TORONTO, Oct. 24, 2020 /CNW/ - SPOT COFFEE
(CANADA) LTD. (TSX-V:
SPP) ("SPoT" or the "Company") is pleased to provide an
update regarding the reinstatement review that has been conducted
by the TSX Venture Exchange following the revocation of the Cease
Trade Order that was imposed by the Ontario Securities Commission
on June 22, 2020 and subsequently
revoked on July 31, 2020.
During the course of the foregoing review, it was determined that
additional commentary should be provided to the public with respect
to a Provision that was recorded in the Company's audited annual
financial statements as at and for the year ended December 31, 2019. As noted in said
statements, the amount of $1,746,615
was recorded as a "Provision on advances to related parties".
Note 17 to such financials summarized certain items that were
recorded as advances to related parties, consisting of "Advances to
franchisees" in the amount of $1,237,307 and "Advances to associate" in the
amount of $509,308. The Company
wishes to provide the following additional commentary concerning
these items:
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(a)
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Though recorded under
the note regarding "related parties", these items represented
amounts owing by franchisees and by a company with a common
director and officer (being John Lorenzo, President, CEO and a
director of the Company).
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(b)
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None of the amounts
recorded as "Advances to franchisees" represented outflows of cash
to such parties during the year ended December 31, 2019.
These amounts primarily relate to services charged to franchisees
by the Company over many years for royalty fees, advertising fees
and management fees for providing management services to certain
SPoT franchises, in addition to an inter-company construction loan
to finance construction of the Williamsville café in
2009.
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(c)
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The amounts recorded
as "Advance to associate" represent office sharing expenses (rent
and other charges such as parking, phone, internet, etc.) between
the Company and a company with a common director and officer (on
the basis of a 60/40 sharing arrangement), in addition to back
office support and administrative servicing management fees
provided by SPoT and charged to the aforementioned company.
It should be noted that no cash was advanced to such company during
the year ended December 31, 2019.
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(d)
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Upon consultation
with its auditors, the Company determined to record the "Provision
on advances to related parties" on the basis that payments in
respect of such accrued amounts had not been received from any of
the aforementioned parties for quite some time.
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(e)
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Though the
aforementioned items continued to be accrued in Q1 and Q2 of the
current financial year, the Company has recently ceased recording
any office sharing arrangements and expenses between the Company
and the aforementioned company with a common director and
officer. The Company has also endeavoured to decrease its
overall administrative expenses in various manners, including the
moving of its head office into a smaller overall space with in the
same building that it previously occupied.
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(f)
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Though the Company
hopes to be able to collect on some or all of the amounts described
above, the likelihood of collection is uncertain at this
time. Having regard to the COVID-19 global pandemic and its
impact on the hospitality industry as a whole, management believes
that the Company needs to be supportive of its franchisees during
these difficult times and intends to continue to work together to
support the long-term success of both thce franchisees and the
Company. Accordingly, the Company has not imposed a specific
timeframe upon the franchisees for repayment of these previously
accrued fees.
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About SPoT Coffee
SPoT Coffee has been designing, building and operating
company-owned and franchise community cafés in the northeastern
United States for over 25 years.
SPoT's cafés provide their customers with the highest quality
service, signature made-to-order meals and award-winning
micro-roasted coffee. Each SPoT café is distinctively
designed to suit the local neighbourhood, creating a warm and
friendly gathering place for the community. SPoT's commercial
business focuses on the sale of roasted coffee beans to food
service and grocery chains, business offices, and resellers such as
universities and hospitals.
We seek Safe Harbor.
Forward Looking Statements
Except for statements of historical fact relating to the
Company, certain information contained herein constitutes
forward-looking statements. Although we believe that the
expectations reflected in the forward-looking information are
reasonable, there can be no assurance that such expectations will
prove to be correct. We cannot guarantee future results,
performance or achievements. Consequently, there is no
representation that the actual results achieved will be the same,
in whole or in part, as those set out in the forward-looking
information.
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.
The forward-looking information contained in this news release is
expressly qualified by this cautionary statement. Except as
required by applicable securities laws, the Company 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.
SOURCE Spot Coffee (Canada)
Ltd.
