Shareholder’s Update
July 2013
Our Mission Statement
Doc Burnstein’s Ice Cream Lab provides each Guest with a fun
and memorable experience that makes them feel good, done in a
way that benefits our Shareholders, Employees and Community.
Letter to Shareholders
Dear Shareholders, The Second Quarter brought more good news to Doc Burnstein’s Ice Cream Lab. We continue to exceed last year’s financial results and budgets, and we are growing our reach into other ice cream markets. With the Public Offering gaining momentum and on-­‐track to be fulfilled, Investors can now allowed purchase up to 5% ($35,000) of the full offering immediately, rather than wait until all shares are issued. In addition to the progress on our San Luis Obispo location, we received commitments for two additional scoop shop accounts. In Morro Bay, Sweet Offerings is due to open in early August, and by November Bravo Farms is opening a large facility in Kettleman City that will feature our ice creams. And the Public Stock Offering is providing the capital to expand out production capacity and grow into these new markets while following biblical principals and expanding the concept of a Beneficial Corporation. What exciting times. SAN LUIS OBISPO RETAIL & PRODUCTION PLANT We have completed plans and received preliminary approvals from all government agencies for the remodel at 860 Higuera Street in downtown San Luis Obispo (formerly Cold Stone Creamery). We are so very excited about the coming changes. We have the talents of the best sign artist in the area working on a design to the parlor that will make for an exciting and memorable “Lab” experience with this location. This “Lab” look will be a model for future franchised or licensed stores that can be placed anywhere, not just in historic Villages like Arroyo Grande and Orcutt. We can’t wait to unveil this store as an ice cream experience that is second to none. A change to the manufacturing plant design delayed the planning process a bit, but the change will allow for greater ice cream production. We now anticipate producing up to 25,000 gallons per year (up from 20,000). Coupled with our 25% increase in output this year, and by 2014 Doc Burnstein’s total capacity can reach 60,000 gallons, triple the ice cream produced in 2012. Wow, that’s a lot of scoops! FINANCIAL RESULTS The first quarter saw phenomenal results, partially due to Easter and Spring Breaks falling in that quarter this year. As we finish the second quarter, our results are closer to budget, including budgeted costs in our SLO location for planning and permit fees, as well as pre-­‐ordering equipment. This July we increased the price of a cone 10-­‐cents, the first scoop price change in over two years. This average increase of 3% should double the Net Profit of operations to over 5%. Growth in volume has also added to Net Profit margins, with ingredient costs up just 4% on sales increase of 16%. This is largely due to reduced trucking for cream costs (per gallon) due to larger deliveries. Retail Sales continue to grow in both Arroyo Grande (up 9%) and Orcutt (up 16%), and Wholesale is up an incredible 53%. The first investment resulting from the Stock Offering was production equipment allowing a 50% increase in daily production, and we are now expecting to produce 25% more ice cream in 2013 than last year, for a total of 35,000 gallons (that’s over 700,000 scoops). As such, ingredients costs are up in the early part of summer as we stock-­‐pile ice cream for the peak month of July. When looking at each line of business, Orcutt is the only area that is not profitable after allocation of admin and overhead costs. However, sales in Orcutt have been steadily and rapidly growing, starting the year at 10% growth, and now weekly sales are up 20-­‐30% over last year. Orcutt remains on track to be profitable by year-­‐end. STOCK OFFERING STATUS Our Public Stock Offering is also on track. We passed the mid-­‐point of the offering in early July, and have issued 53% of the authorized offering. The cash is being saved for the SLO build-­‐out and equipment, which should be needed within the next month. And the delivery truck with freezer unit purchased in May has cut our delivery times and costs dramatically. The Board of Directors made a small change in the By-­‐Laws section concerning the 5% ownership limitations to allow a full 5% investment at any time during the Stock Offering. This was based on the progress of the sale and to simplify the purchasing process for our major investors. Specifically, the change in By-­‐
Laws now allows the 5% limitation to include Treasury Shares (shares authorized to be issued), as well as Outstanding Shares (shares already issued to investors). CLOSING I sincerely feel God’s blessings upon us. It is my goal to grow not only our business and shareholder value, but also to expand our impact on our Communities by continuing to do the right things along with way. As always, I am humbled by your faith in our business model and our products. God Bless. Greg Steinberger Founder/CEO 1 Peter 4:10 Doc Burnstein's Ice Cream Lab, Inc.
Company Profit & Loss
January through June 2013
Jan - Jun
12
Ordinary Income/Expense
Income
Retail Sales - AG
Retail Sales - Orcutt
Wholesale Sales
Event Income
% of
2012
Budget
% of
Budget
341,577
136,282
88,693
20,075
373,482
158,269
135,987
13,347
109%
116%
153%
66%
355,456
165,879
127,964
12,300
105%
95%
106%
109%
Total Income
586,627
681,084
116%
661,599
103%
(1)
Cost of Goods Sold
Labor
Ingredient Costs
Merchandise
Total COGS
211,559
162,216
10,602
384,377
216,024
168,545
8,559
393,128
102%
104%
81%
102%
204,825
160,173
9,478
374,476
105%
105%
90%
105%
(2)
(3)
202,250
287,956
142%
287,123
100%
74,402
25,851
55,329
11,143
16,815
1,882
185,422
83,308
42,973
101,300
11,205
17,289
3,283
259,358
112%
166%
183%
101%
103%
174%
140%
92,327
39,809
101,518
13,700
21,774
1,594
270,722
90%
108%
100%
82%
79%
206%
96%
16,828
28,598
170%
16,401
1,101
1,101
0
0
-100%
-100%
0
10,139
800
10,939
9,585
800
10,385
95%
100%
95%
6,990
18,213
261%
Gross Profit
Expense
Facilities
Operations Expenses
General & Admin Expenses
Advertising
Discounts & Promotions
Donations
Total Expense
Net Ordinary Income
Other Income/Expense
Other Income
Gift Certificate Write-offs
Total Other Income
Other Expense
Interest on Long-term Debt
Taxes
Total Other Expense
Net Income
Jan - Jun
13
31.7%
24.7%
1.3%
42.3%
12.2%
(4)
(4)
6.3%
14.9%
1.6%
2.5%
(7)
0.5%
174%
(5)
4.2%
12,000
800
12,800
80%
100%
81%
(6)
1.4%
3,601
506%
(8)
0.1%
2.7%
Notes:
1. Sales above last year and budget in AG and Wholesale. Orcutt improving 20% in recent months.
2. Labor up far less than increases in revenue,
3. While Sales are up 16%, Ingredient Costs are up only 3% due to Economies of Scale in ordering and trucking costs.
4. Operations & Admin up due to Workers Comp. and Consultants for Stock Offering and Production Planning processes.
5. Net Income up significantly over 2012 and Budget.
6. Interest Expenses down due to early settlement of the Off Season Line of Credit
7. Fundraisers used in Orcutt as Promotional Cost, bringing increased sales. Now reducing number of fundraiser nights.
8. Net Income well above last year, and above budget.
Cost of an Ice Cream Cone
( a.k.a. Profit & Loss Statement)
Jan$–$Jun$2013$
Profit!($!.11)!
2.7%$PROFIT!$!
!
Hourly!Labor!($1.27)!
$3.99$
!
Food!Costs!($!.99)!
!
Overhead!($.96)!
Ads!&!Promos!($!.17)!!
Rent!&!U2li2es!($!.49)!
!
Doc Burnstein's Ice Cream Lab
Balance Sheet
As of June 30, 2013
Jun 30, 13
ASSETS
Current Assets
Checking/Savings
1000 · Checking Accounts
1100 · Savings Account
36,177
343
Total Checking/Savings
36,520
Accounts Receivable
1200 · Accounts receivable
32,415
Total Accounts Receivable
32,415
Other Current Assets
1201 · Undeposited funds
22,315
1240 · Pre-paid Expenses
1250 · Inventory
8,278
56,163
Total Other Current Assets
Total Current Assets
86,756
155,691
Fixed Assets
1400 · Fixed assets
1490 · Accumulated depreciation
Total Fixed Assets
573,610
-305,181
268,429
Other Assets
1520 · Security deposits
14,369
Total Other Assets
14,369
TOTAL ASSETS
438,489
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable
2000 · Accounts payable
26,707
Total Accounts Payable
26,707
Credit Cards
2100 · Credit Cards
30,516
Total Credit Cards
30,516
Other Current Liabilities
2116 · Bonuses Payable
-1,500
2150 · Payroll taxes payable
8,224
2200 · Sales tax payable
2350 · Gift certificates sold
2,796
12,727
Total Other Current Liabilities
Total Current Liabilities
22,247
79,470
Long Term Liabilities
2454 · Orcutt Loans
133,944
2530 · Don & Sue Steinberger Loan (4%)
2500 · Loans from Founder
51,783
133,665
Total Long Term Liabilities
Total Liabilities
319,392
398,862
Equity
3100 · Common Stock
3101 · Paid in Capital
3990 · Prior year activity
Net Income
Total Equity
TOTAL LIABILITIES & EQUITY
9,572
175,028
-163,185
18,212
39,627
438,489