Replies to post #26587 on Baristas Coffee Company, Inc. (BCCI)

[TenKay]

I am not sure how you can say that when the income statements and cashflow statements have to be completely redone. You can't lose money every year and expect to have positive operational cashflow. The company may have had positive cashflow at times but it will be due entirely to financing activities and share payments for services.

[BobSinCA]

Not sure your definition of cash flow positive.

Per their recent financials (Statement of Cash Flow) --

- They started the year with $80K in cash.
- They have $80K in cash at June 30.
- But they raised $150K through sale of stock YTD (but, the Statement of Shareholders/Stockholders Equity shows $150K in Q1 + $45K in Q2 -- arithmetic not a strong suit for this accounting team...).

To further add to the confusion, the Q1 Statement of Cash Flow shows $26,773 for sale of Capital stock in the quarter, but the Q2 Statement of Cash Flow shows $45K in Q2 and $150K YTD (45 + 27 = 150?).

(IMO, is not rocket science to have financial statements consistent with each other -- but apparently a challenge for our intrepid team).

Part of the issue appears to be confusion on the issuance of 15,000,000 shares in Q1. The Q1 financials said this was an investment in Baritas Acquisition Partners (remember -- the abortive attempt to acquire a portion of Tully's), while the Q2 financials say it was a sale of stock for cash. You would think they would know why they issued 15,000,000 shares (6%). But then, you would also think they would know WHEN they issued shares, and the historical view of that has changed since the last quarterly report.

And the above discussion of 'cash flow positive' doesn't begin to speak to the dilution suffered through issuance of stock for professional services, ice cream distribution, etc. 33% total dilution in the last fifteen months alone! Using extreme dilution to say you are 'cash flow' positive is disingenuous at best....

However, to the favorable side of dilution, mention of 5,400,000 shares of preferred stock reportedly issued in Q2 2012 for conversion of debt magically disappeared from the financials during the quarter. Note the preferred total of 1,460,000 at the bottom of the Statement of Shareholders/Stockholders Equity June 30, 2013 while column 3 of the corresponding tables at March 31, 2013 and December 31, 2012 shows 6,860,000 preferred shares outstanding.

Further confusion but consistent with the company's arithmetic issues, the 5,400,000 preferred shares have never shown up on the balance sheet. Even the quarter of issuance!

But, back to cash flow positive -- per prior discussion, they haven't been profitable when you properly account for the dilution. Which they have started to do -- but will complete when much (most?) of 'Unidentified and Intangible Assets' are properly re-classified to Accumulated Deficit, thereby reducing assets and equity.

For example, how can payment of shares to Caliph for ice cream distribution be considered payment for an asset; certainly, they weren't paying for the brand. They were paying for some inventory (long since either sold or thrown out) and distribution development. The former is 'cost of goods sold' a year later, and the latter is normal operating expense.

BTW, not sure why there were in such a hurry to get out these clearly flawed financials -- Q2 2012 financials were not issued until September 25, 2012. Waiting till then would have given another month for clean up. Perhaps these were required for a pending 'pump and dump,' certainly today has been good to the stock.

All IMO, of course. Hopefully revised financials, or the next report, will clear up all of the confusion.