Hi to all...
Well I am starting to get in deep into some research again in this company...I researched it quite a bit last Spring when I originally bought some shares...and was amazed as performance seemed to get better, my stock value declined gradually...
Oh well...I guess there is something very important to be said about a company that can turn a profit...which it looks like JAVC finally will!
Some interesting things I found so far...
JAVC as of September 1996 had 30 Java Centrale outlets and 52 Paradise Bakery outlets....a total of 82 franchise outlets...
Also announced in September...they currently have 90 SIGNED agreements with new or existing franchisees for new franchises...and expect to have a total of 150 outlets opened by Fiscal Year Ending March 31, 1997...that's a lot of growth in these past few months...almost doubled their number of franchises in 5 months...
What does this mean?...Well it won't mean nearly double revenues because as I understand it none of these new franchises will be company-owned, where JAVC derives a lot of their revenue, but also a lot of operating costs...but better yet...it will mean increases in royalties and franchise fees...which are better revenue sources because their is little or no cost to the company for these....
Average of $20,000 to $25,000 for initial franchise fee...I doubt if revenue from all 90 signed agreements will show up in Q3 ending 12/31/96...I'm sure some was in prior quarter, and some may be in this current quarter....but I estimate at least $500,000 should show up in Q3...and should put them very close to a profit...I've heard estimates that it will break-even in Q3, and show profits in Q4....but these are just estimates...
Royalties are where it's at for this company....
Royalties for 6 months ending 9/30/96 were $613,975 compared to $130,219 for six months ending 9/30/95....at this rate they will stand to make at at least $1.2 million in royalties for year ending 3/31/97... and I estimate this number to at least double for the upcoming year based on the number of new franchisees....
They also have a joint venture agreement to open 50 cafes in Florida by the year 1999, of which I believe 5 have opened so far....
As expansion and royalties conitnue to grow...this company will continue to show profits down the road...
One last note for now....JAVC also sold off their Oh! la! la! franchise for an estimated profit of $1.2 million which should help remove some of their debt, and I think will show up as other income for Q3 ending 12/31/96....I'll need to double check on this...
This company is poised for good things.....I'm actually getting more and more impressed with them every day and will continue to buy as much as I can at the current levels...
Ill keep in touch...
John Leach |
