Thanks for sharing the link.
I have quickly looked at the report:
- It is positive that the 10-Q format is being used for financial reporting, with the additional disclosures required.
- Revenues down 30% year on year; management attributes that to reduction in the number of kiosks from 13 to 10. Both are not good for the self-acclaimed fastest growing espresso stand company in the land.
- Operating loss was more than 50% of revenue in the second quarter.
- There is a forecast of ten new franchises over the next 12 months, each with a $25K fee to BCI. This is the same fee quoted in the Prime Equity Research report of two years ago. I would have thought BMOC (the 8 state master franchisor) would get some of the fee; either BMOC grosses up the fee, or perhaps no franchises are forecast for BMOC.
- Including subsequent events, about 12M of new preferred stock have been exchanged for common stock, some of which was used to finance certain operations in the second quarter and in the third, and likely will be so used again in the fourth. But, didn't a poster report that Mr. Henthorn had advised him that the use of common stock to finance operations would not continue to happen?
- The only specific mention of the Knoxville sports bar was the fact that capital is needed for start-up costs. Strange -- the May 28 PR said that the company owned 51% of the JV which had acquired the sports bar; that it would stay open during much of the remodeling; and that as a consequence revenues would double in the third quarter. But under that scenario, Q2 revenue should have been impacted with a month of revenue, I would have thought. Perhaps something was lost in the translation of what I am sure was a very detailed contract, and the PR.
- There was a mention that liquidity will be under pressure due to lower holiday sales. Interesting -- on Dec 14, 2011, the company put out a press release about holiday sales, headlined "BCCI Local Holiday Sales Surge..."
- The company found there to be material weaknesses in internal financial controls during the period ended June 2014, but does not believe that had an impact on the accuracy of the published financials. I expect that such weaknesses are pretty common in a company this size.
