is working (too hard) for a living
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Did they say how equity requirement would be met?
They are to be commended for becoming a reporting company (although, one can debate whether that has been a good use of cash), and they have broadened their board.
And stock price can be met by an R/S.
Key open item, with no published visibility, is how they will meet the equity requirement.
No surprise on stock compensation.
This one was sealed when the two principals were given 60M shares each (half retroactively) in employment agreements signed March 1 of this year and announced in the 10-K (why such huge dilution was not deemed material information requiring immediate announcement is a separate subject).
The retroactive nature of half of the shares was responsible for Q4's huge operating loss (2X revenues for the year).
When April posters were noting no dilution because authorized shares were maxed, I said that this award plus convertible preferred shares plus the companies penchant (need, given no cash) to pay for operations with shares would drive a doubling in authorized shares, which it did.
Franchise fees reported as revenue in Q4 2014.
The fact that the franchises weren't announced until 2015 would seem to be withholding of very material information; if they knew enough to take revenue -- there is a high barrier for that -- then they knew enough to announce it.
However, they may have larger problems with BMOC. The franchise fees were not paid as of June 30, 2015 -- and look to have grown, as it would seem there may be outstanding royalties, as well.
$75K franchise fees recognized in Q4 2014.
Tellingly, appear not to be paid by BMOC as of June 30 2015. A/R was $75.0K (exactly equal to fees recognized in Q4) at end of March, $77.3 end of June. Additional $2.3K are royalties?
Better question -- why no royalties showing? Either in the franchise fee bucket or as a separate line item? Must be buried within the revenue line, if the additional receivables are royalties -- but would certainly be informative to investors to have royalties broken out; IMO, this company only survives with big royalty streams. Right now, those appear in doubt.
More of interest, Accounts Payable and Accrued Liabilities went from $2.9M at the end of December to $3.7M at end of June. This is a very high number for a cash flow negative company with less than $1.5M in annual revenues.
Has a NY store been announced?
A JV with BMOC has been announced for NY stores, but I have seen no announcement of a store opening. If you have seen such an announcement, please post a url.
Sent an inquiring email to DuBois Mall, will advise of result when/if a response is received.
Also does not show on Johnstown Galleria website, another announced location.
A March 19 PR said that Schuylkill Valley Mall site would be open by Memorial Day, situated near Subway and Arby's and Pearl Theater, but the SVM website also does not show Baristas. And, several locations near Subway, Arby's and Pearl Theater show empty, 'for lease.' Not conclusive, as such websites can be out of date. But, the two big 'department store' locations in the mall show for lease as well -- feels like a failing mall.
For Stroud-Mall in Stroudsburg, Baristas does show up in listing, even though the webpage with the map still shows the old Arthur Teachers fish and Chips, which was bought out per the announcing BMOC PR.
My guess would be that BMOC ran out of cash -- but Baristas is still featured on their website, together with the PR about the NY JV.
Will be interesting to hear what comes out of the annual meeting.
Not sure how meeting will turn out, but worth asking.
One additional question to ask, perhaps first, which may help us understand the BMOC situation.
BCCI took revenue for three franchise fees -- presumably BMOC -- during Q4. But, as of the March 31 balance sheet, the $75K still shows as a receivable. As an ex-accountant, hard for me to understand how the company performed sufficient duties in accordance with the contract to be able to take revenue in Q4, yet not be paid more than 90 days later, but the auditors approved the revenue, so be it.
So, the question: have those fees now been paid? Certainly should have been, the three stores have opened.
As an ancillary question, one part of the amended Form 10-12G/A which was filed on Friday, July 24 said that the company anticipated opening ten franchises in the next 12 months, and another part said ten between July 1 and December 31, 2015.
Which is their current expectation, and do they expect that all franchises will be through the BMOC agreement or are there other interested franchisees?
I can think of many questions to ask:
BMOC
- The terms of the May, 2014 deal with BMOC were published; when will the terms of the subsequent PA and NY deals be published, and where?
- Why has the fourth PA mall store (Schuylkill Mall) not opened?
- Why have no locations been signed up for NY? The PR more than two months ago said that several were under consideration.
- Does the NY JV deal require cash from BCCI, to fund things such as initial capital equipment, front-end lease costs, etc?
Coffee K-Cups
- Is this project dead? If so, why?
- If not:
- Why no availability on Amazon, as promised in February for April?
- Why was advertising purchased, without distribution available?
- Has any retail distribution been established in North America? (The Mexico announcement was basically a 'master distributor' deal, still need someone to put it on shelves).
Advertising
- Has recent advertising (k-cup, advertorials in various magazines) been funded by the October 1, 2013 exchange of advertising for shares?
- If not, how was it funded?
- What percentage of that transaction is still available for use?
BCCI frequently pays for professional services with shares, and then at a discounted pps.
One reason to R/S is that providers might be more comfortable taking higher priced shares -- so, at a lesser discount -- although the chart will still look abysmal.
However, another poster indicated he received a message from executive management that they would not R/S unless it was the last thing to do prior to an uplisting. In which case, R/S very unlikely as the company has very little likelihood of meeting the financial requirements for an uplisting.
How will they meet NASDAQ Stockholder Equity requirement?
There is NO REVERSE and they are finalizing steps to go NASDAQ. I got this straight form (sic) Scott.
Why does R/S, A/S increase surprise anyone?
R/S was always going to be required to meet the minimum pps for uplisting, a stated BCCI goal.
'Writing was on the wall' on A/S increase some time ago, with O/S = A/S, and 30M more shares needed to support the preferred O/S of 25M plus.
The 'coup de grace' was when the 10-K disclosed the issuance of 120M more shares to senior management, more than half of it retroactive.
And not to forget, the use of shares to pay vendors (for example, 5,000,000 shares to Calip Dairies for ice cream development and distribution). Company needs more shares for that purpose -- a lot more, given pps decline and current level.
Thus, my projection back in April/May for 600M as a new A/S level.
With the 10-Q announcement of intent for equity financing this year, I am surprised it is actually only 600M. At current price levels, 100M shares of equity financing will likely deliver less than $2M, as the company has a history of private share placement at 50% of public market, though that was when the pps was higher. But, pps trend, balance sheet, and income statement would likely give pause to any new equity investor, again requiring the traditional 30% - 50% discount that BCCI has offered.
Do you have a link to Fortune article?
Or perhaps you have actually read it?
In the past, these references, 'honors,' etc. for BCCI and Mr. Henthorn have been part of paid advertising sections which are quite common in Forbes, Fortune, and Inc. The advertising nature of the articles is generally indicated by small print at the top and/or bottom of the page.
BCCI and Mr. Henthorn have been somewhat unique, versus other participants, in putting out press releases about the content.
But, this one could be different, please advise.
Do you have a link to Fortune article?
Or perhaps you have actually read it?
In the past, these references, 'honors,' etc. for BCCI and Mr. Henthorn have been part of paid advertising sections which are quite common in Forbes, Fortune, and Inc. The advertising nature of the articles are generally indicated by small print at the top and/or bottom of the page.
BCCI and Mr. Henthorn have been somewhat unique, versus other participants, in putting out press releases about the content.
But, this one could be different, please advise.
Actually Mar 1 was the month's high (.062), immediately fell to .041, bounced to .049, ended month at .043. The .062 was actually a six month high following the PA and K-cup announcements.
Enthusiasm has since waned, with the fourth PA store not opened, no sign of the others mentioned in an email from Mr. Henthorn -- and absolutely no sign of the promised k-cups, even on Amazon (commit date was April), despite resources spent on advertising.
https://finance.yahoo.com/echarts?s=BCCI+Interactive#{"allowChartStacking":true}
If you remember this went from .0225 I believe to .075
There is news, preliminary proxy filed late Friday.
As I projected a couple of months ago, shareholders will be asked to double the number of authorized common shares from 300M to 600M.
There is also a request for blanket authorization for the Board of Directors to be able to split the stock at their discretion.
Obviously, a reverse split will be required for any NASDAQ uplisting; however while necessary, such split is not sufficient for uplisting. The big hurdle will be the shareholders' equity requirement.
Not accurate, based on publicly available information:
Crazy that Baristas owns 51% of all Mall Baristas BMOC Parters (sic) openings
Not accurate, based on publicly available information:
Crazy that Baristas owns 51% of all Mall Baristas BMOC Parters (sic) openings
Have to accept kiosk/mall stores exist.
Whether they comprise a viable business is an entirely separate subject. So far, the financials would indicate negative, with expenses far outstripping revenues for the kiosks, and the mall revenues hypothesized by one poster (nothing from the company on this) will produce minimal royalties..
Similarly, the ice cream existed -- it was just a bad idea to develop ice cream and sell it in a market where Baristas had zero brand recognition.
Also, I believe the k-cups existed at some point in the product development cycle (wouldn't be a picture of them unless they did). But again, one can argue with the business decision to expend resources on advertising a product which had no agreed distribution, and trumpeting as 'massive' a deal with a Mexico distributor who had no retail distribution lined up (versus the traditional method of announcing distribution with a 'lead' retailer). And of course, the promised April Amazon k-cup distribution never happened.
The reality show also existed, at least in pilot form; but again, the decision to expend resources on its creation, and showing in stealth infomercial mode at 0630 on a Saturday, a time when target market (younger males) would be asleep, on a network which would never carry it, did not indicate sound judgment, IMO.
So, you can believe that the company has simply made a lot of bad decisions, or that the decisions they have made have been focused on increasing short term pps as opposed to building a sound business. I do not know the principals personally, so I can't wager a guess -- but neither view offers a promising long term investment premise, although as Florida FH has suggested, there are frequently upside spikes in pps as initiatives are announced.
I forgot the best evidence of pending dilution:
The company's own words in Note 2 (Going Concern) of the recently published Q1 15 financial statements --
The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending December 31, 2015.
You need to do some homework about BCCI.
A/S about maxed for the common, but an additional 40% have been promised to the principals in employment agreements, more than half retroactively. And, 9% worth are committed to the holders of the preferred shares. And, the company continually pays vendors with shares -- so formal dilution has to be around the corner.
If mall stores are only double kiosk revenues, big problem. Kiosk revenues about $12k/month. Doubling that for the three open mall stores would give BCCI $13K/quarter of royalties, hardly worth buying stock.
And, where is the fourth announced mall store in PA. And of course, the SW FL kiosks have closed.
An NY mall store JV with BMOC is announced -- but as a JV BCCI will likely not receive $25K up front franchise fee.
And announcing a deal is not the same as opening a profitable store. In the recent past:
- A third SW FL store was announced in Q1 14 for Q2 14 opening; not only did it not open, despite being owned by the same people as the existing two stores -- they closed!!
- A TN sports bar was announced -- with BMOC!! -- in May, 2014, but was never opened.
The company owes $3M in accounts payable and accrued liabilities; that is 90 days of COSTS for a semi-healthy company, but at $1.2M of annual revenues, that is 10 quarters of REVENUES for BCCI.
I would certainly not count on ancillary products -- check out the history of ice cream. K-cups were announced in February for Amazon distribution in April, didn't happen. Speculation is that they ran out of capital to fund completion of product development and initial inventory. To date, NO retail distribution for K-cups has been announced, although the company did see fit to spend money on Advertising them earlier in the quarter.
But, hopefully you are buying at the low -- certainly, the low pps for many, many months.
Forgot to mention $3M Accounts Payable/Accrued Liabilities.
Company does not further break down, but traditionally this line item relates to payments for supplies, rent, utilities, services, things like that.
So would tend to be 90 days of costs or so for a 'problem' company. After 90 days, my experience is that creditors get antsy and refuse additional service, demanding COD.
BCCI's $3M represents 2.5 years of REVENUES, much less costs. So, a frighteningly high number, absent more detailed explanation about this line item which the company has not provided so far.
In CA, takes 3 debtors to put a company into bankruptcy, do not know the laws in WA.
I am guessing that creditors are hoping that BMOC royalties will bail them out, if ice cream, reality shows, and k-cups do not, as it is clear after several years that kiosk cash flow is big time negative.
In fairness, some of the loss is non-cash:
- About $50K/qtr for depreciation and amortization.
- About $50K of expense in Q1 paid for by dilution (2.5M common shares).
To pay for the rest of the money-losing activities, the company went a further $200K in debt during the quarter.
But net, the company is bleeding cash. The Q1 15 financial statements say:
The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending December 31, 2015.
Next text, ask about the k-cup coffee initiative:
- The February announcement promised Amazon.com distribution in April, not there yet, at least not as of 20 minutes ago. What is delay?
- Any US retail outlets signed up?
- More than two months ago, a 'massive international distribution agreement' was announced, focus on Mexico -- any retail outlets identified yet?
- Are the k-cups at least being sold at the kiosks and mall outlets? Would seem like a natural thing to do if the product exists.
Or, perhaps the company has elected to use its scarce resources on the NY initiative instead of k-cup product development, inventory, and promotion? I would have no argument with that decision.
I liked the brand extension concept -- sports bar seems a natural, has worked for Hooters -- but agree with your view that BCCI is better off first trying it 'close to home.'
For example, in the Seattle area where they already have brand awareness and a Seattle Seahawks presence.
Given BCCI lack of cash, best shot is to go in with an existing sports bar operator who needs some 'oomph.'
Knoxville Bar walkaway was in page 4 of then Amended Registration Statement discussion of the BMOC agreement, filed Nov 13, 2014, which said:
The parties mutually agreed to not pursue this agreement with BMOC
No way, breakeven 6 months to a year.
Consider 2014. As ppv said, 1.3M in revenues and 3.8M in losses. But in fairness, about 2.4M of that was in management compensation due to stock, so call it 1.3M in losses, 100%.
About the same percent as Q1, when taking away the one time 'beneficial conversion fee' and stock impairment charges.
Going forward, will be about $475K/yr in stock compensation (assuming share price as per Q1, when it was $119K; note that these shares are committed through 2020 or so).
So, we have a 1.3M, profit problem per year. With me so far?
I think we can agree that the kiosk business loss rate is pretty stable at that amount, so that leaves franchises. After 15 months of trying and no takers, I think we can assume that kiosk franchises won't happen.
That leaves BMOC and the mall model.
The first ten franchises will net $75K profit in franchise fees per Mr. Henthorn, as someone has to be hired. With $75K of franchise fees taken in Q4 14, that leaves 7 more franchises to be opened in the first ten, which will net $0 in profit, per the company. Note that there are no franchise fees associated with the NY JV.
That leaves royalties (6%) and profits on supplies (no data available). It will take $30M/year in mall store revenues (no data yet provided), to develop 1.8M of royalties, to clear the loss (assuming no additional costs).
Not calculated are supplies profits (which I expect to be low, else BMOC will buy locally), or the profitability of the JV in NY (which I expect to be less than on the franchises, as I suspect BMOC drove this change. I could be wrong).
Net of the above -- no way profitable in a year.
Perhaps the upcoming Q2 15 profit report will provide additional indicators of mall store volume.
You need to review your share arithmetic.
Shares O/S at 3/31, about 297M.
In addition:
- 27M preferred shares O/S to be converted to common.
- 60M+ common shares given to top management already, 'pending A/S increase.'
By themselves, those two items take O/S to 385M shares, plus company has committed to give top management 10M more common shares each year.
Then, there is the convertible debt you mentioned. Take $500K. To convert that at .016 per share, say, would take another 30M shares.
Do you have a first profitable quarter prediction?
Top management signed employment contracts in March 2015 which gave them each 60M shares, 30M of which vested in 2014, the remainder at 5-6M/year each. The contracts noted that these shares are not currently available -- but charges are being taken against earnings, indicating that they will be.
The contracts were signed when O/S and A/S were within 3M shares of each other, indicating an expectation of an increase in A/S.
Additionally, approximately 27.3M preferred shares -- convertible into common at 1:1 -- are O/S out of 30M A/S. Many of these are held by management, as they accepted preferred shares to replace their common shares so that vendors could be paid in common shares.
Finally, the 10-Q also says in Note 2 to the financials:
The Company intends to fund operations through equity financing arrangements.
How did you reach your conclusion about dilution?
It is obvious to me that the days of dilution are over.
The clock is ticking down to NASDAQ$$$$
I think you give Mr. Henthorn too much credit:
BH isn't afraid to switch mid stream and change to family concept
BCCI is listed on OTCQB, has reporting requirements.
From www.otcmarkets.com:
The OTCQB venture marketplace is designed for entrepreneurial and development stage U.S. and international companies that are current in their reporting
I think 'Innovative Leader' was in an 'advertorial.'
Not surprisingly, BCCI was the only company to put out a PR on this (based on googling Forbes Innovative Leaders to Watch).
At the time, I looked at an online description of the editorial content of that edition, saw nothing on this subject.
Perhaps a subscriber can scan and post the actual 'article'?
If the stores are doing well, why would BMOC be low on cash?
It isn't all about the revenue, it is all about profits and cash.
If the stores are doing well, why would BMOC be low on cash?
It isn't all about the revenue, it is all about profits and cash.
Restaurant business is notoriously low margin.
I bet BCCI would have been happy to continue the $25K franchise fee and 6% royalties, rather than have the risk of ownership.
Very positive about mall store expansion for BCCI.
Company makes $25K per store up front -- but the real revenue is in ongoing royalties.
I don't like the 'split brand,' however:
- racy attire, drive through, coffee kiosks
- costumed, family theme, restaurants
The company has already seen some 'negative publicity' in Pennsylvania, as news outlets doing their 'due diligence' (unfortunately, aided by Mr. Henthorn quotes) spoke about 'breastaurants,' and 'scanty attire.' BMOC had to do damage control.
Given the unprofitable nature of the kiosks ($0.50+ in operating losses per $1 of revenue -- but Q1 15 still not out) -- and failure to gain ANY franchise traction (minor exception, SW FL JV but even there, third store didn't open as announced), perhaps the company will elect to shut them down as their leases come up for renewal, in order to have a 'pure' brand.
Pictures of BMOC locations/costumes would be great.
Also confirmation of opening schedule for already announced mall locations, and plans for future announcements.
Any indication of whether revenues for the two open locations have been higher, the same, or lower than expectations would be a welcome bonus.
You're welcome. Trying to be factual and even.
Barista Prima Coffeehouse long-established k-cup brand, doubt there is much Baristas can do.
In fact, perhaps pushback from BPC might be why Baristas has not put their k-cup coffee on Amazon, as their February PR promised they would do in April. Could also be why there has been no publicly announced U.S. retail pick-up of the Baristas k-cup, although national advertising in Country Weekly urged those desiring the Baristas k-cup to ask their local retailer for it.
Similarly, there has been no publicly announced retail pick-up of the k-cup in Mexico, despite the 'massive international distribution' deal announced in a March PR.
Although, my hypothesis for lack of Baristas k-cup availability is lack of resources to complete product development and purchase inventory to support amazon.com and/or baristas.tv distribution and/or Mexico distribution.