For the year ended June 30, 2016, cost of sales wa

For the year ended June 30, 2016, cost of sales was $1,134,636 or 105% of sales, versus $212,458 or 43% of sales for the year ended June 30, 2015. Cost of sales increased in 2016 due to inventory obsolescence write-downs and increased sales. Inventory obsolescence write-downs in 2016 were $725,718 compared to $0 in 2015. The factors impacting inventory obsolescence were (1) two changes in can design during 2016, that rendered the previous designs less marketable to customers, (2) management’s decision to move the brand to a 16 ounce can to broaden its market appeal and lower production costs and (3) prior management’s decision to date code all production runs prior to May 2016 with a shorter than necessary one-year shelf-life when a two-year shelf-life was applicable. Cost of sales in 2016 before the write-downs was $408,918 or 38% of sales.

http://www.otcmarkets.com/edgar/GetFilingPdf?...D=11611886

it is a good thing that the date codes on all of the new products is now set at 2 years. better luck over the next year (tbd)