ALKM Q & A's from Sat 7/28 Well some of the most important ones....
Debts and Share Structure
The most asked question and sought-after answer is why the increase in the authorized and debt, and what our plans are going forward. The bottom line is that we are exploring options internally, but our number one priority at this time is getting the company current. With the share price lower than it is, we think it should never be valued at this low of a level, but we have absolutely zero control over the buying and selling. We know it should never be at a price where it is today, but so long as we stay focused on building the business we know the stock will take care of itself. However, our focus again is on getting our filings done and keep growing the business.
As insight into these questions, it easiest for me to break this apart into two different sections. Let’s call it the old debt vs. the new debt.
Old Debt / Increase to the Authorized / Previous Notes.
As we put out these filings this story should unfold rather clearly if it hasn’t already. Xtreme had some good contracts gone bad, and infrastructure issues, but we wanted the IP. We had a plan and we were able to step in and acquire our co-packer along with the IP because we had the ways and means to continue the vision of its original creators through utilization of our stock. As time went on in the trenches of fighting the good fight, we didn’t really see the old debt cleared out until early 2017, as is unfolding in the subsequent events and footnotes of the 10K. We cleared out massive amounts of the old debt that was used to acquire the IP and other various settlements that drained us in both funds and time. Unfortunately, clearing out this old debt was done at such low levels that it caused the increase in the authorized. If we pool together all of what we did creatively and pegged the number of actual debt eliminated from the books, it would be much higher than confirmed in the 10K and press release. Basically, we squared up with most everyone.
New Debt
At the same time we were outgrowing our existing facility, we had a tremendous opportunity come up that we wanted to jump into immediately, the creation of Bell Food & Beverage. We worked with a couple of friendly investors that love and believe in Alkame. We pulled the trigger with both Alkame and its investors understanding that our ability to grow this business would only be limited by capital and infrastructure, and expanding a business is no easy or cheap task. We stepped into another facility operating at a loss and needed to cover some of that monthly expense. Fronting materials is capital intensive, as we need to purchase and produce the products in order to sell these products. From trade shows to qualified reps, all of these things are going to need capital infused into the business, new debt.
This new debt has enabled us to do some pretty amazing things. We moved into a larger facility, entered the world of hot and cold co-packing, brought in additional infrastructure such as compliance and QC, purchased equipment to maximize efficiencies, became a top producer for Hemp infused beverages (something we could not do in Idaho), certified the facility as Organic, began an aggressive cross-marketing and co-branding campaign “Powered by Alkame Technology” with this new base of clients, and paying down debt. We are almost done with hemorrhaging, and we’re getting caught up on our filings.
What we are working closely with these investors on is what’s best for the company while minimizing the impact on our shareholders. There are multiple options open to us, and everyone involved wants nothing more than to see this company wildly successful. This should be evident to all given the situation, a pink sheet with a stop and now a CE, backed up on filings, and no shares to even issue to these new notes. It takes a believer. Contrary to some questions we received, management is not diluting to line anyone's pockets, in fact management is deferring their compensation and putting everything into the business, believing wholeheartedly in what we are doing. Never sold a single share. As was disclosed in our 10K, some notes from accredited investors have been paid out of cash flow, which is an option we personally are a fan of, and this seems to have been overlooked in most of these questions received. We are talking to traditional forms of financiers and seeking traditional lines of credit. We should be open to these shortly as most traditional lenders would like to see the company have 18 to 24 months in business under their belt. The company wasn’t in a position to do that before, but receivables are growing and getting closer to 18 months everyday.
Bell Food & Beverage Inc. dba Bell Foods International Inc. and our relationship with Craig Bell
We saw this as a perfect opportunity for Alkame to grow. This was originally structured as a JV, but due to Craig Bell’s personal reasons, we ended up taking over the whole facility and created a new entity called Bell Food & Beverage. Bell Foods International became a dba of ours. Our 8K filed with the SEC clearly stated all the terms. We leased the facility for 5 years and the equipment for $1 per year. We agreed to purchase the hot pack equipment, thus the reason for the low cost on the lease. We acquired the operational assets which was all rights, title and interest in and to trademarks, the business name “Bell Foods International”, accounts receivable, customer lists, supplier lists, and finished goods inventory. Craig Bell is the landlord and an advisor or consultant to the company. Where I think the confusion lies is the fact that the Bell’s are still interested in selling the campus and a local brand of spring water they own. However, this doesn’t affect what we are doing. The lease remains intact and is set to automatically renew in 5-year increments, unless a new landlord comes in and does not want to renew the lease. Regardless of whether we buy the plant or someone else does, we will be here for many years.
Revenue / Growth
We projected roughly 2m if we stopped growing, and what would stop us from growing are capital constraints and infrastructure.
Our Subsidiaries Progress
The company is always making progress, such as our aquaculture licensing, development of new brands and products, establishing new lead generation websites like CBD Co Packer and West Coast Co-packing, etc.… Most subsidiary ideas have not gotten the attention they deserve lately because our core focus has been on revenues, cash flow, profitability and the filings most recently. That is one of the reasons why the company is always looking for JV and Partnership Opportunities, so they can get time and assistance they need to grow.
