Shareholder Update – April 2015

Shareholder Update Doc Burnstein’s Ice Cream Lab, Inc. First Quarter 2015 Great First Quarter Results The First Quarter of 2015 is the best start to a year Doc Burnstein’s has ever experienced. Sales are up more than the historical average while fixed expenses are holding close to flat, resulting in record profits for the first quarter, (which historically shows losses more often than profits). Wholesale accounts are growing at an even faster rate than retail, and we reintroduced novelties to locations we had discontinued in 2014. To prepare for the next steps in the company’s growth, we see the need to improve in three areas. We are improving our packaging to compete in a grocery environment based on a request to introduce our Mud Pies to the SLO Haggen grocery store. The improved packaging will allow us to expand to other items and other stores. Second, we are focused on process improvements and production efficiencies, while also better monitoring our guest experiences. And third, to address the most important part of the business, our people, we are expanding our staff training and development programs to deliver memorable Guest experiences every time. Stock Sales There have been three stock sale transaction in 2015, each at $80./share, (the same price established with the 2014 stock transactions). While the list of interested buyers continues to grow, the Board of Directors is focused on planning the next major growth step and the possibility of a future stock offering. Sales Growth Q1 Year Over Year Sales Wholesale scoop shop sales are taking off, with our largest customers of Hula Hut (Avila) and Village Bean (Cambria) up 25% over last year. Adding Kettleman City in April 2014 also added a significant amount to the Q1 wholesale increase. 1 Shareholder Update Doc Burnstein’s Ice Cream Lab, Inc. First Quarter 2015 We doubled the number of novelty freezer placements this past quarter, bringing back the three top-­‐selling customers we had dropped in 2014. We also started selling So Goods in all our parlors, and at SLO Farmer’s Market. We now have 6 scoop shops, 6 novelty freezer placements, and 10 restaurants carrying Doc’s. We are willing to entertain another scoop shop in the Central Valley and other novelty freezer placements. Arroyo Grande sales are growing, both compared to past years and due to seasonality. Orcutt sees less of a summer surge in sales, and is tracking just a bit above historical levels. SLO opened Jan. 24, 2014, so first quarter comparison is not a trend even though it is below last year due to being closed most of January 2014, followed by the opening hype. SLO looks to be growing about 8-­‐10% going forward. To reach the Cal Poly market, we built a 500-­‐serving ice cream cake at Open House on April 17, which reaches incoming freshman and parents. It was such a success, Cal Poly asked us to repeat it for Week of Welcome in the fall. Cal Poly students are the key to SLO sales, and we are focusing on reaching this market, while maintaining our outreach to tourists for summer sales. Cost of Goods / Gross Profit Last year we experienced a minimum wage increase of $1. in July 2014, and the price of cream rose from $7.00 to $9.00/gallon. Thankfully, by February 2015 the price of cream dropped back to $6.80 and has maintained this price. Therefore our labor cost is tracking with growth in sales, while Ingredient cost have dropped from last year. The result is an additional $58,000 of Gross Profit over last year. Q1 Year Over Year COGS 2 Shareholder Update Doc Burnstein’s Ice Cream Lab, Inc. First Quarter 2015 Fixed Expenses Fixed Expenses are holding close to last year, and well below budget! Discounts and Promotions are up due to large-­‐volume discount on wholesale deliveries, which we started in July 2014 at the time of a wholesale price increase. Q1 Year Over Year Fixed Expenses Income As expected from the good news in sales and expenses, profits are up significantly. Operating Income (EBITDA) and Net Income are greatly above last year. During the First Quarter of 2015 we experienced 7.1% Operating Profit, up from 3.3% in 2014! Q1 Year Over Year Profits 3 Shareholder Update Doc Burnstein’s Ice Cream Lab, Inc. First Quarter 2015 Q1 Net Income History The Net Profit for Q1 2015 is the highest in Company history, as shown below, (shown without Depreciation as that was not accrued monthly prior to 2014). Closing As we head into the busy summer season, we are in the best shape of the company’s history to meet the many opportunities being presented. We have a very talented and dedicated team, doing their jobs impeccably well to move the company forward. Our vision is to become #1 in the Hearts and Minds of Americans for ice cream. Not only because the flavors and quality are second to none, but also because the business model is second to none. A business that serves the needs of shareholders, its staff and the community. A business that allows consumers to make a choice to do good with every purchase, and feel good about themselves in the process. A business with a heart for serving others and God in their words and deeds. I firmly believe that when we are ready for the next stages of the company’s development, God will bring us the opportunities and resources that can bring this company’s message to others. The future is as bright as the promises of God. Thank you for being a major part of Doc Burnstein’s Ice Cream Lab. Greg Steinberger Founder/CEO We know that in all good things God works for the good of those who love Him,
who have been called according to His purpose. - Romans 8:28 (NIV)
Forward-­‐Looking Statements Statements that are n ot based on historical fact are forward-­‐looking statements. Although such statements are based on management’s current estimates and expectations, and currently available competitive, financial, and economic data, forward-­‐looking statements are inherently uncertain. We, therefore, caution the reader that there are a variety of factors that could cause business conditions and results to differ materially from what is contained in our forward-­‐
looking statements. We caution readers that we do not undertake to update any forward-­‐looking statements. 4 Shareholder Update Doc Burnstein’s Ice Cream Lab, Inc. First Quarter 2015 3:23 PM
04/06/15
Accrual Basis
Doc Burnstein's Ice Cream Lab
Profit & Loss
January through March 2015
Q1 2014
Q1 2015
% Change
Income
4003 · Retail Sales - AG
157,943
172,031
9%
4015 · Retail Sales - SLO
170,742
183,722
8%
4012 · Retail Sales - Orcutt
73,280
76,963
5%
4019 · Wholesale Sales
47,089
70,433
50%
342
6,225
1,720%
449,396
509,374
13%
5020 · Labor
147,774
168,429
14%
5100 · Ingredient Costs
133,953
117,924
-12%
8,614
5,291
-39%
290,341
291,644
0%
159,055
217,730
37%
6200 · Facilities
77,826
91,233
17%
6100 · Operations Expenses
36,663
26,016
-29%
6300 · General & Admin Expenses
4040 · Event Income
Total Income
Cost of Goods Sold
5010 · Merchandise
Total COGS
Gross Profit
42.7%
Expense
45,643
41,361
-9%
6050 · Discounts & Promotions
7,037
11,859
69%
6055 · Advertising
2,971
8,546
188%
411
2,452
497%
170,551
181,467
6%
-11,496
36,263
415%
240
369
54%
6120 · Donations
Total Expense
Operating Income (EBITDA)
7000 · Other Incomes
7.1%
Other Expense
8030 · Interest on Long-term Debts
8010 · Depreciation expense
8000 · Taxes
Total Other Expense
Net Other Income
Net Income
5,192
5,993
15%
10,200
18,000
76%
800
801
0%
16,192
24,794
53%
-15,952
-24,425
-53%
-27,448
11,838
143%
5 2.3%
Shareholder Update Doc Burnstein’s Ice Cream Lab, Inc. First Quarter 2015 3:22 PM
04/06/15
Accrual Basis
Doc Burnstein's Ice Cream Lab
Balance Sheet
As of March 31, 2015
Mar 31, 15
Mar 31, 14
ASSETS
Current Assets
1000 · Checking Accounts
29,751
-24,540
1200 · Accounts receivable
36,104
24,290
1201 · Undeposited funds
16,008
28,808
1240 · Pre-paid Expenses
86
351
87,128
61,961
1250 · Inventory
1300 · Employee advance
300
0
169,377
90,870
1400 · Fixed assets
955,276
919,293
1490 · Accumulated depreciation
-410,114
-355,523
545,162
563,770
Total Current Assets
Fixed Assets
Total Fixed Assets
1520 · Security deposits
15,289
14,369
729,828
669,009
2000 · Accounts payable
54,854
28,827
2100 · Credit Cards
36,898
11,973
2151 · Wage Garnishments
-92
0
2111 · Direct Deposit Liabilities
-51
0
TOTAL ASSETS
LIABILITIES & EQUITY
Liabilities
Current Liabilities
2116 · Bonuses Payable
0
7,500
2150 · Payroll taxes payable
4,294
1,516
2200 · Sales tax payable
2,401
2,454
17,590
10,899
2350 · Gift certificates sold
2450 · Coast Line of Credit
Total Current Liabilities
50,000
47,618
165,894
110,787
Long Term Liabilities
2255 · Accrued Interest
50,228
42,693
101,263
119,736
2460 · SLO SBA Loan
87,083
99,160
2500 · Loans from Founder
87,400
85,000
2530 · Don & Sue Steinberger Loan
44,673
48,796
370,647
395,385
536,541
506,172
2454 · Orcutt Loans
Total Long Term Liabilities
Total Liabilities
Equity
3100 · Common Stock
14,025
13,995
3101 · Paid in Capital
391,776
391,746
-230,875
-215,458
18,361
-27,446
193,287
162,837
729,828
669,009
3990 · Prior year activity
Net Income
Total Equity
TOTAL LIABILITIES & EQUITY
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