Spot Coffee Provides Financial, Franchise and Marketing Update
Spot Coffee Provides Financial, Franchise and Marketing Update
Canada NewsWire
TORONTO, May 1, 2019
TORONTO, May 1, 2019 /CNW/ - SPOT COFFEE (CANADA) LTD. (TSX-V: SPP) ("Spot" or the "Company") has released its audited financial statements along with its management discussion and analysis (MD&A) for the year ending December 31, 2019.
The Company is pleased to report that the new cost savings measures and improvements to revenue generating lines of business which have started being implemented in the third quarter of 2018 have noticeably contributed to a healthier margin growth rates and declining debt. More particularly, the key highlights from the audited financial statements of the Company for the year ending December 31, 2018, are as follows:
Declining Debt
The Company's long-term debt and convertible debentures of $1,926,666 in 2017 were reduced to $1,553,332. Accordingly, the Company made the total payments of $373,334 in reduction of the principal amounts of its long-term debt and convertible debentures in 2018.
Operating Expenses
The Company reduced its operating expenses by $405,181. Accordingly, the Company's operating expenses of $6,808,104 in 2017 came down to a total of $6,402,923 in 2018.
COGS
In an effort to cut down on labour costs, the Company has been outsourcing products that meet the Company's high-quality standards. It has also been applying measures to cut down on waste. These initiatives have helped the Company reduce its cost of goods sold by $98,756. Accordingly, the Company's gross profit now rose to 72.14% in 2018.
EBITDA
The company achieved a positive company-wide EBITDA (earnings before interest, taxes, depreciation and amortization) of $223,000 as compared to last year's negative company-wide EBITDA of ($89,176). This represents an overall improvement of $312,176 in the Company-wide EBITDA in 2018.
Assets & Liabilities
The total assets of the company increased in value by $248,600 from $2,434,160 in 2017 up to 2,682,760 in 2018.
The company's liabilities decreased by $189,653, i.e., from $4,033,761 in 2017 down to $3,844,108 in 2018.
Profit/Loss
This year, the Company's loss before income tax was reduced by $474,840, i.e., 63.5% less than last year's reported loss of $747,635. Considering the following new IFRS-15 rules, the Company reported this year a net loss of ($272,795):
1) | Under new IFRS-15 rules, non-refundable franchise fees of $137,140 that the Company received from its new franchisees were not recognized as income for the year 2018. The new IFRS rules recognize only $13,714 (10%) of these franchise fees as income for this year leaving the balance of $ 123,426 (90%) as deferred revenue to be recognized annually over the remaining 9 years of the 10-year franchise rights. | ||
2) | Because the Company provided a guaranteed rate of return on the disposition of one of its cafes, a portion of the gain realized by the Company on this disposition has been deferred to conservatively account for this guaranteed rate of return henceforth reducing the gain by the deferred portion of the gain. |
Franchise Operations
Subsequent to the news release of January 10, 2019 in which the Company announced entry into five (5) new Spot Coffee franchise deposit agreements, Spot Coffee is further pleased to provide an update of its franchise operations by listing the 9 new Spot full cafés and Express locations it is presently developing:
1) | On March 31, 2019, Parisco Cafés LLC completed the purchase of its third franchise Spot café namely, Spot Coffee Orchard Park. | ||
2) | The Company is in the process of studying and selecting two new Spot café locations for its franchisee namely, Parisco Cafés LLC ("Parisco"). With its purchase of Spot Coffee Orchard Park, Parisco now owns and operates three (3) franchise Spot cafés and is looking to develop and build 2 more franchise Spot cafés to complete its ownership of 5 franchise Spot cafés. | ||
3) | Spot Coffee has moved from a franchise deposit agreement to a final franchise agreement to develop a franchise Spot café in the town of Tonawanda, NYS. | ||
4) | The Company has moved from a franchise deposit agreement to a final franchise agreement to develop a franchise Spot café in the town of Victor, NYS. | ||
5) | Spot Coffee is presently in the process of equipping a new license Spot Express in the new Dash's supermarket, a local family owned supermarket chain, on Hertel Avenue in North Buffalo. This new license Spot café marks the fifth of its kind in Dash's supermarkets. | ||
6) | The Company is in final negotiations with a major supermarket chain franchisee to start the development of four (4) franchise Spot Express locations in 4 of the chain's supermarkets. The Company is very excited about this strategic alliance with the real potential of becoming a multi-unit Spot Express franchise owner. |
Marketing Campaign
Spot Coffee has entered into an agreement with Trellis Marketing Inc. to launch a comprehensive long-term marketing campaign beginning in May of this year with the following objectives:
1) | Increase and maximise café revenue; | ||
2) | Strengthen the Spot digital infrastructure by improving local listings, website, and SEO; | ||
3) | Expand the Company's franchise footprint throughout NYS and northwest USA with a strategic digital marketing campaign designed to drive franchise inquiries; | ||
4) | Increase awareness and drive sales for specific promotions; | ||
5) | Strengthen the positioning of Spot as Your Neighborhood Café with video and messaging that resonates with all demographics; | ||
6) | Intensify and coordinate Social Media presence; | ||
7) | Strengthen the connection between Spot and the surrounding communities; | ||
8) | Keep high company awareness | ||
9) | Improve branding to reflect the total hospitality experience and offerings of a Spot café. |
About SPoT Coffee
Spot Coffee designs, builds, operates and franchises community-oriented cafés and Express cafés in the northeastern United States. Spot's community cafés provide its customers with the highest quality service, signature made-to-order meals and award-winning micro-roasted coffee. Each Spot café is distinctively designed to suit its local neighbourhood, creating a warm and friendly gathering place for the community. Spot's commercial business focuses on the sale of roasted coffee beans to food service and grocery chains, business offices, and resellers such as universities and hospitals.
We seek Safe Harbor.
Forward Looking Statements
Except for statements of historical fact relating to the Company, certain information contained herein constitutes forward-looking statements. Although we believe that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. We cannot guarantee future results, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.
SOURCE Spot Coffee (Canada) Ltd.
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