Spot Coffee Ltd (SCFFF)

[MrG]

SCFFF---SPoT Coffee Second Quarter 2011 Results: Reports 22% Increase in Sales Over Previous Quarter

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TORONTO, ONTARIO--(Marketwire - Aug. 18, 2011) - SPOT COFFEE (CANADA) LTD. (TSX VENTURE:SPP) ("SPoT" or the "Company") released its financial results for the Company's second quarter ended June 30, 2011. Complete financial statements and Management's Discussion and Analysis have been filed for public review at www.sedar.com and are available on the Company's website at www.spotcoffee.com. All dollar values expressed in Canadian dollars unless otherwise stated.

Second Quarter 2011 Highlights
•Revenue increased 22% to $1.4 million from $1.15 million compared to the first quarter of 2011. The revenue increase compared to the same quarter of 2010 is up 10% from $1.27 million. The Company benefited from the strength of same store sales over the quarter as a result of various new marketing and branding initiatives, as well as the reopening of SPoT Rochester on May 27th after the café was temporarily closed for full renovations starting October 2010.


•Gross profit (measured as sales less cost of goods sold) improved to $917,457 for the quarter reflecting an increase of $71,723 or up 8% from $845,734 for the first quarter of 2011. Gross profit significantly improved by 20% when compared to same quarter of 2010. The Company's gross margin percentage (measured as gross profit divided by sales) increased to 65% for the second quarter of 2011 from 60% for the same quarter of 2010.


•The Company's consolidated net loss for the quarter was reduced to $11,358. This is a significant and positive reduction of 90% from a loss of $121,815 for the first quarter of 2011 and a reduction of 91% from a loss of $130,951 for the same quarter of 2010. On a cash basis, adjusting for amortization and standard accruals, the Company generated a positive net cash flow of $78,181 for the quarter ended June 30, 2011. This is the first quarter of positive cash flow for the Company. The Company benefited from an increase in sales and various cost cutting initiatives, including more advantageous supplier contracts and improvements in the purchasing process in order to reduce waste and excess carrying costs. As SPoT continues to expand, the Company benefits from increasing economies of scale.



"SPoT Coffee's second quarter results demonstrate the strength in the underlying operations as the Company continues to execute on its strategic growth plan. This quarter is the first quarter of positive cash flow for the Company representing the positive momentum towards achieving our short-term milestone of our first ten operating cafés," said Raymond Stapell, President and CEO of SPoT.

Second Quarter 2011 Developments

On May 27th, SPoT announced the reopening of its Rochester café in Western New York after its temporary closure for renovations. The newly renovated café has an updated service bar, enhanced seating areas and a new enlarged kitchen. The renovations have reduced the overall excess square footage decreasing monthly operating expenses by up to 40% while the improved design and menu enhancements lead to a greater customer experience.

On June 14, 2011 SPoT successfully closed a follow-on equity financing for total gross proceeds of $500,000 as well as on August 3, 2011 SPoT closed a $750,000 financing. Proceeds from both financings support the short-term expansion plan, in addition to further supporting the continued development of SPoT's existing operating infrastructure.

Construction on SPoT Hertel, SPoT's seventh operating café, is progressing on schedule and is expected to open during October 2011. The café is located Hertel Avenue, a vibrant commercial and residential area in Buffalo, New York.

Construction on SPoT Park Place, SPoT's eighth operating café, and will begin in mid-October which is ahead of the Company's initial planned construction schedule. SPoT Park Place will be the Company's second location in Toronto and is part of a new multi-condo urban development project in the North York area of Toronto by real-estate developer, Concord Adex, comprising 20 buildings and an expected residential population of 290,000. The café is anticipated to open early 2012.

SPoT is continuing to assess future café locations and is currently in the final stages of selecting the sites for cafés nine and ten. SPoT anticipates accelerated growth during 2012, leveraging its existing operating infrastructure in Western New York, Southern Ontario and Florida before a broader North American and international expansion commences.

About SPoT

SPoT (www.spotcoffee.com) designs, builds and operates community-oriented cafés that provide its customers from every lifestyle and culture with the highest quality service, signature light meals and in-house roasted gourmet coffee. The current SPoT management team and directors have been successfully operating company-owned cafés since 2004.

Each SPoT café is a popular and friendly gathering place for its community where specialty coffee, upscale beverages, fresh baked goods, signature sandwiches, soups, salads and gourmet pizza, cakes, pastries and home baked goods are offered and enjoyed by its patrons in a warm, friendly and home-like environment.

The Company currently operates six cafés that range in size from 2,000 to in excess of 4,000 sq. ft. with two more cafés currently under development. Spot is currently evaluating several locations as part of its North American expansion.

Unlike other conventional gourmet coffee houses and quick service restaurants that are built on uniformity of product and style, each SPoT café maintains several unique and key features, including:
•Dedication to create a friendly environment that nourishes and intensifies a sense of gathering and of community;


•In-house roasting and blending SPoT's own award-winning premium Arabica coffee;


•Unwavering commitment to offer the customers of the Company the highest quality products and services;


•Innovative and varying café designs that consider both the culture and flavor of the specific communities of each café;


•Choice of corner locations for each SPoT café at the center of their neighborhoods;


•Ability to offer intimate and warm ambiances in each café to suit the social and private moods of SPoT's patrons; and


•Trained and dynamic service staff that are proud to call themselves "Spotters" who enjoy serving their customers and make them feel at home.