The Alkaline Water Company

Kurta Law is investigating broker recommendations of The Alkaline Water Company. This risky investment may not have been suitable for many investors. Regulations like FINRA Rule 2111 and Regulation Best Interest require brokers to recommend investments that are suited to their clients’ risk profiles.

If you lost money on your investment in The Alkaline Water Company, consider contacting a securities attorney. Pursuing FINRA arbitration can be a quicker and cheaper remedy for investors than a civil suit. Contact us at (877) 600-0098 or email info@kurtalawfirm.com to speak to one of our securities attorneys for free today.

What is The Alkaline Water Company?

According to the prospectus, The Alkaline Water Company (WTER) produces alkaline drinking water as well as CBD-infused products including lotions, bath salts, and edible gummies.

The stock prospectus states that investing in The Alkaline Water Company comes with many risks due to the company’s finances, its position in the beverage industry, and other concerns pertinent to investors.

What are the Risks Associated with The Alkaline Water Company?

Some of the most significant concerns The Alkaline Water Company notes in its prospectus are related to the company’s position in the high-competition commercial retail beverage industry.

Besides indirectly competing with established international beverage corporations like The Nestlé Group and PepsiCo, The Alkaline Water Company directly competes with other alkaline water brands with larger visibility and resources.

Relatedly, the company expresses that it has “difficulty realizing consistent and meaningful revenues and achieving profitability” and anticipates losses in the future due to its lack of sufficient market acceptance. 

Immediate Stock Dilution

The prospectus warns that investors will experience an “immediate and substantial dilution” in their stock value due to the difference between the stock’s offering price and its tangible book value. This dilution may also increase if the company offers additional shares in the future.

Further, the company states that they do not “anticipate paying any cash dividends on our common stock in the near future.”

Reliability of Revenues and Financial Disclosures

The company’s independent registered public accounting firm expressed “substantial doubt” as to the company’s financial stability because the company “had not yet established an ongoing source of revenues sufficient to cover our operating costs.”

Additionally, management at The Alkaline Water Company determined in 2021 that their “disclosure controls and procedures and internal control over financial reporting are not effective,” and that this may result in late reporting or misinformation being released to the public.

Reliance on Third Parties

The Alkaline Water Company relies on third parties to produce and distribute its products. This disclosure also states its reliance on vendors and third-party brokers could leave the company vulnerable to delays in production and distribution, as well as quality issues by third-party bottling facilities.

Compliance with State and Federal Hemp Regulations

As a producer of CBD-infused products, The Alkaline Water Company is subject to many state laws as well as FDA regulations regarding hemp.

The prospectus notes that the company may be negatively affected by the financial burden of adhering to state hemp regulations across the company’s national third-party network of brokers, distributors, and retailers. Failing to comply with these laws and regulations will also result in fines and other costs as the company works to achieve compliance.

Risk of Litigation

The prospectus notes that The Alkaline Water Company is periodically involved in litigation and other proceedings regarding product liability and intellectual property claims, as well as stockholder class action claims. The potential settlements, fines, legal fees, and other expenses may negatively influence the company’s finances as well as the company’s reputation.

Aegis Capital Corp. Underwriting

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares underwritten by an affiliate of their brokerage firm. 

What Can I Do If I Suffered Losses?

If you believe The Alkaline Water Company was overly risky for your risk profile, consider reaching out to a Kurta Law securities attorney. Our experienced attorneys have a proven track record of securing fair settlements in cases of unsuitable investment recommendations. Call (877) 600-0098 or email info@kurtalawfirm.com.