TORONTO, Dec. 10, 2019 /CNW/ - SPOT COFFEE
(CANADA) LTD. (TSX-V: SPP) ("Spot"
or the "Company") is pleased to announce that the
directors of Spot met at the Company's head offices in Toronto on the 4th, 5th and 6th of December,
2019 to review, discuss and approve the Company's business and
financial plan for the year 2020.
New Financing
The Company's directors have unanimously approved the terms of a
$2.5 million new convertible
debenture financing to support the Company's business and financial
plan for the year 2020, which includes:
- The cost of the full development of one (1) company-owned
traditional Spot café and one (1) Spot Express café location in the
City of Toronto, Ontario,
Canada;
- The cost of the full development of Spot's new coffee roasting
facility to accommodate the continually rising retail demand for
the Company's award-winning gourmet coffee, as well as the demand
by Spot's company-owned and managed cafés along with a growing
number of new franchises scheduled to open in 2020;
- Payment in full of the Company's current debentures, which
carry an interest rate of 9% per annum and which will be paid from
the proceeds of the newly approved convertible debenture financing
at the lesser interest rate of 6% per annum; and
- The cost of upgrades to company-owned cafés and Spot's central
kitchen facility.
The newly approved convertible debentures will be categorized in
three classes; Class A, Class B and Class C. The terms of each
class will be as follows:
- The Class A debenture will be for the total amount of
$1,000,000 comprising 1,000 units of
$1,000 each bearing interest at the
rate of 6% per annum on an accumulating basis calculated at
maturity with a conversion date of July 15,
2021, at which the entire principal amount as well as the
accumulated interest thereon will be converted into common shares
in the capital stock of the Company on terms and conditions that
are shown below and that are applicable to all convertible
debenture classes;
- The Class B debenture will be for the total amount of
$1,000,000 comprising 1,000 units of
$1,000 each bearing interest at the
rate of 6% per annum on an accumulating basis calculated at
maturity with a conversion date of February
28, 2023; and
- The Class C debenture will be for the total amount of
$500,000 comprising 500 units of
$1,000 each bearing interest at the
rate of 6% per annum on an accumulating basis calculated at
maturity with a conversion date of April 30,
2023.
Each of the amounts of the above mentioned convertible debenture
classes plus the accumulated interest will be converted into shares
in the capital stock of the Company at the average share market
price for the month immediately preceding the maturity date
discounted, if any, by the maximum amount approved by the TSX
Venture Exchange notwithstanding that all of the shares that will
be issued as a result of this conversion will be subject to the
statutory four-month hold period in accordance with securities
laws.
New Company-Owned and Franchise Cafés
The Company's business and financial plan considers the
development of nine (9) Spot Express café locations, eight (8) of
which are anticipated to be franchise Express cafés in Western New York, extending Spot's
multi-franchise strategic alliances. One new company-owned Express
café will be developed in downtown Toronto, Canada.
Furthermore, the Company is currently in the process of
studying, for the purpose of selecting, four (4) new suitable
locations for the development of traditional Spot cafés, out of
which three (3) will be Spot franchise cafés in the
Rochester suburban towns of
Pittsford or Victor, both of which are in Monroe County, New York, as well as the
villages of Blasdell and
Lancaster, both in Erie County, New York. These franchise
locations have been requested by two existing franchisees and one
new franchisee with whom Spot has entered into a franchise deposit
agreement. The fourth new full Spot café will be developed and
operated by the Company in a neighborhood in Toronto. This Toronto company-owned and operated café will
serve as Spot's new flagship café in Ontario, where there has been a growing demand
for Spot franchises.
The anticipated opening schedule for three (1) additional
franchise Express and traditional café locations that commenced
construction in 2019 is as follows:
- The fourth Spot Express café in Tops supermarket number 227,
located at 9660 Transit Road, East
Amherst, New York, is expected to open for business in early
January of 2020;
- The Spot franchise café in Niagara
Falls, New York, is expected to open for business in March
of 2020; and
- The Spot franchise café in the town of Tonawanda, New York, is expected to open for
business in May of 2020.
"On behalf of the directors of Spot, I would like to thank our
entire team, especially our Spotters, franchisees, stakeholders and
shareholders. These are the people who have helped to build this
company up over the past 15 years into a thriving, 30-location
family of community cafés," said John
Lorenzo, the Executive Chairman of Spot. Since its
acquisition and restructuring in the 2000s, Spot has gone public,
grown from three to thirty cafes, expanded its kitchen and roastery
operations, and adopted a highly successful franchise business
model. With new personnel, reporting systems and marketing
initiatives in place, we now conservatively estimate that 40 of our
traditional café and Express café locations will be open and
serving customers by the end of next year. We continue to focus on
growth, increasing revenue and achieving sustained profitability.
Together with Workers United, the union voted for by our employees,
we will strive to set an example of social justice, promote
community-oriented thought, and continue to deliver high quality
service to all of our neighborhoods."
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.
SOURCE Spot Coffee (Canada)
Ltd.
