This company has been around since 2000. It was a failure during its first incarnation and in late 2009, Barry Henthorn started the process of re-incarnating it. The original stock was diluted in a 1-for-20 reverse split, turning the nearly 100 million shares into 5 million. Along with that, the treasury stock was raised from five million to 300 million and more than 150 million shares were awarded to "insiders". Since then 80 million additional shares have been awarded to insiders for "services rendered" or at a nominal fee of $0.001 per share. If instead of "services rendered" shares those providing said services had been paid in cash at a rate commensurate to the actual price of the stock at the time said shares were issued, the corporation would have accumulated a loss of around 4 million dollars during the past two years. I wonder about the legality of this activity, and if it is not illegal, it should be.
The unaudited financial release bring up a lot of questions. Most important the expense of COGS, which doesn't include obvious accounting method acceptable under GAAP. In fact, the way the accounting is done it is unacceptable since in the food and beverage hospitality industry all expenses related to the running of each location belong under GAAP. This includes payroll, equipment, rent, taxes, insurance, etc that is related to each location in particular. Instead, for example, payroll is place under a personnel heading that does not differentiate between kiosk staff and central office staff. Furthermore, the amount of money attributed to personnel expenses clearly indicates that either, the staff is being paid less than the minimum wage or that the stores are closed at least half what would generally be regular hours for a business of this nature.
In conclusion, this business if fraught with all kind of accountability problems and is not an investment under any circumstances.
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