While I tend to agree with you on most points, don't kid yourself that companies won't take a .15 a share profit and walk. It all depends on what company you're talking about. It does no good for "companies" like OTC Journal and MarketPulse to carry shares on their books, hence all the "promotion" and distortions to get the price as high as possible. Unless this was a public company answering to shareholders, chances are they are eager to get out of it as soon as possible and move onto the next gig. $6M in stock does them no good. They need cash to get the next deal signed, not equity.
My bet is that it is trickling into the market as we speak (unless it's restricted, I didn't check) and will increase on any price spike.
And for this quarter, and most likely the next, yesterday's news still didn't mean anything. Sure, it might bump the price a few pennies, but it still didn't put any more stores into the revenue stream. And 5 stores? That's another $35,000 in QUARTERLY revenue and they probably spent that much on travel and personnel arranging the leases in the different cities.
The problem for the current shareholders is that it is taking WAY too long to get stores up and running, needing AT LEAST 70 more to get anywhere close to profitable and are burning a ton of cash in the meantime ($1.3M last quarter) Take into account that they're building two corporate stores (at least) and that $6M is not going to last long, and with each store only adding $7K ~ $8K per quarter, it'll be a while till they can make up that $1.3M loss.
Granted, company stores will provide more revenue, but having to operate the store, they will also show a lot more expense. I would bet that if they're taking 5% of the gross revenue from the stores, that they might, MIGHT make a net profit of 10% of revenue (post 5% deduction) so you're talking (since each store is pulling in $500K ~ $600K a year in revenue as opposed to the $700K they have planned on) maybe $60,000 a year in profit, meaning $15,000 per quarter or roughly double what the franchised stores make.
That makes one corporate store equal to about two franchise stores, and they need at least 70 more. As I said in the past, they should be concentrating on putting franchises in the ground, not getting all distracted with corporate stores.
If you don't believe me, hit some of the websites/chat rooms that exist for franchises and ask some franchise owners how their Quizno's and Subway's are going. Not only are expenses going through the roof because of grain/baking prices, but some are pulling out of their Quizno's franchises all together.
Granted, they aren't the same, but they're in the same price range/sector and I'm sure are getting hit with the same price fluctuations that the other franchise's are.
They need to get franchises in the ground. Period. And quickly. Another financing or two will seriously begin to erode shareholder confidence.
Good luck!
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