Paul,
From conversations I've had with Charles Goyette at Alanco (Investor Relations), my understanding of the marketing agreement is that Alanco pays $500 per unit to have the machine installed at each location (excl labor and transportation), but receives $700 from all of its food suppliers (Tyson, Anchor, Beatrice's Lamb Weston Div, and Cargill for veg oil) upon starting up each Fry unit.
Also, the deal in China involves supplying the food units, not the Fryer. So ALAN is just a glorified food broker, but soon to be a rich food broker if all of these units go into place.
The way Charles Goyette explained it to me: In each Walmart location, ALAN receives 13 cents per order. Typically 80 orders per day and 1200 locations and we'll use 360 days per year and 80% margins to arrive at $3.59 million in earnings per YEAR on 34+ million shares to arrive at 10 cents per share, just for the Walmart units.
I used 34 million shares instead of 33 million because ALAN sold a European convert at $1/sh a little ways back, that was the reason for the slide from $2/sh down to $1.59. The sellers were finally cleaned up on the 660,000 share volume day on Jan 24th. The foreigners converted their bonds for 1+ million shares @ $1 and liquidated once the required holding period expired. I figure they made a tidy 70% profit assuming they sold at an average price of $1.70.
The Salubre deal involves significantly more units (10,000 over the next few years) and a higher 25 cents per order profit, but figure on significantly LESS volume. Let's use 40 orders per day instead of 80 to arrive and you end up basically, with the same deal that Walmart has. You can see right away that it wont be long until substantial earnings are realized.
I'd like to post more info right now, but my family is calling me.
Tim West
5:22 PM, Tues, Feb 4th |
