is working (too hard) for a living
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Bikini barista stands old news in Pacific NW.
http://www.bikini-baristas.com/bikini-barista-location.html lists cities totaling 131 such stands, of which BCCI has about six, a number which has remained static since the company bought them. If this market is growing, as some posters have posited, BCCI market share is by definition shrinking, since store count is stable.
BCCI has opened two stores in AZ, but they are closed; and two in TX, but they are closed.
There is one in MT (two were purchased, one closed).
There is one in Tampa.
There are two in SW FL; in February, 2014 a third was announced as opening in Q2 14, but it hasn't opened yet. It still may, as a placeholder site is on the baristas.tv website, but that placeholder may simply be due to delayed website maintenance.
Franchise papers have been filed in 26 states, but no kiosk franchise locations are open (caveat: SW FL is a JV with a local investor).
I don't see Barista's Coffee House infringement.
Perhaps BCCI has trademarked Baristas as a brand; but:
- Barista is a generic word, and Barista's Coffee House for me is sufficiently different than Baristas to avoid an infringement claim;
- There is clearly no attempted rip off -- note totally different logo; and
- Barista's has no presence in New Jersey (other than the store announced as opening several years ago, which has not opened).
I expect Mr. Henthorn will NOT spend scarce BCCI resources chasing this one (better to spend on getting Q1 15 financials filed, now over a month overdue without even an NT 10-Q filed), but would be interested in reading his response back to your email.
'Split brand' problem --denied by some-- again appears.
Mr. Henthorn talks about bikini-clad baristas, which is consistent with DD a newspaper might do by googling 'Baristas,' while BMOC is trying to establish a more family-oriented brand in the malls.
“Baristas, in the malls, will mean more than just Baristas world famous Coffee served by costumed staff,” Lehr commented, explaining “BMOC Partners has negotiated and will continue to negotiate supplier arrangements that will allow Baristas to make its mark in the family quick serve business.”
Drive-thru business operating loss $0.50 per $1 revenue.
At least in 2014.
Q1 2015 financials, due to be filed April 15, have not yet been filed, so don't know how Q1 went; but, given time of year should be the best quarter -- was last year. Also not filed -- an NT (for Not Timely) 10-Q, saying why the filing was not made. This is quite concerning from a cash perspective, as the Q3 14 10-Q was also late, but a timely NT 10-Q was filed and the actual 10-Q was only three days late.
The real promise for this company is with its BMOC affiliation, where that company is creating a 'new' Baristas brand for malls:
- family oriented, not 'racy'
- restaurant, not coffee +
- mall, not drive through
Two such locations have opened, and at least 2 - 5 more appear to be in the pipeline. There have been no public statements as to the volume of business achieved in the open locations, so royalty projections are difficult at best. However, as a reference point even $10M in annual mall revenues for BMOC will not be enough to bring BCCI to profitability alone, though the cash flow situation will dramatically improve.
The company did announce white coffee K-cups in February, and has advertised them in Country Weekly, but has not achieved any distribution as yet. Even the announced Amazon distribution was not completed when committed, again suggesting cash problems.
Exactly, we are making different points.
So not sure what I am incorrect about.
You and Rookie miss my point about dilution:
- Market value (MV) of a company = present value of discounted cash flows, adjusted for risk.
- Price per share = MV / shares outstanding.
- So, more shares outstanding equal lower pps, absent any other factors affecting MV. Have to agree with that, folks, it is pure arithmetic not rocket science.
Your point, is that pps could be driven below MV at least temporarily by shareholders selling all at once, but that BCCI shareholders don't have to worry about insiders doing that due to SEC restrictions.
I agree with THAT point -- but it doesn't disprove my point that dilution, no matter the source, is harmful to pps. Arguably, the pps action which occurred the week the employment agreements were apparently signed (they are dated 1 March, but we don't know when they were signed), supports my point.
Suppose instead of 120M shares versus current 400M shares, it had been 1M shares -- would you still say not to worry about dilution since insiders can't sell for some amount of time into the future? I would agree that 1M shares of dilution is worse than 120M shares, but that doesn't mean 120M shares of dilution has no impact on pps.
Not authorized yet, but 120M (40%) more shares are contractually committed to Mr. Steciw and Mr. Henthorn as of employment contracts signed March 1 (a Sunday? but maybe effective as of that date, signed later?) but not publicly disclosed until the 10-K three weeks ago.
I believe this disclosure is the basis for the downward price since that time. Closed at .05 on the 14th, and .0366 today -- a 27% decline. Although, an 'efficient market' theorist might say that the price should have declined the full 40% if the news suddenly came out.
Is worth observing that the stock is down almost exactly 40% since its .06 peak on March 2, with most of the damage occurring that week (drop to .041 on Friday, March 6). It would not be the first time that 'non-public' information found its way to the Street....
Different divisions should mean different names.
Landry's, for example, has more than 15 different restaurant brands. Morton's, Mastros, Claim Jumper, Landry's, etc.
Absent different names, how can you try to air the 'racy' Baristas reality show in Pennsylvania, where there was significant public concern that the servers might be attired as they are in the Seattle kiosks??? Which brand is supposed to come to mind when one sees Baristas in Country Weekly?
Speaking of which, worth asking Mr. Henthorn when he expects Amazon -- or even his own website -- to carry the k-cups announced back in February, for April Amazon availability. When I searched k-cup coffee on amazon.com, found 51 brands -- but only barista prima with the name barista.
Or when any k-cup retail availability will be announced, particularly in Mexico where there was a major international distribution PR.
Would also be fun to see pictures of the PA mall locations when clicking the 'all locations' button on the baristas.tv website. Instead, the most recent location one sees (as a placeholder) is the announced in February, 2014 but yet to open third SW FL location.
Similarly, where is the Q1 10-Q due back in April? Company hasn't even filed the NT 10-Q for a late filing -- though it has previously done so in the other quarters it has been late.
The items I suggest above don't seem like big deals -- but failure to do them reduces investor confidence in the company and hence pps.
Fair question. Answer is hobby, I guess.
I had a chance to buy stock in this company at one point, and passed. Have been watching it since, wondering what would become of it. I'm semi-retired, so I have the time.
I've never been a 'penny stock guy,' more of an investor in companies, private and public. I focus on quality of information; I respond to what I believe to be erroneous or misleading information. I'm pretty good at reading financial reports, so I share what I learn with this board.
As neither a 'long' nor a 'short,' I can be very even-handed with my comments. If I see good things happen (e.g. BMOC -- I was positive about the sports bar idea, and have said that the mall stores are a potential positive financially for BCCI) I say so. When I disagree with something I say so.
People can read my comments or not as they wish, and pay them heed or not as they wish. They are meant to add value.
All I am saying about dilution, is that investors should factor it into their investment decision -- and are doing so.
The 10-K released APril 15 contained 'new news' on this subject: 120M shares have been promised to the two principals in employment agreements signed March 1, 2015 (10M/year starting in 2009), to be issued 'when shares are available,' which I think we all agree will happen at some point.
So, the way pps works (aside from 'promotion'):
- The market calculates a' value' for the company based on discounted future cash flow adjusted for risk
- pps = value/shares
Thus, IMO, the BMOC news should be increasing pps, but the news of increased shares is working in the opposite direction. Net of the opposing impacts -- a slight downdraft on pps.
I do not own BCCI stock.
BMOC is the biggest -- arguably only -- positive. They are totally changing the Baristas brand:
- family instead of racy
- mall locations instead of drive through kiosks
- restaurant instead of coffee plus
What will be interesting to see is whether BCCI can leverage this with other potential franchisees; BMOC's operating area is just 8 states, not clear that they are interested in national expansion.
The kiosk business model has been hopeless for BCCI:
- Several posters have suggested that kiosks are generally profitable -- but BCCI has had an operating loss of $0.50 per $1 of revenue.
- Attempts to expand kiosks geographically have been unsuccessful (see failures in AZ and TX, and non-opening of announced NJ and third SW FL stores; one of two acquired MT stores has closed).
- Company has only been sustained through issuance of shares for cash (at <=50% of market price) and for services (at similar discounts).
BCCI now has a 'split brand,' as outlined above. That can't last.
Company has spent resources on (my opinion) distractions: ice cream, reality show, k-cups (still not available on amazon.com, despite April commit, or in any retail site, or on the company's own website -- yet company is advertising them).
Where are Q115 earnings? 10-Q was due 4/15.
Good post. Concern is dilution.
PPS is discounted cash flow, adjusted for risk, DIVIDED BY NUMNER OF SHARES.
The 10-K disclosure of 40% dilution on behalf of the principals likely came as a big surprise to the market, thus the stock goes down despite operationally good news.
If the principals thought life was real good, why not live with their current share count, with $$$ to them paid for by pps.
Stock is .04 at some point, that is $2.4M each for the principals. Quite a haul, for a company losing money hand over fist, whenever they can sell.
They contracted 120M shares to continue work. 40% dilution.
5M shares each starting 2009 -- backdated from the employment agreement signature date.
If they thought their existing shares would explode, as you suggest, why would they commit 40% dilution to themselves, which will obviously weigh on pps.
Even at just .04/share, this is a $400K annual hit to earnings. BMOC royalties will be $420K per year, if their stores do $7M/year, which is more than 5x the annual total for all existing Baristas kiosks.
50% dilution is a 'done deal.' Consider:
- 300K common shares authorized and outstanding.
- 120M shares committed to the two principals, per written employment contracts signed March 1, 2015.
- 30M shares committed to conversion of the 30M preferred shares, most of which are O/S.
So: 120 + 30 = 150, 50% of 300M outstanding.
This will have a negative impact on PPS; indeed, one could argue that the stock might have moved up on the BMOC openings, but the April 15 10-K news of 40% dilution for the two principals might be what is keeping the pps down.
And beyond that, the company has a history of selling shares below market for cash, and providing them for services. Perhaps BMOC royalties will reduce that requirement, time will tell.
Thanks -- I am a data guy. Appreciate the shout out, but I have no need for personal acknowledgement.
Data should be visible, and accurate. From that, people can make their own decisions.
I get annoyed when people post only half of a very visible full story. For example, the recent discussion on 'authorized shares are almost fully outstanding,' when there is 50% dilution pending based on employment contracts with the principals, plus the preferred shares (most of which are held by principals) which are 1:1 convertible.
Fine to support positive information, but creating a misleading view of data is not good with me.
How do you define 'modest' dilution?
Company currently has 300M shares authorized, almost all outstanding, BUT:
- 120M more common shares 'when available' are contractually committed to the two principals per employment contracts signed March 1, 2015 per the 10-K.
- There are also 30M preferred shares authorized, most of which are outstanding -- and convertible into common at 1:1.
That is 50% dilution, and counting, already in the bag.
Going forward, the company has a history of selling shares at less than 50% of public market pps for cash, plus giving out shares for services at similar discounts. Finally, the principals have been lending money to the company (this I consider bullish), convertible into stock at a significant discount.
One can hope that BMOC royalties will reduce the need for dilution caused per the last paragraph -- but 50% dilution is already in the bag.
Thanks. Should have better read Rookie's post.
I looked through initial Country Weekly, didn't see it. Will go relook at my store.
Looking at the posted ad -- says 'look for it at your local retailer.' Surprised not to see amazon.com, as had been previously said -- perhaps in next week's ad, assuming the April amazon commitment is met.
I am also surprised to see expenditure of (scarce) resource on advertising with no committed distribution. Perhaps they are trying to create bottoms up demand to get a retail chain interested. Hopefully works better than the webTV advertorial for the reality show, which has so far not been picked up.
Has anyone seen ad in Country Weekly?
I thought it was going to be in Country Living -- perhaps I am wrong. I have read Country Weekly, which is a weekly magazine devoted to country music. It has very limited advertising, and I am guessing any advertising would be quite expensive.
If anyone has seen the ad, what does it say about k-cup availability? Still not on Amazon.com (although, still a few days to make the April commitment), and not on baristas web site.
Where buy barista calendars? Not at baristastv/shop.
If someone visits one of the mall locations, advise if available there; though, I'll take the under on that, not 'audience appropriate.'
120M more shares contracted to principals, misleading post IMO; incomplete at best.
Plus 30M more preferred shares (convertible to common 1:1) authorized, most of the authorized preferred are already outstanding.
So, almost 150M common shares -- 50% dilution -- are committed.
So, I am interested in what you see to be the value to investors of your post that that 99% of authorized shares are outstanding.
Do we agree no meaning to 400K unissued shares -- other than to signal a huge increase in authorized shares is soon to appear?
Rookie, you are parsing words.
You took the authorized share position (almost all authorized shares are outstanding) as a reason for the stock to go up.
Your post 36242 in its entirety:
Company has less than 400,000 Authorized Shares left. Something should pinch this North Soon.
Reality show in development is based on old brand.
That is, the kiosk barista of Sleepless in Seattle (or whatever it was) -- which will represent a small minority of 'Barista' brand revenues in Q3, as BMOC openings progress.
Hard to imagine a reality show based on family-oriented mall stores but hey -- Mr. Lehr is creative!!
Company committed 120,000,000(40%) shares to principals March 1, per employment agreements, including at least half of them immediately.
But, pending an increase of authorized shares.
I therefore suggest investors focus on expected authorized shares, not 400K remaining out of 300M authorized, as the principals are certainly incented to find a way to increase authorized shares.
Another incentive is that they hold many of the outstanding preferred shares, which are also convertible to common on a 1:1 basis pending authorized share availability.
A final incentive is that they hold debt from the company convertible into about 6M shares at .02/share.
The company also has a history of providing shares for services (and also for needed cash -- 8M shares in 2014 at .01/share). In 2014, there were 16 transactions where a total of 13.6M shares were exchanged for debt or services. NET: I speculate that the authorized number of common stock will soon be doubled.
Indeed, for those interested in investing long term in BCCI, the company has shown a continued willingness to accept cash from investors at a pps well below market.
The issue is dilution of the stock.
Posters here -- yourself included -- have argued that there has been nominal BCCI dilution over the last couple of years.
On March 1, there was effective 40% dilution -- half of it 'retroactive,' that is recognizing work done from 2009 to the present time.
There is also a bit of a discussion re: disclosure.
I would have viewed this planned dilution (to happen when authorized stock is 'available') as a material event, requiring public disclosure at the time. Instead, it was buried inside of a lengthy 10-K filed 45 days later.
But in fairness, I do not know SEC disclosure requirements, as I would also have expected public disclosure of a new BMOC distribution agreement, as the May 2014 agreement was stated as lapsed in SEC filings of November, 2014 and the recent 10-K.
Real revenues, but losses greatly exceed revenues!!!
And the most recent financials reveal employment contracts signed March 1, 2015 which dilute the stock 40% -- with that 40% going to the two principals.
Shareholders have to hope that the new business model promulgated by Mr. Lehr is successful, and that BCCI can profitably extend that model to other markets.
Certainly, the kiosk model has been wildly unsuccessful, with no net growth in six years despite a market (breastaurants; 'costumed' coffee kiosks) we have been told is growing (so, BCCI losing both share and money, not a good combination).
Near as I can tell from Google, there are no bikini-clad barista coffee kiosks in Las Vegas (perhaps someone can correct me).
IMO, that is because:
- No-one has ever thought of it;
- The summer heat in LV makes it a non-starter (think: 2 Barista AZ store failures); or
- Zoning/business case (rents, salaries) doesn't support it.
This is not to say there may not be an opportunity for a BMOC-style store in an LV mall, but servers will be G-rated. Note the concern in PA as to whether 'classic' (read: scantily clad) Baristas servers would be in the mall.
The zoning/community issue is a major part of why Barista's coffee kiosk model has gained no traction, despite having franchise papers filed in over half the country for a couple of years (per company PR).
There will not be a costume issue with the G-rated costumes planned for male and female servers in the PA mall locations; but, this is not the same Baristas we have known and loved -- or which is pictured in the 'in development' reality show. Heck, even Mr. Henthorn was confused about server attire!
If you're right, it's not being followed:
Looks to me they are using the franchise agreement that included the Sports Bar. Apparently the only part of the agreement that was canceled was the part about the Pavilion.
The parties mutually agreed to not pursue this agreement (BobS note: the agreement highlighted included franchise terms) with BMOC, and neither party has any further obligations as of the date of this filing.
Fair -- I meant to say $75K profit from first ten franchise fees, not franchises, as I have in several previous posts.
Note that the post to which you object went on to say
Real profit is in royalties and margin on supplies per Mr. Henthorn ...
That's what I said re: franchise fees, profitability.
Mr. Henthorn's email to you spoke about selling supplies to franchisees, with profit margin to BCCI. Happy to assume that is accurate.
My point there is that if BCCI can't make money using their supplies at cost -- which they haven't with the kiosks, with $0.60 operating loss on every $1 of revenue -- it will not be easy for franchisees to make money with the extra 7% revenues in royalties/marketing PLUS BCCI margins on the supplies.
For reference, BCCI reported directs costs (read: supplies?) as 35% of kiosk revenues in 2014. If half of this is supplies which BMOC must buy from BCCI, and there is 15% margin, that is an ADDITIONAL 2.5% of revenues in the BMOC cost structure, not in the BCCI structure. This will be reduced by the extent to which BMOC is selling non-BCCI products such as the soup (but, costs there as well).
Hope BMOC makes lots of money -- but just saying it won't be easy with all of these costs.
4 other franchises 'greenlighted' per Henthorn email to Rookie.
Company has stated they will make $75K in profit from the first ten franchises, or $.00025/share (actually less, with the recently announced dilution), after costs, due in large part to a planned hire.
With $75K in revenue taken for franchise fees in Q4, and no-one hired, suggests only nominal profit for the next seven franchises.
Real profit is in royalties and margin on supplies per Mr. Henthorn (though, the original franchisee agreement in the filings did not seem to require BMOC to buy supplies from BCCI -- but the new agreement has not been published). Note that if BCCI makes margin on supplies -- and only has costs in their own business which is losing money at a rate of $0.60 per $1 of revenue -- hard to see how BMOC will make money with the additional burden 0f 7% royalties/marketing fees.
BCCI shareholders should hope they will.
Collapse/not depends on BMOC success.
The kiosk model is clearly dead -- AZ/TX failures, no new franchisees, JV in SW FL didn't open third store after announcing it, model loses money, kept alive only by cash loans from principals (8% interest plus payable back in stock at 50% of market price) and willingness of various vendors to accept stock for services.
If the business model restructure by BMOC is successful, that could give BCCI some life through royalties and additional franchisee interest in the new model.
But, the information posted by ALLKINDS on the profitability of food courts, even for 'known name' franchisees, was a bit sobering as you think about 'no name' (in PA) Baristas. Note that even $10M in franchisee revenues doesn't generate sufficient royalties to offset BCCI losses at current rates (though, margins on BCCI-supplied supplies could make up the deficit).
Also, the huge dilution on behalf of the two principals, about 40%, announced in recent 10-K is sobering; the positive news could be, they wouldn't bother if they didn't think good things could happen. They also wouldn't be lending money to the company, despite the sweetheart terms, if they thought they would lose it.
I can't evaluate whether there is a scam here -- to me looks like real business, just not a successful one so far.
Company does $100K/month, 9 kiosks, $11K/mo/kiosk.
Not sure the treatment of the two SW FL stores which are in a JV; I believe their revenue is included in the $100K, but not certain.
If the company were paying itself royalties, would be less than $20K/quarter. I'm hoping revenues are far higher on the mall locations. Hard to estimate margins on BCCI-unique items supplied to the malls; hopefully the Q2 2015 10-Q, due in August, will tell us more.
Thanks for the email.
It is fascinating to me that material company information becomes public via an email to an iHub poster -- but Rookie, have to give you credit for getting it! Just as you did with the unannounced, 'green-lighted' stores which emerged out of the store count inconsistency with public information.
I don't have the data, maybe someone else does.
I bet there is a range of revenue per sq ft for mall eateries; if we know the square footage (Rookie, maybe you do?), would give some idea -- though trickier with the 'food court' units.
But I am expecting these franchises to dwarf the kiosks in revenue, and the royalties are pure margin. Plus, Mr. Henthorn notes margin on BCCI products (think coffee, apparel, k-cups, ice-cream, etc.).
Intangibles in FS Note 6, 10-K p.26.
2014 2013
Goodwill $ 2,770,651 $ 2,770,651
Definite-lived intangibles:
Trademarks 100,000 100,000
Logo 80,000 80,000
Website 27,500 27,500
Policies and procedures 10,000 10,000
Ice cream intangibles 125,000 125,000
Total Definite-lived 342,500 342,500
Accumulated amortization (153,958 ) (109,458 )
Definite-lived intangibles, net 188,542 233,042
Total intangible/goodwill $ 2,959,193 $ 3,003,693
The following is said about the Goodwill:
The intangible assets were purchased along with the hard assets, from the Pangea purchase in December 2009, for $3.5 million in our common stock. After the assets and intangible assets were identified, the remaining $2,770,651 was recorded as goodwill. The Company does notamortize goodwill. Instead, the Company evaluates goodwill annually in the fourth quarter and whenever events or changes in circumstancesindicate that it is more likely than not that an impairment loss has been incurred. As at December 31, 2014 and December 31, 2013, the Company determined that no such impairment existed
Please post BCCI CEO email re: BMOC royalties.
What you have posted looks like BCCI's standard franchise agreement information; if this is in fact the BMOC agreement, it is significant 'new news' to the public -- and actually good news!
The Q4 2014 $2.3M to Henthorn/Steciw is stock.
It hasn't actually been paid yet, as there are no available authorized shares -- but obviously, a significant increase in authorized shares is anticipated. In total, 120M shares are owed to the two of them (30M each retroactively, plus 5M/year each from 2016 through 2020) per employment agreements signed on March 1, 2015. For those doing arithmetic, that is a 40% dilution for the two principals.
BMOC in the 10-K is also interesting.
The company recognized $75K in initial franchise revenues, which (per the 10-K)
are recognized upon opening of a restaurant or granting of a new franchise term, which is when the Company has performed substantially all initial services required by the franchise arrangement.
BCCI had negotiated an Operating Agreement with BMOC USA Partners, LLP, providing Master Franchise Rights to BMOC in the states of NJ, PA, OH, IN, IL, MI, WI, and MN....The parties mutually agreed to not pursue this agreement with BMOC, and neither party has any further obligations as of the date of this filing.