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Sunday, March 15, 2015 6:40:37 PM
The biggest component in the nine-month, $800K reduction in operating expenses is the $550K reduction in stock based compensation, from $586K to $35K.
The second biggest component is the $290K reduction in G&A, which the company's Q3 2014 financials report to be primarily due to a Department of Labor judgment in 2013.
These two components are $40K over the total reduction -- going the other way, there was a $50K increase in professional expense for auditing expense.
The above means that the two most important components of operating costs for the kiosks, materials (shown as Direct costs) and baristas (shown as Compensation -- note that officers do not take salaries, but they certainly take stock) stayed the same year on year.
To your point, however, in depth look at direct costs shows that 2013 direct costs were quite low as coffee purchases were curtailed due to the pending closings.
Worth looking at the trend in 'operating margin' during 2014. In Q1, the company lost $.05/$1 of revenue; in Q2, .53/$1 of revenue, and in Q3 $.60/$1. TBH, quarterly results will bounce around depending on when coffee is purchased (it appears inventory is only taken annually), stock is issued for services, etc.
For those interested in the potential impact of the pending increase in minimum wage, compensation alone was 57% of revenue in Q3 14.
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