kkd announced on the cc that q1 capex was approximately $20 million. Additionally, the recently released 10-k states that kkd had $6.55 million in "construction in progress" at the beginning of Q1.
What did kkd get for their $20 million plus the $6.55 million in "construction in progress"?
3 new consolidated joint venture stores (new stores cost $2-$3 million a piece) were opened in q1. Just the previous entry in construction in progress ($6.5 million) should have been enough to cover most, if not all of, the typical expenditures for these factories.
What about uncompleted factory stores at the end of Q1? While I can't say for sure, it looks to me that the first company store openings in Q2 are scheduled for mid-June in Branson and Springfield, MO. Given that these openings are 6 weeks into the current quarter and stores are built in 8 weeks, I doubt that these stores would have had significant expenditures in Q1.
Why does this matter?
The wsj article, if accurate, details aggressive (possibly in violation of gaap) accounting techniques. If kkd is, in fact, playing such accounting games, then all accounts and transactions must be scrutinized more closely. Capex accounts (which are typically quite large) are notorious for containing inappropriately classified expenses in cases of massive fraud (Healthsouth, Worldcom to name two).
Now, is it reasonable that kkd spent $20 million in capex in q1 when a more reasonable guesstimate, given new store activity, would have been only $1-$5 million (allowing for some expenditures on stores to be opened in Q2)?
lets not forget where cfo used towork. They are up to their necks in alligators because financial shenanigans. Feds are after them for financing hedgies in mutual fund timing scandal. I think they were also neck deep with C,JPM,MER, in financing the Enron crime family when it was obvious they were involved in fraud. He should feel right at home.
Insiders sure had wonderful timing.
Never own stock in acompany that insiders dont have the balls to buy stock in on open market
I think they should re-price Phalen's options. Scottie, Tate, Casstevens, McAleer, West walk off with millions and this kid is stuck with options almost $20 underwater. They put the kid in the line of fire and don't even pay him for it. Maybe this makes Scottie feel more pure. As long as he doesn't have to give up his own options prices at what ...$1 and change? or something like that
Short again divursefi? Too sweet to pass up, I agree. Ask yourself, is this company better off now than right before IPO? Cover at IPO or below.
Low carb doughnut? Why not make a low carb carb? Just another clue that this thing was a lot better off when it was a nice little private co.