The following excerpt from the most recent 10-q is most interesting, imo:
On September 5, 2002, KremeKo, Inc. completed an equity offering to raise funds for store development and general working capital purposes. The Company subscribed for its proportionate share of the offering and further agreed to purchase any shares not subscribed for by other existing shareholders. The Company paid approximately $4,000,000 for its subscribed shares as well as the over-allotment it received and, as a result, the Company�s ownership interest increased from 34% to 39.3%, effective September 5, 2002.
What does this mean? Well, KremeKo, the eastern Canada joint venture, needed money to finance operations. The joint venture attempted to raise funds from its owners, i.e. KKD (34%) and the other partners (66%). Some or all of the "other partners" decided not to contibute some or all of its allotment. KKD agreed to cover the portion not subscribed to. This has several (possible) implications.
1) Has the Canadian partner abandoned the joint venture financially, i.e. is KKD now going to be on the hook for all future financing in the venture? While we don't know what % (besides KKD) wasn't subscribed to, it could have been all 66%.
2) Why would KKD agree to buy up the portions not subscribed to? Did they sign the original Area Developer agreement allowing the partner to bow out of future financing rounds, effectively giving a put option on the franchise to the franchisee? We know that the Glazed Investment partners were given an option to tender the rest of the joint venture to KKD. Were other AREA DEVELOPERs (or all) given similar deals?
Glazed Investments is supposed to build 28 stores total (not including commissaries). Kremeko is supposed to build 34 (not including commissaries). This represents 64 of the roughly 200-250 that KKD had claimed were contracted at the beginning of FY03. Now it appears that KKD will be responsible for financing this development. The required capital will be significant.
canannina - whatever this name means:
your posts have lots of text and little content; sofar you have not made a single contribution that could qualify as a quantitative or qualitative comment.
dvsf's post's have content and reasoning.
I am surprised that he even answers your posts.
>>He feeds you the comfort you need to stay short. <<
I was short the day this POS first hit 40, which was before dvsf started posting, I believe. I do not, nor will I ever, need someone to feed me "comfort" on my investments. I'm defending him mainly because he uses real information to make his case, and I like to see this because I come from a science background where this is the way to argue an opinion. People like you just can't handle the fact that his research is good. I would defend someone with good research on the long side too if someone wanted to make a case that forward earnings are in fact high quality, but I haven't seen it, aside from company PR. Have you?
>>Who cares? Are you long? I'm not.<<
No I'm short and in for the long run. I'm not timing this one because I don't want to get caught on the wrong side if there's some kind of "event". Maybe that's what you're afraid of too...dvsf posts should not have any bearing on your trades up or down unless you're actually afraid that he's right. The very fact that you're trying to shut him down proves that you're worried. By the way, I'm very profitable on this stock too. There's more than one way to make money here.
"No I am saying the opposite. The stock is going down therefore the market knows."
I see. So the old bandwagon of insider trading causing KKD's price to drop has come by and you jumped on. What other pronouncements on this board have you decided to guide your investments with? How about this one?: KKD lies by deliberately overstating the number of proposed store openings in order to make the price go up. Investors are onto this scheme, so now the price is dropping. Does that too make you want to short?
Just ask di_vur_se_fi. He's got a million of 'em.
"There's nothing illegal going on here - but as a long I would be questioning the quality of the forward earnings."
Who cares? Are you long? I'm not. But I do buy at the dips and sell at earnings. Would you like to see my track record over the last seven quarters? Just look at the price charts.
How many "longs" have you seen post on this board? Do you really think they even bother with such a wasteful venue?
>>Are you saying that no one except the posters on this board are aware of it and only they (you) know what the REAL implications are, <<
No I am saying the opposite. The stock is going down therefore the market knows.
How long do you think the KKD insider trader issue has been on the table? Talk about old, worn-out fodder.
Are you saying that no one except the posters on this board are aware of it and only they (you) know what the REAL implications are, and that the SEC, analysts, and others are simply casting a blind eye?
Answer this one simple question. Are or aren't the insiders in this company grabbing tens of millions of dollars in cash out of the stocks of this company while the price continues to decline? Time just honored 3 folks with such "one-sided crusades" you know...