Baristas Coffee Company, Inc. (BCCI)

[BobSinCA]

BCCI has negative cash flow.

The Comparative Statement of Cash Flow in the company's recently issued 2013 financial statements show a net change of cash of -$36,438 for the year - and that was after selling common stock for $201K, otherwise negative cash flow would have been -$237K.

(Caveat; the -$36K came from the bottom of the Comparative Statement of Cash Flow; but, that statement didn't 'foot,' that is if you add and subtract the numbers in the columns, they don't add to the total shown.

If you go by the balance sheet, cash did increase by $3500 during the year -- but after taking dilution into effect, it was down by $198K; and, I would never argue that an increase of $3500 constitutes 'cash flow positive,' given the 43,000,000 total common shares (almost 20% dilution -- plus the 300% dilution of the preferred stock) issued during the year -- almost all of which were to pay for services which should have been paid for with cash)

Its great to have 'plans for expansion,' but 'where's the beef'? WhenPrime Equity Research published their report in January 2012, the company had 8 stores; they currently have 10 -- hardly the explosive growth expected in the PER report:

Baristas intends to open 50 new owned stores and 50 franchised shops in 2012.

Such store growth -- 12x in one year -- would certainly have justified the .44 pps target published by PER. But, with only two net stores opened over a two and a half year period, and entire states closed down (TX, AZ) hard to make the case for buying the stock based on 'plans for expansion.'

IMO, the current marketing campaign -- focused on finding franchisees -- is really make or break for the company, if you are interested in it for business reasons, as opposed to viewing it as a trading vehicle. This campaign is not cheap; the financials seem to indicate that the company issued approximately 20M common shares and 5M preferred shares to finance this campaign (exact terms were not disclosed in the October 1 press release, for some reason no longer available on the BCCI website) for '$1.7M worth of advertising" (my memory of the PR).

Hopefully, it pays off -- and it may well, if the Cape Coral locations can be used as a proof point. Opening of the third store, announced in January to occur in the early part of Q2, would indicate that the company (49% owner) putting up the cash -- which included buying land and a building for the second store, versus a simple lease arrangement -- is satisfied with the returns. And as a 51% owner, BCCI can certainly 'open the books' in Cape Coral for a prospective franchisee.