John, I certainly hope you're right.
I'm still going over the 10-K. Here's another red flag that was raised in the report. It's probably nothing, considering the fact that Wal-Mart continues to expand the Fry Guy program. But it is extremely significant to the future health of the company...
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Dependence Upon Key Customers.
The focus of the Company's restaurant equipment/food distribution segment has been almost entirely devoted to its relationship with Wal-Mart. Successful operations of Fry Guy are dependent upon the Company's ability to meet its obligations under its agreement with
Wal-Mart. Although the Company has one year remaining on a two year commitment with Wal-Mart, a decision by Wal-Mart to cease or reduce its commitment with the Company's IFFM program would have a material adverse affect on its business. Negotiations are under way for a new contract with Wal-Mart.
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Does anybody have any insight as to where the negotiations stand?
Maybe this would be a good question for anybody that's planning to go to the shareholders meeting this week.
As I said, if Wal-mart was not pleased with the program they would probably not be expanding it to new locations. As the 10-K says, "...the Company is now servicing 1,300 Wal-Mart stores and has just been awarded 85 Super Centers, which were not part of the original program. The IFFM program has replaced McDonald's, Taco Bell, Wendy's, A&W Root Beer and Little Caesar's Pizza in a number of Wal-Mart locations."
Of course we have no idea what the "number of Wal-Mart locations" replacing these national brands actually is. But, I would assume that Wal-Mart would not be replacing McDonald's, Taco Bell, et al in their stores if they did not intend to renew the Alanco contract.
Just my opinion... |
