I'm sure Aquagold execs are working on increasing their profit margin. In the early stages, start-up costs make it very difficult to turn a profit, but as they increase production, economies of scale kick in and the cost per unit decreases. Part of their cost cutting involves working out an arrangement to lower the cost of shipping, and they are studying the different possibilities as we speak.
Sales will be increasing over time, especially with free taste tasting at the LianHua super-stores and all other retail locations, including hotels, karaoke clubs and high class restaurants, where Aquagold spring water is sold. From the CEO's report, it sounds like they expect the sales operation to significantly kick in at the outset of 2010.
Anvil, in answer to your point about contracts, the current $197M contract is an updated version of the contract spoken of at the April 22, 2008 meeting in NYC. The shipment schedule is flexible and revolves around three things: the increase in demand for the product as the marketing and branding effort progresses, the logistics of delivering orders to a wide range of business establishments in different metropolitan areas throughout China, and the Company's ability to increase production to meet that demand.
To increase production to anticipated levels will require a huge stimulus package in the form of major capital funding.
CEO Domingo Silvas has a full dance card. He is working on obtaining financing, on developing new product lines, on arranging for a reliable shipping company to take their product to market, on all matters of compliance, both legal and accounting, on marketing strategies like the DEVNET agreement, on a contract with a bottling company to handle new products that are already on the drawing board, and the list goes on and on.
Personally, I wouldn't assume anything at this point. The LianHua stores are not ordinary grocery stores. They are more like Whole Foods, with a high class clientele. One reason why new orders were not announced was because Domingo was seriously ill for a period of three weeks after his last trip to China. Based on the information we have, I see nothing to indicate the product has not been well received or that it is over-priced. All of these issues were well studied before the shipping of the product was undertaken.
In New York we have an expression: "Give a brother a chance."
So far, since becoming CEO, D. Silvas has made tremendous headway in getting this company organized. The next phase of operations will be to increase sales through all of the venues they have spoken of, culminating with the 2010 World Expo in Shanghai. The groundwork has been solidly planted and very shortly we will begin to reap some spectacular returns on our investment. That's why I purchased another 500K shares today at .0015.
