Only a few short weeks ago (May 15, to be exact), Rothstein Kass expressed substantial doubt about Crumbs' ability to continue as a going concern in a 10-Q filed with the SEC for the quarter ended March 31, 2014:
The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business and the continuation of Crumbs as a going concern. Crumbs’ net loss attributable to stockholders was approximately $3.8 million for the threemonths ended March 31, 2014 and approximately $15.3 million and $7.7 million for the years ended December 31, 2013 and 2012, respectively. Crumbs’ operating activities used cash of approximately $3.6 million during the threemonths ended March 31, 2014 and $7.6 million and $4.1 million during the years ended December 31, 2013 and 2012, respectively.
Management expects that Crumbs’ operating expenses will continue to consume a significant portion of its cash resources and that Crumbs will not be able to generate gross profits in amounts necessary to offset or exceed such expenses for the foreseeable future. Accordingly, management anticipates that Crumbs will continue to record net losses in future periods. Management is evaluating the steps that it may be able to take to reduce Crumbs’ operating expenses and increase gross profits, but management cannot predict if or when Crumbs will be achieve net income.
At March 31, 2014, Crumbs had a working capital deficit of approximately $1.9 million and an accumulated deficit of $28.8 million. On April 1, 2014, Crumbs received approximately $1.5 million by selling senior secured convertible Tranche Notes. Crumbs will require additional funds to meet its working capital needs, execute its business strategy and further develop its business.
Crumbs has historically funded its operations, business development and growth through sales of CBS common stock and convertible debt financings. In addition to reducing operating costs and increasing gross profits, management’s plan for funding future operations may include additional equity or debt financings. No assurance can be given, however, that financing will be available at desireable times, amounts or terms.
So, yeah, all that borrowing finally caught up to the overpriced, overfrosted treats.
The Wall Street Journal reports:
Crumbs Bake Shop Inc. notified employees Monday that it would be closing all of its stores at the end of the business day, a spokeswoman for the New York-based cupcake maker said.
"Regrettably Crumbs has been forced to cease operations and is immediately attending to the dislocation of its devoted employees while it evaluates its limited remaining options," the company said in a statement to The Wall Street Journal. Those options could include a bankruptcy filing, the spokeswoman said.
Kareem Wegman, a manager in a Crumbs store in Brooklyn, told the Journal that a fellow employee broke the news of the closure to him. "I come into work today, I'm happy, I'm skipping to work, and suddenly I don't have a job," said Mr. Wegman, who has worked at the store for two years and said he has a family to support.
Even with net sales of $47.2 million last year, Crumbs just couldn't get it together. They were delisted from the Nasdaq exchange on July 1st due to a failure to comply with a minimum stockholders equity requirement of at least $2.5 million.
Sorry, guys, that's just how the common stock crumbles sometimes.