Lease of SPoT Concord Place Cafe Terminated

TORONTO, ONTARIO--(Marketwired - Sept. 23, 2014) - SPOT COFFEE (CANADA) LTD. (TSX VENTURE:SPP) ("SPoT" or the "Company") report that Concord Adex Developments Corp ("Concord Adex") has decided yesterday to terminate the lease of Hot Spot (Concord Place) Inc. ("Spot Concord Place") which owns and operates a Spot Coffee café on 333 Bremner Blvd., Toronto. Concord Adex claims that termination of the lease has been by reasons of breaches of covenants in the lease.

On November 1, 2012, Concord Adex unexpectedly invoiced Spot Concord Place the sum of $138,951.70 which included HST. Concord Adex claimed that this amount was for additional rent that was not previously invoiced by Concord Adex for the period of the past 5 years, i.e., 2007 and up to November 1, 2012. The lease provides that additional rent should be invoiced by the landlord in a timely fashion at the end of each year of the lease. Such timely invoicing especially of drastic changes in the fixed operating costs of the café would have allowed Spot Concord Place the time and opportunity to calculate and adjust its selling prices accordingly. However, in order to preserve its good relationship with Concord Adex, management of Spot Concord Place elected to avoid entry into legal disputes for a ruling on this matter and chose instead to amicably negotiate a settlement of these untimely and sudden additional rents. On September 16, 2013, Concord Adex and Spot Concord Place entered into a settlement agreement which provided that Spot Concord Place pays Concord Adex the total sum of $90,400 including HST instead of $138,951.70. The settlement agreement further provided that Spot Concord Place pays the $90,400 in instalments starting with the payment of $22,600 including HST on September 30, 2013 and the monthly payment of $5,650 including HST thereafter until September 30, 2014. All these payments have been paid by Spot Concord Place to Concord Adex. The only remaining payment is the last one due September 30, 2014.

Last month, Spot Concord Place advised Concord Adex that it would be late in paying rent catch-up payments as per a schedule of lease payments that was mutually agreed upon. Spot Concord Place also advised that the delay was due to the financial strain caused by the payments of the substantial additional rent that was levied against Spot Concord Place for the years 2007 to 2012 and that was only invoiced in late 2012. Despite best attempts by Spot Concord Place to rectify the breach by the end of November of this year, Concord Adex insisted on the immediate full payment not only of the rent arrears but the additional amount of $48,551.70 ($138,951.70 - $90,400) for additional rent that was discounted in the settlement agreement that they cited as being terminated due to the breach in the covenant of the lease. This final and uncompromising position taken by Concord Adex since the entry of its lease with Spot Concord Place on May 25, 2006, led to the unfortunate termination of the Spot Concord Place lease.