Spicy Pickle Franchising, Inc. Reports Second Quarter Results
DENVER, CO - (Marketwire) - Spicy Pickle Franchising, Inc. (OTCBB: SPKL), fast casual restaurant operator and franchisor of its Spicy Pickle and Bread Garden Urban Café brands, announced today its results for the second quarter and six months ended June 30, 2010.
Revenue for the second quarter totaled $1,215,441, almost even with the $1,223,858 in the year ago second quarter. Franchise fees and royalties for the quarter rose to $541,378 compared with $493,413 in the same quarter 2009. The company noted that a majority of its revenue is derived from its owned restaurants. In May, 2010, Spicy Pickle closed one of its restaurants and is looking for a site to relocate it. Therefore, the second quarter ended with six company owned stores operating versus seven at the end of the second quarter a year ago. For the six months, revenues amounted to $2,188,592 versus $2,227,453 for the same period a year earlier. Franchise fees and royalties for the six months were $895,832, up from $798,388 for the first half of 2009.
Restaurant and bakery operating costs were down slightly in the quarter to $782,722 from $793,769 and general and administrative expenses were also lower at $581,047 versus $652,503 in the year ago quarter. Restaurant and bakery operating costs for the first half were also down slightly at $1,531,498 compared with $1,577,981 in the year ago half. General and administrative expenses were higher in the half this year at $1,597,726 compared with $1,365,300 in the year ago same half, mainly due to stock based compensation expenses of $298,765 in the first quarter this year versus negligible amounts in the other periods for shares issued to employees in consideration of salary reductions and stock options.
The company's net loss attributable to common shareholders for the second quarter was cut to $230,220 versus a net loss for common shareholders of $317,694 in the year ago quarter. For the six months, the net loss to common shareholders was $1,030, 392 compared with a net loss of $885,978. After minor foreign currency translation, the comprehensive loss was equal to nil cent a share in the second quarter 2010 versus one cent in the same quarter last year and one cent in the first half versus two cents in the year ago half, based on 82,494,274 weighted average shares outstanding in the second quarter and half this year and 54,387,357 and 54,378,422 in the quarter and half last year respectively.
At June 30, 2010, the company had total assets of $5.4 million with current assets of $1,083,826 and current liabilities of $1,456,130. Of its current assets, $461,113 was cash and equivalents, down from June 30, 2009, and $266,705 was in trade accounts receivable which was up from the prior year. Of its current liabilities, $440,500 was deferred franchise fee revenue and not a cash liability. These funds are taken into revenue when the franchisee opens the restaurant or a franchise agreement is terminated but they are available immediately as working capital. The company carried no long term debt on June 30 compared with $467,000 a mid-year 2009 as $451,307 of the long term debt was moved up to current and notes payable to related parties rose to $1,210,605 from $676,927 at the same point last year. Shareholders' equity totaled $2.6 million, equal to 3.2 cents a share.
Just joining the company as CEO in April this year, Mark Laramie stated, "The second quarter was the first in which a new management structure and turnaround operating plan began to take shape. At the end of July we sent a letter to shareholders outlining our strategic directions. We cannot divorce ourselves from economic conditions, but at this time we are optimistic that the basic ingredients are here from which to build a successful restaurant franchise company. We are working diligently to improve Spicy Pickle's operations and results. Some of our most positive elements include our proven brands, our strong board, our management team and our existing franchise operators. We have put a program in place to strengthen franchisee relations and operations and hired a new marketing director. We expect these and other moves we are making to have positive effects."
Summary financial data:
operations data Three Months Ended June30, Six Months ended June 30,
2010 2009 2010 2009
Total revenue $ 1,215,441 $ 1,223,858 $ 2,188,592 $ 2,227,453
expenses $ 1,391,365 $ 1,454,895 $ 3,129,224 $ 2,943,281
loss ($ 240,908)($ 329,899)($ 1,041,047)($ 918,549)
outstanding 82,494,272 54,387,357 82,494,274 54,378,422
Net loss per
share ($ 0.00) $ 0.01)($ 0.01)($ 0.02)
June 30, December
Balance sheet 2010 31, 2009
assets $ 1,083,826 $ 1,288,423
Total assets $ 5,408,038 $ 5,839,194
liabilities $ 1,456,130 $ 1,208,359
liabilities $ 1,350,684 $ 1,290,328
equity $ 2,601,224 $ 3,343,507
About Spicy Pickle™ and Bread Garden:
Founded in 1999, Spicy Pickle Franchising, Inc. (OTCBB: SPKL) serves high quality meats and fine artisan breads, baked fresh daily, along with a wide choice of eight different cheeses, twenty-two different toppings, and fourteen proprietary spreads to create healthy and delicious panini and sub sandwiches with flavors from around the world. As a leading "fast-casual" concept, Spicy Pickle offers menu items that are far beyond traditional fast food but without the price point of casual dining. The hallmark of a Spicy Pickle restaurant is quality, service and an enjoyable atmosphere. The company is headquartered in Denver, Colorado, with restaurants open across 11 states and more in development nationwide. Spicy Pickle Franchising, Inc. also operates as franchisor for Bread Garden Urban Cafes, a bakery café concept with restaurants in the metropolitan Vancouver, Canada area. Bread Garden Urban Cafes serve coffee, pastries and breakfast items as well as lunch and dinner along with a wide variety of desserts and are found in typical high density urban settings along with specialty locations in two airports in British Columbia. To find out more about Spicy Pickle (OTCBB: SPKL), visit our website at www.spicypickle.com.
Certain statements in this press release, including statements regarding the number of restaurants we intend to open, are forward-looking statements. We use words such as "anticipate," "believe," "could," "should," "estimate," "expect," "intend," "may," "predict," "project," "target," and similar terms and phrases, including references to assumptions, to identify forward-looking statements. The forward-looking statements in this press release are based on information available to us as of the date any such statements are made and we assume no obligation to update these forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, the following: factors that could affect our ability to achieve and manage our planned expansion, such as the availability of a sufficient number of suitable new restaurant sites and the availability of qualified franchisees and employees; risks relating to our expansion into new markets; the risk of food-borne illnesses and other health concerns about our food products; changes in the availability and costs of food; changes in consumer preferences, general economic conditions or consumer discretionary spending; the impact of federal, state or local government regulations relating to our franchisees and employees, and the sale of food or alcoholic beverages; the impact of litigation; our ability to protect our name and logo and other proprietary information; the potential effects of inclement weather; the effect of competition in the restaurant industry; and other risk factors described from time to time in our SEC reports.