authority on this subject, not Mr. Henthorn.
I suspect he and/or one of his supporters reads this board, and so he is aware of my posting. If there is information contradictory to my post 'out there,' my invitation stands to have it posted for general review, I will be the first to 'eat crow.'
As a caveat -- I believe it is possible to be (up)listed concurrently with a event which results in qualification, for example an IPO or in BCCI's case, a secondary offering or acquisition.
And kudos to you for getting Mr. Henthorn's comment, it does put in context the work being done to meet the non-financial requirements of uplisting. A transaction can happen 'all of a sudden,' while the other things (board composition, board committees, financial reporting) take time.
But frankly, it is hard to see how uplisting will happen. If the company were serious about it, they would not have promised 120M shares (40% of the then outstanding total) to officers as compensation, thereby making them even further away from the shareholder equity requirement.
NASDAQ listing requirements must be met before listing, not after, to best of my knowledge.
You may wish to do your own due diligence, here is url:
https://listingcenter.nasdaq.com/assets/initialguide.pdf
The easiest requirements, for NASDAQ Capital Market, are found on page 9.
If you find evidence that requirements can be met after listing, please post, I am always willing to stand corrected.
Mr. Henthorn's comment that the capital raise could be a potential way to meet the stockholder equity requirement is correct. I will let you do the math as to how many shares would have to be sold to meet that requirement, and what dilution that would entail. Hint: although authorized shares were just increased at a shareholder meeting where you reported the focus to be on NASDAQ uplisting, there are not sufficient unissued shares to meet the requirement at current pps.
Could a private company buy them as a 'cheap' way to go public? Yes, but.... Reporting 'shells' are available for $100K (been there, done that); and not obvious that a reputable, profitable private company would consider a money losing bikini coffee company as an appropriate vehicle for its public market aspirations.
Also, BCCI could attempt to buy a (public) company, as they did with Tully's, and Mr. Henthorn is correct that the combined shareholder equity is what would be evaluated; however, there is no indication they have the financial means to do that, or the business management credibility versus other potential suitors.
Old data; BCCI doubled authorized shares at its recent shareholder meeting.
This was necessary, as the previous authorization was maxed -- yet the company had 30M or so convertible preferred shares outstanding and had committed 120M shares (40% of the shares then O/S) to the two principal officers. So 50% increase in authorization was needed for existing commitments, and the company in the past has used common shares to fund professional services, advertising, and business development activities.
Recent PRs have not resulted in dramatic increases in share price level, perhaps because of company track record on execution.