Baristas Coffee Company, Inc. (BCCI)

[BobSinCA]

I have now reviewed the Q2 financials. Comments:

- Revenues flat from Q2 14, down from Q3 13. No surprise, with no increase in open stores from Q2 14, and a decrease from Q3 13.

- Operating loss increased by 20% from Q2, from $.53 on every dollar of revenue, to $0.63. About half of the increase is attributed by management to 'compliance costs' (re: registration statements, audit costs, etc.).

- Compounding the problem, interest expense is $0.30 per dollar of revenue.

Clearly not a sustainable business model, so how is the company still alive? Not surprisingly, the answer is dilution -- the issuance of preferred and common stock to acquire cash, retire debt, or pay for vendor expenses.

Common stock is roughly .035/sh today; worth noting that issuance of shares to insiders, converters of debt, and vendors was between .015 and .025/sh between July 1 and the present day (based on the 'subsequent events' section), with one outside investor paying .05/sh for preferred stock during Q3. Note: I am not differentiating between common and preferred as the latter can be exchanged 1:1 for the former -- although there are not sufficient shares of common stock authorized to enable conversion.

I continue to not understand the gross property and equipment increase this year of $158K, or almost 40%, with no new store openings. If there was an explanation in the 10-Q, I couldn't find it.

'Grounded in Seattle' is on the list of 'defined-lived intangibles' assets for $72K; if the show is not picked up, I would expect this to hit the Q4 P&L during the audit process. But having said that, last year the auditors did accept $125K in this category for ice cream, which is inexplicable given the company's statement in the registration statement that

All of our revenues are planned to be generated through the sale of coffee.