year end quotes & commentsThese red statements are taken from the (finally) released MD&A.
“In the first two (2) quarters of the year, the Company stabilized production costs; however, during the last two (2) quarters the Company was faced with increasing costs for its spring water and transportation. As a result margins were lower during the last two (2) quarters of the year.”
That’s because after AHW got busted for fraudulent water, they needed to use real water. This was far more expensive. They also needed to buy a distiller.
“The Company anticipates that margins will increase as volumes increase.*”
How will this happen now that AHW was booted out of Superstore. Shouldn’t this news be in the Material Change section?
The estimation of the useful life of water bottles has been modified from 10 years to 5 years.
Bottle life of 5 years is gross exaggerated. 2-3 years is the extreme high end depending on turns. And how will AHW pay for new 18.9L bottles now that the bottle life in the float is almost completely dead? This represents an additional unstated loss of at least $250,000.
Exceptions were Rent increased by 2% as noted above, (the Company extended its lease on the Calgary facility by one year);
Why is there no mention of the Boards’ refusal to close the obsolete and unnecessary Calgary plant (a minimum $400,000 annual saving) back before they renewed the lease? The current total volume is easily produced in Edmonton on a single day shift. Gross mismanagement by the Board and the President!
Historically, the Company has generated positive cash flow from the 18.9-litre bottle deposit charge of $10.00 per bottle; however, with the increase in the rate of conversion to the 15-litre bottle from the 18.9-litre bottle, this cash flow has been reduced.
This is the core issue. Deposits have always been the main source of income. Now that this has dried up, how does the President plan to replace this revenue stream?