Many parts of the Western United States are undergoing a drought crisis due to dry conditions. Experts warn that this crisis may worsen. Besides conservation and rationing the use of water, one other line of defense is the evaporation of water. Drought occurs when evaporation from increased temperatures greatly exceed precipitation for a prolonged period.
UCLA Water Resources Group Director Madelyn Glickfeld broke down the state's water system. "Only about a third of L.A.'s water comes from local sources. The rest is siphoned in from elsewhere. Hauling all this water, she said is the biggest electricity use in California. Moreover she said, we lose a lot of it through evaporation."
Flexible Solutions International (NYSEMKT:FSI) is the developer of WaterSavr, the world's first commercially viable water evaporation retardant. WaterSavr reduces evaporation by up to 30% on reservoirs, lakes, aqueducts, irrigation canals, ponds and slow moving rivers. Heatsavr, a "liquid blanket" evaporation retardant for the commercial swimming pool and spa markets, reduces energy costs by 15% to 40% and can result in reduced indoor pool humidity. The company's Ecosavr product targets the residential swimming pool market providing the same savings as Heatsavr.
On July 16, 2014 FSI announced that The City of Wichita Falls, Texas has approved a project to apply WaterSavr to the Lake Arrowhead Reservoir that supplies the City of Wichita Falls. WaterSavr is an evaporation reduction aid that has significantly reduced water loss in multiple studies around the world. It is approved for use in the USA by the National Sanitation Foundation (NSF) under Schedule 60. WaterSavr is 100% biodegradable and composed of only food grade ingredients. It is made in the USA. In several studies, it has reduced evaporation from reservoirs by more than 30%. Evaporation is the largest form of water loss suffered by reservoirs in the region and it has been calculated that if Wichita Falls can save 10% of the water that normally evaporates each year, the saving would be greater than 1/3 of its annual consumption by the city of the year. A 75-day summer supply that would cost about $400,000.
For fiscal year 2013, after removing items not related to current operations FSI shows positive operating cash flow of $533,407 or $0.04 per share. The NanoChem division continues to be the dominant source of revenue and cash flow for the company. New opportunities continue to unfold in detergent, water treatment, oil field extraction and agricultural use to further increase sales in this division.
Risks include the industry adoption of products and the application challenges. However, having successful wins like Wichita Falls would seem to serve as selling and marketing proof to win other sales. Additionally, FSI has a tradeable float of approximately 6.8 million shares. Low float stocks can be subject to extreme and rapid moves.
With the drought crisis only threatening to worsen worldwide, in my opinion, the FSI evaporation retardant product has the potential to become a strong weapon in the fight against this severe problem.
Disclaimer: This article is not investment advice or making stock price predictions for any stock. Do not make investment decisions based on this article as I am not an investment advisor. This article is for information only. I am long FSI and I may sell my position in FSI at any time.
I released this article at 8:15 am EST Tuesday July 22, 2014 on my blog at super-trades.com and to my subscription newsletter service on profit.ly at 8:15 am EST Tuesday July 22, 2014.
Disclosure: The author is long FSI. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.
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