SPoT Coffee (Canada) Ltd.
TSX VENTURE : SPP

SPoT Coffee (Canada) Ltd.

July 18, 2011 12:01 ET

SPoT Coffee First Quarter 2011 Results: Reports 15% Increase in Gross Profit

TORONTO, ONTARIO--(Marketwire - July 18, 2011) - SPOT COFFEE (CANADA) LTD. (TSX VENTURE:SPP) ("SPoT" or the "Company") released on June 28, 2011 its financial results for the Company's first quarter ended March 31, 2011. Complete financial statements and Management's Discussion and Analysis have been filed for public review at www.sedar.com and are available on the Company's website at www.spotcoffee.com.

Financial Highlights

Gross profit (measured as sales less cost of goods sold) increased by 15% to $845,734 for the first quarter of 2011. For comparison, gross profit was $735,244 for the same quarter of 2010. The Company's gross operating margin percentage also improved to 73% for the first quarter 2011 from 63% for the same first quarter period in 2010.

Cost of sales was reduced by 30% for the quarter when compared to the same period in 2010 as a result of the implementation of several new cost cutting initiatives that include a more efficient and streamlined café purchasing process enabling better control and management of supplier costs. The Company continues to benefit from increasing economies of scale and purchasing power. Additionally, the Company implemented an enhanced inventory waste management process providing café managers with an increased real-time understanding of inventory waste costs allowing them to more quickly analyze trends and implement procedures to minimize inventory costs.

The Company's consolidated net loss was $121,815 for the quarter ended March 31, 2011. On a cash basis, adjusting for quarterly non-cash amortization charges and expense accruals, the Company's net loss for the quarter ended March 31, 2011 decreases to $2,526.

"We are very pleased to have begun 2011 with a strong first quarter and remain committed to the execution of our new café growth strategy. We believe that our continued focus on building and strengthening the underlying operational and human resource infrastructure while strategically expanding will help us to improve the overall operations and to ultimately deliver greater value to our shareholders," said Raymond Stapell, President and CEO of SPoT.

Operational Overview

During the first quarter of 2011, the Company continued to execute on its expansion and redevelopment plans with the achievement of several milestones. SPoT announced the start of construction on its seventh café (SPoT Hertel in Western New York), the launch of its eighth café location (SPoT Park Place in Toronto, Ontario), and continued completing the renovation of SPoT Rochester which was temporarily closed for renovations during October 2010 and reopened to strong reviews on May 27th, 2011.

SPoT Hertel is expected to open during October 2011 and is located on Hertel Avenue, a vibrant commercial and residential area in Buffalo, New York. This café will feature a large outdoor patio space, dining and lounge style seating, as well as a stage for live entertainment.

SPoT Park Place will be the Company's eighth operating café and will be its second location in Toronto. It is part of a new multi-condo urban development project in the North York area of Toronto by real-estate developer, Concord Adex, comprising 20 buildings and an expected residential population of 290,000. SPoT enjoys an exclusive relationship with Concord Adex as their café of choice for their urban development projects. The café will be situated on a corner of a pedestrian courtyard, adjacent to a neighborhood park, and will showcase a Tuscan style pizza parlour, floor to ceiling windows and various styles of comfortable seating arrangements. SPoT Park Place is expected to open in the beginning of 2012.

On May 27th, SPoT announced the reopening of its Rochester café in Western New York after its temporary closure for renovations. The newly renovated café has an updated service bar, enhanced seating areas and a new enlarged kitchen. These enhancements now enable SPoT customers to enjoy an expanded menu that includes SPoT's gourmet pizza, signature sandwiches, all day breakfast and Belgian waffles. Furthermore, the renovations have reduced the overall excess square footage decreasing monthly operating expenses by up to 40% while the improved design and menu enhancements lead to a greater customer experience.

SPoT anticipates accelerated growth during 2012, leveraging its existing operating infrastructure in Western New York, Southern Ontario and Florida before a broader North American expansion commences. The Company is currently evaluating several locations for its ninth and tenth cafés.

ABOUT SPOT

SPoT (www.spotcoffee.com) designs, builds and operates community-oriented cafés that provide its customers from every lifestyle and culture with the highest quality service, signature light meals and in- house roasted gourmet coffee. The current SPoT management team and directors have been successfully operating company-owned cafés since 2004.

Each SPoT café is a popular and friendly gathering place for its community where specialty coffee, upscale beverages, fresh baked goods, signature sandwiches, soups, salads and gourmet pizza, cakes, pastries and home baked goods are offered and enjoyed by its patrons in a warm, friendly and home-like environment.

The Company currently operates six cafés that range in size from 2,000 to in excess of 4,000 sq. ft. with two more cafés currently under development. Spot is currently evaluating several locations as part of its North American expansion.

Unlike other conventional gourmet coffee houses and quick service restaurants that are built on uniformity of product and style, each SPoT café maintains several unique and key features, including:

  • Dedication to create a friendly environment that nourishes and intensifies a sense of gathering and of community;
  • In-house roasting and blending SPoT's own award-winning premium Arabica coffee;
  • Unwavering commitment to offer the customers of the Company the highest quality products and services;
  • Innovative and varying café designs that consider both the culture and flavor of the specific communities of each café;
  • Choice of corner locations for each SPoT café at the center of their neighborhoods;
  • Ability to offer intimate and warm ambiances in each café to suit the social and private moods of SPoT's patrons; and
  • Trained and dynamic service staff that are proud to call themselves "Spotters" who enjoy serving their customers and make them feel at home.

Forward Looking Statements

Except for statements of historical fact relating to the Corporation, certain information contained herein constitutes forward-looking statements. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Except as required by applicable securities requirements, the Corporation undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of the release.

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