American Water Star resumed trading yesterday after a 2 1/2 month hiatus from the market. There are definately some positives to look at, and one glaring negative.
On the positive side: AMW was able to maintain its AMEX listing and continues to trade there, so the company must have done something right to convince the exchange they could right the ship.
Secondly, the stock is trading at $.29 as I write this BLOG entry. The last trade on the day it was halted was $.37. Considering the enormity of the problem, the stock has not taken a terrible haircut. This suggest one of two things. Either the stock is already trading low enough that all the bad news is built into the price, or not enough people have noticed it has resumed trading. Once aware, sellers could materialize.
There’s good news and bad news on the March quarterly financial statement. First the good: The balance sheet is quite reasonable. There is 7.8 million in shareholder’s equity, and about $4 million in inventory and receivables. The company argues their plants are worth much more than the booked value, which is probably true but segways to the bad news. Revenues.
The glaring negative: Revenues for the March quarter were a dismal $900k. Absolutely pathetic as compared to the bold prediction of $80 million in ’05 made by Chairman Roger Mohlman in the 4th qtr of ’04. One would expect some business interuption as a result of the regulatory challenges, but this number is far short any reasonable expectation even with the challenges.
Which brings us back to the balance sheet issue. The three plants they own could be worth more than the booked value, but what value do they really have if they are not bottling? If they are not producing they are simply a cash drain on the company.
The software I use to generate charts does not show the 2 1/2 months the stock didn’t trade. It simply resumes as if it were the next day, and leaves out the month of May.
Nevertheless, here’s the picture on the stock. Considering all that has happened, it’s really not all that bad.
Despite two attempts, recent calls to the company have not been returned. Now that the stock is trading again I’m sure another conference call with an update on corporate progress will be scheduled.
When the company starts talking about the future, the source of future revenues will be key. In the interim, my advice is to hang tight and wait for more information.
I must agree with you on this one. I didn’t get any warm and fuzzies reading the 10k. Although one can’t change yesterday, I sure would like to know how they blew the Wal-mart deal. When I saw the product on the shelf and it didn’t stay there long. Regardless, I know the risks and Roger is really going to have to say something positive and worthwhile to regain my confidence. In the meantime, I will stand by with dice in one hand and cash in the other. I’m ready to roll, if he is ready to rock.
Editor: I’d like to see some hard numbers to prove they are ready to rock. This one cannot be a story much longer. They have to deliver the goods if they are going to have any chance.
Do you know how much Roger Mohlman makes as CEO? My concern is AMW has been shipping product in record amounts with little increase in revenue. IF a CEO wanted to make their stock look good by buying large quantities and not selling it, instead taking huge pay as CEO so as to get most of the stock money back in a form of payrol, I’m questioning if his pay is appropriate. Roger gives the impression of a hard worker, but results have not been a reflection of his words. So I ponder if it is smoke and mirrors, such that Roger gets a fat check or simply that quarterly financial statements are slightly delayed in showing current conditions. Don’t misconstrue my line of thinking, since these are hypothetical views not based on factual data.
Editor: You can find that information in the 10k they recently filed for ’04. Salaries of management have never been an issue with this company. If you want to be concerned, look elsewhere. For example, in the fall of ’04 Mohlman predicted the company would generate $80 million in revs in ’05. By the end of March they had generated $900,000. That’s pathetic. There’s your problem. Now that the stock is trading again, let’s see if he can get it moving now. I’m talking about the sales, not the stock. If he gets the sales going he will get the stock going for the right reasons.
More negatives to consider for Q2 – (1) due to the delinquent filings and trading halt, they are once again in default on the Laurus note (2) the Jacksonville plant still isn’t up and running (3) they are locked out of their Mississippi plant (which is probably the most interesting item in the filing) (4) they had no major sales announcements during Q2, which is now over (5) their expenses are still high, and having to restate three quarters of earnings plus deal with a 2.5 month trading halt sure won’t help the admin costs for Q2.
Editor: Succinctly put.
Perhaps they changed their accounting system (no pun inended) and the revenues will skyrocket and approach the expected revenue numbers. A company cannot be on the path for $80M and then show an annualized $3.6M in revenue. Have they turned on the spigot at any of the other closed plants yet? This is the prime consumption season for bottled water! They have got to be filling those “orders” if they existed. Unless, in last winter’s projections, they were counting on speculative production/advance orders for the other plants that are NOT even bottling water at this time. Still sounds hokey, to me. Anyway, have a great 4th of July weekend.
Editor: My concerns exactly. I am willing to wait and hear what the company has to say when they say it. They will have something to say soon.
I snagged 25,000 shares on Friday at an avg. of .30 — The bad news is out, in my opinion. Still tons of risk, but I see this as an oppotunity. This is Roger’s last chance, imo, and I think he’ll pull it off.
Editor: As long as you realize the risk. You could lose 100% of your money. The $900,000 revenue number for the March qtr is truly abominably relative to the $80 million predicted.
I commend you for finally discouraging Mike on his recent 25,000 share investment. I finally dumped mine on the last blip up to $0.32 and took an incredible bath. I am in the regional food business and we are currently struggling to get water supplied from many of the best in the industry such as Nestle and Absopure due to the heat and country wide weather conditions. Then we have the con artist Roger saying nothing and selling nothing and wasting investors dollars with his silence and worthless management. Risk away my friends but I suggest you start looking at real investments… not the flim-flam type as in AMW!!!!!!!!!!!!!! Chris
Editor: Perhaps Mike bought your shares. That’s what makes a market- someone buys and someone sells. Someone will be right, and someone will be wrong. I am very cautious on this one, but I believe time is running out. They have to deliver or die now.
Today’s news (7/6) was a good start–more distributors, and more importantly, 70% of the extra inventory was sold. I imagine they had about $3 mil in inventory. I don’t think AMW is dead as many suggest….Chris, I am a risk taker. In fact, I averaged down at tad and bought more at .24 today. Roger “spoke” today and it appears that things are in motion to get revenues on track. Best of luck to you on your “real” investments. I agree with the editor that this is mega-spec, but a risk I’m willing to take at these levels. The upside potential is large at this point, IMO. Editor, can you comment on today’s news? Thanks, Mike
Editor: Seems like they are definately moving in the right direction, but I still want some hard numbers concerning actual sales. Unloading the excess inventory is a positive on the working capital, but I want to know that those three bottling plants are running and delivering. If so, your speculative capital could be well placed.
Hold on a second, regardless of R’s80M$ mouthiness, looking at the progress from last year, quarter for quarter, they have improved substantially, true? What are the % increase in profit, revenue, etc. from Q1 04?
Editor: On the top line (revenues) there is no improvement to report of any kind. The revenues are abominable. The balance sheet has improved considerably with the addition of the bottling plants. Here’s the challenge: If the plants are bottling, even at 50% capacity, the they should generate significant gross profits and revenues. If they are not, they are a major cash drain. Based on publicly available information, it’s too early to say what’s happening.
After reading the most recent press release I have to feel encouraged. However, the market has reacted adversely to the news as the stock continues to drift lower and lower. I have a substantial amount of money tied up in this stock and I feel lost. In your opinion, with these contracts in place, when do you believe revenues will be realized so we can see facts not just promises? And what is the future consequences of the loan default? Would they pull the plug or is it in their best interest to see this company succeed?
Editor: I have been cautioning people about the risk associated with owning this stock for quite some time. Unfortunately, I can’t tell you what to do, because I don’t really know what’s going on. I know what they said they were going to do, and I know what they reported they have done. The disparity is terrible.
On the other hand they have the plants. If they can get them going, the stock could start to do better. The default on the note was mostly the result of the stock not trading and all the accounting issues they had to deal with. Now that they are relisted, I believe they can cure the default and access the remainder of the capital. Perhaps that is what is holding them back.
Until the company lets us know what’s going on in more detail, I can’t form a conclusion one way or the other. I would suggest if you have more money in this stock than you can afford to lose, sell it.
I am going to hang in there for a while and see what happens.
I wonder about this superstar new guy from coca cola why is he not at coke anymore and now working for a start up company?
Editor: I couldn’t say for sure.
I really do wish all of you risk investors good luck with this one. I took the bait at $1.87 so you can imagine how frustrated I was when I sold my remaining shares recently at $0.32. I did get out of about half of my shares at $0.60 before the mystery filing. Just could not take anymore of the false comments (truly believe lies from Roger)and lack of any productive things coming from the company. I do hope they make it but with this bunch of loser management you truly are placing your money at risk. Opinion is you will see liquidation before you see $0.50 a share. Chris
Editor: Sometimes stocks like this become like a cancer in your portfolio. They eat at you pysche and provide a constant source of irritation. In those cases I find it best to just sell the damn thing and move on. Cut it out like cancer, and then the patient will recover more quickly.
The items that were in the July 6 press release were not as important as what was missing. There was simply nothing there to suggest multimillion dollar sales in 2005. The biggest item they had to announce was a store chain that plans to grow to 55 stores. And this is supposed to offset the loss of sales to Wal-Mart??? Larry, you’ve been riding this one from $1.65 down to $0.19. When do you plan to declare AMW a failed idea?
Editor: I believe if you have read my commentary on this stock since last Fall, I have pretty much already declared it a failed idea. The stock being halted for trading was something I didn’t have a clue on, but if you go through the past editions which you can find on the web site, you will note I told everyone that if they didn’t achieve at least $10 million in revs in Q1, the whole premise of their “rebirth” would be questionable at best. This stock has cost me about 5 times in taxes that it’s worth right now. I’m just holding it because it’s not worth selling at this point, and you never know what might happen.
I can usually get some sense of what is going on with this company. I have now placed four unreturned phone calls to Mr. Mohlman. I can only hope he’s too busy getting is factories up and running to take the time to return my calls.
are all the bottling plants running?and whare are they all located
Editor: The plants are located in Florida, Phoenix, and Alabama- I don’t know if they are running or not, and the company hasn’t disclosed whether they are. Anecdotally- I have heard the Florida plant is not running, but I don’t know why.
Any reason for the slight up tick the last couple days?
Editor: Not that I’m aware. The company doesn’t return my phone calls anymore, so I don’t know anything more than anyone else does.
Based upon the past few responses, it looks to me as if you have washed your hands of AMW. Any way to get information? It is a very uncomfortable situation, but then, I don’t think it could get more uncomfortable than it has been the past 3 months.
Editor: If the CEO won’t return my calls, there isn’t much I can do. Numbers are due out soon, and we will know where we are. Until there is greater visibility as to where we are headed, I am reluctant to suggest to anyone that they either buy or sell.
I was an employee for 1 month and we never got paid. There are other people that have worked for several months that are still not getting paid. The labor board in Jacksonville Florida has gotten involved and also involved in the plants in Alabama and Nevda as they to have never been paid. OSHA has been involved in the Jacksonville plant due to safety issues with drain systems and faulty equipment. They have 30 days to repair and they guy they hired to do the repairs has not received any pay either. He walked off the job and told them that he will not return until he is paid. They have several 100′s of cases of water in a warehouse that has been sent back from the government because it was old and not drinking quality. They had us reboxing and shipping back out BAD water to either FEMA or the Red Cross. BEWARE of this Company and any bottled water you drink.
Editor: For those reading this entry, I have no evidence personal knowledge as to whether or not these claims are true. Clearly, the company is distressed, and these could be some symptoms. The purpose of the BLOG is for investors to share information for the benefit of everyone. I allow both positive and negatives on the board. I hope people read this and form their own opinion.
Thank you for your contribution.
THIS COMPANY IS A JOKE….HE WILL BE IN PRISON SOON. INVESTORS, PLEASE DO NOT GIVE ANYMORE MONEY TO THIS CROOK
Editor: Thank you for your contribution. I don’t know whether it is true or not.
besides arizona,jacksonville fl. whare are the other bottling plants at?and is there anymore news on the company?
Editor: I don’t know anymore than what is in the SEC filings. The management has not returned my last three phone calls, so I have no idea where they are headed. The numbers have been very discouraging, especially relative to what the Chairman predicted.
Hey we worked at the Jax Fla plant from june 8to acouple weeks ago and have not been paid Iwent to the labor board thi guy is a scam
Editor: Thank you for the contribution. I don’t know if it is factual, but this board is open for both the positives and the negatives.
So very glad I washed my hand of this deceptive company a few months back. I will again say I am in the grocery retail business and during a summer where bottled water has been in such short supply, AMW’s recent sales reporting clearly showed they are going nowhere fast. Hate to admit I bought in at this newsletters recomendation at $1.81 per share but feel fortunate I got out of about half of my mistake at $0.61 and dumped the remainder around $0.32 after it resumed trading. Roger is a bottom feeder and it has been lie after lie for too long a time now. Get out while you still can get some money for what will be worthless stock in the very near future. Look at the most recent numbers, and remember that King Roger told us all that AMW would achieve sales pushing 100 Million in 2005!!! NEED I SAY MORE????? At least I took a bath honestly…… tell me that Roger can look in the mirror and say the same! In a line made famous by Jim Kramer on Mad Money, ” Paddles….CLEAR”! Chris
Editor: I might give him the message if he would ever return my calls. I’m in the same boat as you with one exception. I visited the company just before the stock was $1.81 and was given some informal projections about where the WalMart relationship was going. I never published on it, because it wasn’t public information. As you can imagine, more of the same.
I do pay attention to PR. If this management is as bad as it appears, how come the SEC or state AG haven’t stepped in by now? Something has to be amiss here.
Editor: I don’t know. The SEC and the AG don’t prosecute failure, just fraud. There is nothing illegal about predicting $80 million in annual revs, and then delivering $2 million. It’s just failure, and that’s not against the law. I’m pretty sure all of their problems are disclosed in the SEC filings.
Seems that with the disaster in the South, selling water there should e easy. Do you know if production is up yet? If not now, look out
Editor: I haven’t heard a thing as it relates to AMW- if they can provide water for disaster relief, they should probably publicly disclose it.
Roger is on the run. He still has not paid anybody for working for the water company. I have contacted the FBI and nobody calls me back. The labor Board stated that he was to pay us 2 weeks ago but again he never has paid us or will pay anybody. This guy needs to be in jail, but then again, you have to find him first.
Editor: I can’t say I have any knowledge to support your claims, but the stock is certainly getting back on track with current publicity. If you feel that way, the current surge is a selling opportunity.