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MISSISSAUGA, ON, May 11, 2020 /CNW/ - The Second Cup Ltd. ("Aegis Brands" or the "Company") (TSX: SCU) announced today that will rely on the blanket relief provided by the Canadian Securities Administrators and Ontario Instrument 51-102 – Temporary Exemption from Certain Corporate Finance Requirements of the Ontario Securities Commission to postpone the filing of its interim financial report for the first quarter of 2020, the associated management's discussion & analysis and related certification filings (collectively, the "Interim Documents") due to logistical issues arising from remote working arrangements of key personnel as a result of the COVID-19 pandemic. The blanket relief provides for up to a 45-day extension for periodic filings normally required to be made by reporting issuers during the period from March 23, 2020 to June 1, 2020. At this time, the Company anticipates being able to complete and file the Interim Documents on or before June 19, 2020.
The following material developments of the Company have occurred since March 12, 2020, being the date of filing of its annual financial statements. Certain of these developments were previously disclosed by the Company in its March 30, 2020 press release:
- 130 of the Company's 244 Second Cup cafés and all 19 Bridgehead coffeehouses have temporarily suspended operations in response to the COVID-19 pandemic. In addition, four Second Cup cafés have closed pending conversion of those locations to cannabis retail stores and four other locations have closed permanently.
- The Company has deferred the collection from franchisees of the accrued royalties and cooperative advertising fund contributions for the periods of February 23 to March 21, 2020 and March 22 to April 18, 2020. The Company is presently considering deferring collection of such royalties and contributions for the period of April 19 to May 16, 2020. The Company does not currently intend to collect deferred royalties and contributions from franchisees that are in good standing.
- The Company has engaged in discussions with landlords, both on its own behalf and on behalf of its franchisees, to request abatements and/or deferrals of rent, and, where appropriate, to discuss potential amendments to or the termination of lease agreements for certain underperforming café locations. The Company is also supporting conversations on behalf of its franchisees with financial institutions to request deferrals of loan repayments, as required. The Company is assisting its franchisees to access applicable relief programs that the Canadian Government has introduced in response to COVID-19, including the Canada Emergency Commercial Rent Assistance (CECRA) program for small businesses.
- The Company is working with the full network of Second Cup suppliers to arrange deferred payment terms to provide franchisees with additional flexibility to manage cash and payroll.
- Second Cup cafés across Canada that remain open are currently only offering take-out, delivery and drive-thru service.
The Company expects the ongoing COVID-19 pandemic and events and circumstances resulting from that pandemic to have a material impact on its business, operations and financial performance for at least the first half of 2020. However, this impact cannot be quantified at this time because of the significant uncertainty associated with the ultimate extent, duration and severity of the pandemic itself, and with the government restrictions, effects on consumer behaviour and other factors associated with or resulting from that pandemic, many of which are beyond the Company's control. The Company continues to actively monitor all aspects of its business and operations and to work closely with its franchisees and other business partners but does not expect to provide further updates except as required by applicable law.
In connection with utilizing the blanket relief, the Company confirms that its management and other insiders are subject to an insider trading black-out policy that reflects the principles in Section 9 of National Policy 11-207 – Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions.
2020 Annual Meeting of Shareholders
After careful consideration, the Company has decided to postpone its annual meeting of shareholders to a later date in 2020. The Company intends to rely on the temporary blanket relief provided by the Canadian Securities Administrators, including the exemptive relief contained in Ontario Instrument 51-504 – Temporary Exemptions from Certain Requirements to File or Send Securityholder Materials of the Ontario Securities Commission to postpone the public filing of its executive compensation disclosure until such time as it is filed and delivered to shareholders as part of the Company's information circular relating to its 2020 annual meeting of shareholders. The Company is considering an appropriate format for its annual meeting of shareholders, which it is planning to hold on July 23, 2020. The Company will provide further information on its annual meeting of shareholders when it has appropriately considered all applicable issues.
About The Second Cup Ltd.
Founded in 1975, The Second Cup Ltd. is a Canadian specialty coffee retailer operating franchised and company owned cafes across Canada. For more information, please visit www.secondcup.com or find the Company on Facebook and Twitter. Additional information regarding the Company including required securities filings are available on our website at www.secondcup.com and on the Canadian Securities Administrators' website at www.sedar.com; the System for Electronic Document Analysis and Retrieval.
FORWARD LOOKING STATEMENTS
This press release may contain forward-looking information that represents internal expectations, estimates or beliefs concerning, among other things, future activities or future operating results and various components thereof. The use of any of the words "anticipate", "continue", "expect", "may", "will", "project", "should", "believe", and similar expressions suggesting future outcomes or events are intended to identify forward-looking information. Certain information set forth in this press release is forward-looking information within the meaning of applicable securities laws, including the expectations of management with respect to the anticipated date of filing of the Company's Interim Documents, the anticipated timing of the Company's annual shareholder meeting, the number of Second Cup cafes offering modified or suspended services and the fluctuation of this number over time, the conversion of certain Second Cup cafés to retail cannabis stores, the imposition (or relaxation) of government restrictions and other factors (including the duration and terms of such restrictions), the extent of the expected impact of the COVID-19 pandemic and associated government regulation, expected consumer and commercial behaviour and other related matters on the Company's business, operations and financial performance, and the timing of any further updates.
The dynamic nature of the COVID-19 pandemic and the events and circumstances resulting from or associated with the pandemic mean that management can offer no assurance such forward-looking information or forward-looking statements will occur or be accurate in the circumstances. Any forward-looking statements are based on management's estimates and assumptions that are subject to inherent risks and uncertainties, some of which are beyond the Company's control, which could cause the Company's actual performance and financial results in future periods to differ materially from the forward-looking information contained in this press release. These risks include: the ultimate extent, duration and severity of the pandemic itself and the associated government restrictions; effects on consumer and commercial behaviour and other factors associated with or resulting from such pandemic, including that the outbreak of the COVID-19 pandemic could result in additional cafes temporarily suspending operations, decrease the willingness of guests to patronize the Company's cafes, cause shortages of employees to staff the Company's cafes, interrupt supplies from third parties upon which the Company relies, result in governmental regulation adversely impacting the Company's business; the availability of the CECRA program; landlord willingness to consider franchisees' requests for deferrals of rent or loan repayments and/or the Company's requests to amend or terminate certain café leases; that franchisees may request that the Company take certain steps to support its franchisees (whether financially or otherwise); and that the pandemic and the consumer, governmental and commercial response to it could materially impact economic activity in general and otherwise have a material adverse effect on the Company's business, financial condition and results of operations. Such adverse effects could be rapid and unexpected.
Although the forward-looking information contained in this press release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. As a result of the foregoing, readers should not place undue reliance on the forward-looking information contained in this press release. A comprehensive discussion of other risks that impact the Company can also be found under the heading "Risk Factors" in the Company's annual information form available at www.sedar.com.
All forward-looking information in this press release is qualified by these cautionary statements. Forward-looking information in this press release is presented only as of the date made. Except as required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.
SOURCE The Second Cup Ltd.
For further information: Ba Linh Le, Chief Financial Officer, (905) 362-1827 or [email protected]