No wonder RJ couldn't wait to merge in his toxic company... even states that Hearthstone folks have priorit over every other stockholder..... This is end very badly very soon....
We will have to fulfill the debt obligations of the Hearthstone Entities and R.J. Dourney. Our failure to meet our debt service obligations could have a material adverse effect on our business, financial condition and results of operations.
As previously disclosed in our filings with the SEC, we incurred a substantial amount of indebtedness in connection with completing the Hearthstone Merger (the “ Hearthstone Indebtedness ”) and, as a result, the Hearthstone Merger increased our outstanding indebtedness. The aggregate of the Hearthstone Indebtedness outstanding as of April 1, 2015, upon completion of the Hearthstone Merger, was approximately $10.8 million, of which approximately $5.6 million was paid shortly following the closing the Hearthstone Merger. Our increased indebtedness following completion of the Hearthstone Merger could adversely affect our operations and liquidity. Our level of indebtedness could, among other things:
• make it more difficult for us to pay or refinance our debts as they become due during adverse economic and industry conditions because we may not have sufficient cash flows to make our scheduled debt payments;
• cause us to use a larger portion of our cash flow to fund interest and principal payments, reducing the availability of cash to fund our working capital, capital expenditures, research and development and other business activities;
• cause us to be less able to take advantage of significant business opportunities, such as acquisition opportunities, and to react to changes in market or industry conditions;
• cause us to be more vulnerable to general adverse economic and industry conditions;
• decrease our profitability and/or cash flow;
• cause us to be disadvantaged compared to our competitors with less leverage; and
• limit our ability to borrow additional monies in the future to fund our working capital, capital expenditures, research and development and other general corporate purposes.
In addition, the terms of the Hearthstone Indebtedness may restrict certain actions by us and our subsidiaries, including financial, affirmative and negative covenants, including limitations on our ability to incur indebtedness, create liens, and merge, amalgamate and consolidate with other companies.
A portion of the Hearthstone Indebtedness that we assumed will bear interest at variable rates that are linked to changing market interest rates. As a result, an increase in market interest rates would increase our interest exposure and our debt service obligations.
All of our debt obligations, and any indebtedness incurred in connection with the Hearthstone Merger, will have priority over our common stock with respect to payment in the event of a liquidation, dissolution or winding up of our company.
In any liquidation, dissolution or winding up of our company, our common stock would rank below all debt claims against us, including claims in connection with the indebtedness under the Senior Secured Promissory Note issued by the Company to Milfam II L.P. in April 2014 and the Senior Secured Promissory Notes issued by the Company to AB Opportunity Fund LLC and AB Value Partners, L. P. in May 2014, and the Hearthstone Indebtedness acquired in the Hearthstone Merger. As a result, holders of our common stock will not be entitled to receive any payment or other distribution of assets upon the liquidation or dissolution until after our obligations to our debt holders and holders of equity securities that rank senior to our common stock have been satisfied.
TABLE OF CONTENTS
The issuance of shares of our common stock in connection with the Hearthstone Merger resulted in the dilution of our equity.
Upon completion of the Hearthstone Merger on April 1, 2015, we issued 1,790,993 shares of common stock as consideration for the Hearthstone Merger, which diluted the equity interests of the holders of our common stock.
We may be subject to liabilities of the Hearthstone Entities that are unknown to us, which may have a material adverse effect on our profitability, financial condition and results of operations and which may result in a decline in the market value of our common stock.
We may be subject to liabilities of the Hearthstone Entities unknown us, which may have a material adverse effect on our business, financial condition and results of operations and the market value of our common stock after the consummation of the Hearthstone Merger.
Sentiment: Strong Sell
soon $1. RJ will soon release the june numbers, awful I'm sure . Another $3-$4 million loss coming. Now that RJ has fully DUMPED his debt-ridden company into COSI , there is little motivation for him to continue the charade. After Sept quarter are further dismal sales, he'll probably resign with exit bonus in hand. Of course his real BONUS was unloading his $10 mill debt onto you bagholders.
cosi is nothing more than a retirement sled for execs and cohorts.. The cosi brand is WORTHLESS .. the cosi name is known for horrible slow service and poor food. you cannot change this now. You'd basically have to start all over again and re-brand as different name and concept.
September seems early for cash flow positive. Store renovations will take longer than that. I don't think RJ subscribes to the under promise over deliver approach. If anything he is optimistic on timelines. I'll go with the stated 4Q cash flow positive RJ committed to but not be surprised if at YE call he says starting 1Q 2016 we are cash flow positive. With the raise of equity I was hoping they would say store renovations would be completed by 4th Q but I guess there are a lot of logistics to manage.
I think RJ will have COSI generating positive cash flows in the September quarter and will be self funding its growth going forward. We should see this stock approaching 5 a share by the end of the year.
that's RJ speak for increasing revenues.. but all i see is further declines.. May alone sales DOWN 1%... but with costs rising wildly , this is actually much worse. looks like the RJ experiment will end by fall... he will disappear with exit bonus in hand... or maybe "change positions" from CEO to "BORED member". ... hahah.. There is little motivation for RJ now that all his Hearthstone debts have been merged into cosi
But I was shorting it back in 2007 after spike to $5 (before all reverse splits)
My take: as long as there is a short to squeeze Wall Street will find the way to float any piece of garbage
This quarter about $11 million debt from RJ will be merged into cosi... hahah.. and I'm sure RJ's boston stores boost up the overall G&A expenses... wouldn't be surprised if most/all of RJ's family members are on payroll... maybe he'll invent some nice job titles for them like "freshness engineer specialist"... and of course he say that's worth $100,000 salary apiece... I guess these pumper fools will be looking for any "silver lining" when they supposedly report may sales numbers next month... I suppose RJ will pat himself on the back for accomplishing a 1% same store sale increase....
Wow...yet another horrendous quarter. They burned through $7 million in cash. They only have $13 million on the books. Unless something dramatic happens, this feels like a Chapter 11 situation in 6-12 months.
Things are not turning around....the Operating Loss got higher in the quarter and Operating Costs are running 108% of sales and that is before G&A which is now up to almost 15% of sales (up 3 points vs. same quarter a year ago). Bottom line....the net LOSS is 24% of Revenues. That's a LONG way to go before they simply breakeven. I love the posts that support this company but none of them are ever based in rational arguments. This company has NEVER made money and there's no real case for value (they don't own any real estate and you can see that they have to pay to get out of bad leases). If someone wants their real estate, they just have to wait for Cosi to close the store and go direct to the landlord.
Sentiment: Strong Sell
My wife went to Cosi's in Hackensack NJ lasy year when ewe were visiting and found the food delicious
and they deliver order to your table ater you order & pay at counter. No problem for us, you sound like a
Mac Donald fan.
Went to lunch at Cosi at Columbia MD. Big mistake. Place was filthy. I am a vegetarian. Ordered grilled veggie sandwich - got a grilled chicken sandwich instead. Never again.
this alone is horrible news.. many people will NEVER come to cosi just because of this.. Panera has a drivethru at some locations, cosi does not.. And the customers that do walk in the stores are quickly disgusted by the long waits ... 15 minutes to prepare a simple meatball sub... no one will return to this..
"On April 1, 2015 upon completion of the Hearthstone Merger, we acquired through Hearthstone Associates and Hearthstone Partners approximately $10.8 million of indebtedness "
Thus over $16 MILLION loan debt now sits on the books.. Rest assured by the end of summer, cosi will again be low on cash... Take $13 mill cash at 3/31, add $14 mill stock offering, SUBTRACT $16 million LOAN DEBT , SUBTRACT $4 mill cash loss by 6/30 and you get net cash of only $7 mill at 6/30... then another $4 mill cash loss at 9/30 then only $3 mill cash remains..
over last 14 years the cosi concept has failed miserably ... So many execs and clowns have come and gone, and yet the results always fail. There is no FIDUCIARY responsibility with anyone at cosi and several should face legal consequences, in my opinion. But of course each officer is probably protected 100% by company paid insurance. But This is negligent careless waste of shareholder money... probably around $150 million in shareholder cash WASTED in 14 years. where's any fiduciary responsibility during these 14 years? I mean , heck, can't they figure out in 14 years that the concept is flawed? The executive teams continued to throw good money after bad right down the drain. If the concept didn't catch on after 5/6/7 years , the stores should have all been closed, BUT hey if they shut down 5 years ago that would have interfered with the salary gravytrain. And now with a full year of RJ, the results couldn't have been worse! many stores still must be closed and sales are basically stagnant ... Stagnant won't cut it when inflation is 5% a year...