Sunday, May 18, 2008 2:43:55 PM
THREE MONTH PERIODS ENDED
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APRIL 1, 2008 APRIL 3, 2007
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NET SALES $ 545,193 $ 578,876
COST OF SALES 165,407 198,128
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GROSS PROFIT 379,787 380,748
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OPERATING EXPENSES
Selling, general and administrative expenses 1,700,372 1,658,794
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TOTAL OPERATING EXPENSES 1,700,372 1,658,794
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LOSS FROM OPERATIONS (1,320,585) (1,278,046)
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How the hell can their SG&A be so high (1.7M). With this it is pretty hard to do a Pro Forma because to me this does not make sense. What are their SG&A expenses going to be with 3 restaurants. Seems to me the restaurants are doing great.. with 3 of them they may just break even. Business people do not generally like to buy technology from money-losing companies that may not be around to provide ongoing support.
How can they be spending so much SG&A? One would think that they could trim that down and become profitable with 3 restaurants. I would have thought their main cost would be in the restaurants themselves (CGS). Or in R&D, which is usually a biggie for technology companies. Unless they are trying to hide R&D expenses in this...
By the way the 1M investment appears in the cash flow statement clearly as being invested in the new restaurant.
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