DREV...nice volume..lotsa good rumors..phoned the company about their pink status..was told they're working very hard to get off... :)..new CEO hired..turning the company around...we'll see :)
website,
dragonenvironmental.com
Believe it traded around $3.50 few years ago...see below what the company does..is an old report..
Price: OTC BB: DREV $0.62 E.P.S.
Yearly Range: $0.51 - $3.50 1996 ($.17)
Shares Outstanding: 8 million 1997E $.05
Estimated Float: 1.3 million 1998E $.14
Market Cap: $5 million
Book Value Per Share: $.23 UNAUDITED
Estimated Growth Rate: 400% BALANCE SHEET (9/30/96)
Dividend: Nil Net Working Capital $535,682
Return on Equity: Nil Current Ratio .17 - 1
Marginable: Nil Long Term Liabilities $0.00
Average Daily Volume: 50,000 Shareholders Equity $1,757,822
Location: Orlando/Sanford, FL Suitability: Aggressive Speculation
Recommendation: BUY
One-Year Target: $2.25 to $3.00
Two-Year Target: $4.50 to $6.00
INVESTMENT CONCLUSION
Other than the air we breathe, our most pressing environmental concern is the water we drink. We take it for granted that every time we turn on the tap, our water is fit for bathing and drinking. After all, it is cleaned and purified at the local water treatment plant, but have you ever asked yourself, "Who cleans the treatment plant?"
There are over 294,000 wastewater treatment facilities in the U.S. alone, and over twice that many water treatment facilities. The total annual price tag to clean them is over $5 billion. This does not take into account the ponds located at those facilities and kat thousands of industrial facilities. This market not only increases yearly, but because sand and grit removal and media replacement is a recurring event, it regenerates itself every five years. The settled sediment at many industries is known to regenerate itself once a year.
There is a relatively new public company that has found a special niche in cleaning wastewater treatment plants; is positioning itself to generate $50 million in revenues by 2002; has eight years time-tested patented technology; has hundreds of repeat customers, including major cities and Fortune 500 companies such as Universal Studios, US Sugar, and Pratt & Whitney; showed over 300% increase in sales during the last year; and is projecting between $4 million to $6 million, or a 800% - 1000%, increase, in 1997.
And it is trading at only 62½ a share.
The company is DRAGON ENVIRONMENTAL CORP. (OTC BULLETIN BOARD: DREV).
Dragon's patented technology, fittingly called the Sand Dragon, removes sand and grit from wastewater treatment facilities, and does it while the plant remains in operation. It is the only known technology with this ability. This is not hitech or biotech; it is a basic industry that is very easy to comprehend. For example, it costs $300,000 to manufacture one Sand Dragon and Mud Puppy system, and the system generates about $600,000 yearly. By the end of 1997, the company plans to have between six to ten systems generating revenues of $4 million to $6 million annually. Accordingly, we rate the shares of Dragon Environmental Corp. a BUY with AGGRESSIVE SPECULATION. Not only has the company been making significant progress in fulfilling its short-term objectives, it is currently negotiating several acquisitions, valued at a combined $10 million, that will help Dragon establish a national presence and expedite a NASDAQ listing. We give the shares a conservative twelve-month target of $2.25 to $3.00; two-year target is $4.50 to $6.00.
COMPANY BACKGROUND
Dragon Environmental became a public company in 1996, after purchasing the assets of Uddo-Mims International, of Edgewater, FL. In business for eight years before it was purchased, Uddo-Mims had developed a unique method of cleaning sewage treatment tanks. Uddo-Mims? vice president was Kenneth Mims, who is now Dragon's senior vice president and the inventor of the company's patented technology.
During the period before its takeover, Uddo-Mims had built a substantial customer base throughout the Southeastern states, the Caribbean, and New Jersey with just a single Sand Dragon and Mud Puppy System. However, in order to ensure major market expansion and growth, it decided on the public company route and raised $1 million, partly from stock sales and partly from cash investments by the new owners, who where led by Basil Meecham (see Management).
The new management feels confident that, within five years, Dragon can capture 1% to 2% of its $5 billion market, which is cleaning water and waste water treatment facilities. The impetus for this confidence is the company's patented and proprietary technology, known as the Sand Dragon, which is the only known effective method of removing unwanted sand and grit from waste water treatment facilities while the plant remains in operation. Standard cleaning procedures require a costly and lengthy plant shutdown with manual and hazardous labor. Also, Dragon's technology does a much better job.
To capture the true essence of the Sand Dragon's effectiveness, we refer to a November 22, 1996 article in the Orlando Business Journal that reported on how the city of Port St. Lucie, Florida paid Dragon $11,000 to remove 95 cubic yards of sand from one of the city's wastewater plants; a job that took only a week to complete without a plant shutdown. Here is what the plant's chief operator, Carl Norton, had to say: "We looked around and tried to get other bids and couldn't find anybody else. They did a very good job. That tank had not been cleaned for 20 years, and we had accumulated piles of sand five feet high in the bottom of the tank. That actually robs the system of capacity."
Had Mr. Norton resorted to traditional cleaning techniques, he would have had to shut down his plant for several weeks while workmen literally went into the tank and shoveled the sand onto conveyors.
In addition to Port St. Lucie, Dragon has several hundred other customers, mostly repeats, such as the cities of Orlando and Jacksonville, Universal Studios Florida, US Sugar, Pratt & Whitney, and Lockheed Martin. Recent additions to its client list include the city of Margate, Florida and the exclusive Sawgrass Players Club. Sawgrass, incidentally, plans to use Dragon a great deal over the next five years to dredge the waterways that snake through the private community.
One Sand Dragon can service approximately 50 facilities a year, and each plant should be cleaned at least once every five years. One Sand Dragon and Mud Puppy System costs $300,000 to manufacture and can generate about $600,000 a year in sales, with gross operating margins averaging over 70%. Besides removing the sand and grit, the Sand
Dragon is capable of removing the filter media from water treatment facilities and separating it according
to size. This process automatically cleans the media for reuse by the facility, resulting in tremendous savings to the plant, which, in the past, had to replace all the expensive media.
Dragon has many potential customers. There are over 294,000 wastewater treatment facilities in the United States, and over twice that many water treatment facilities, for a total market of $5 billion. This does not take into account the ponds located at those facilities.
Dragon also owns patented technology to that is called the "Mud Puppy", a sediment removal system that can clean lined ponds at a rate of one acre in about one week and generate over $10,000 in revenue, without damaging the pond's lining. There are over 2 million acres of lined ponds in North America, representing a $20 billion market. Many industries require the removal of these sediments on an annual basis.
In addition to these two markets, Dragon has the technology for removing the sand build up in canals, streams, and marinas without the need for a damaging spoil area, as evidenced by the Sawgrass residential community. The sand can be separated from the water and loaded directly onto trucks for disposal; the water is returned to its source.
The company has set some pretty heady goals for the next several years, and based upon a recent 300% jump in yearly sales and management that is experienced in marketing and finance, there is every reason to believe Dragon should attain both its short-term and long-term objectives. Dragon's future growth will come from growing its customer base and through the acquisitions of related companies.
By the end of 1997, the company plans to have six to ten Sand Dragon and Mud Puppy Systems operational, serving between 300 to 500 customers a year, and bringing Dragon between $4 million to $6 million in annual revenues. In five years, its low-end goal is 50 pieces of equipment generating $25 million; the high-end is 100 Sand Dragons and $50 million.
Dragon is currently negotiating three acquisitions valued at nearly $10 million combined. According to management, these purchases will help Dragon establish a national presence, and will also enable the company to expedite a NASDAQ listing, which is also one of its goals during the next year.
As we stated earlier, this is a simple company to understand; there is nothing complex about it. This is not high technology, it has a basic necessity market of availability that sees very little change but constant never ending growth. Because of its simplicity, combined with its proprietary technology, Dragon should do very well.
The company's address is: Dragon Environmental Corp.903 W 3rd Street, Sanford, Florida, Phone: 407-330-3900, Fax: 407-330-7755.
Email:dragon@iag.net.
WebSite: stock.spectator.com .
MANAGEMENT
Basil Meecham, Chairman and CEO, has held executive positions in private and public companies in South Africa, England and North America. Before heading the Dragon takeover of Uddo-Mims he was a consultant and investor in several industries including real estate development, medical technology, cosmetic industry, and aircraft development.
Kenneth Mims, Senior Vice President, was the vice president of Uddo-Mims. He is the inventor of the company's technology and is responsible for new product development.
Loren Howard, Vice President of Operations, is the founder and former president of Environmental Solutions and Services, of Orlando, Florida, which he sold in 1990.
Ed Korkki, Vice President of Marketing and Sales, has held senior executive posts with a number of Fortune 500 companies such as General Electric and Paulucci International. Prior to joining Dragon, he spent nine years as a private industry consultant specializing in new market ventures, turn arounds, turn-key operations, and financial and sales marketing and planning.
COMPETITION/RISKS
Throughout North America the wastewater/water treatment industry is serviced by thousands of small operators who haul sludge, stabilize bio waste, vacuum or manually remove solids and liquids. All of them can be considered Dragon?s competitors.
While Dragon possesses the only known patented technology of its kind, it is conceivable that someone else, or some other company, that is larger and better financed than Dragon, could develop superior technology.
Historical and Pro Forma Financial Information (1996 Unaudited)
1995 1996E 1997E
Revenues 576,577 5,000,000 8,000,000
Direct Costs 1,286,022 4,500,000 6,000,000
NET GAIN (LOSS) (809,455) 500,000 2,000,000
Net gain (loss) per share (.17) .05 .14
Average # of shares outstanding 5,000,000 12,000,000 15,000,000
Even though Dragon's predecessor had been in business for eight years, the company is still considered a start-up by many in the financial markets to where Dragon may need to seek additional capital. Many times, the financial markets do not react favorably to start-up situations.
The company will need additional financing to fulfill its objectives and one source for funding may be through secondary stock offerings, which will dilute current shares and could cause adverse pressure on share price. Should Dragon be unable to obtain the needed financing, its future operations could be severely impeded.
INVESTMENT CASE AND OUTLOOK
Well-Balanced Management. Seldom in a small company does one see such a diversification of management skills. Basil Meecham is very experienced in fund raising; Kenneth Mims, who invented the Sand Dragon System, is definitely a very creative individual; and Ed Korkki, the marketing chief, has helped to plan and execute the sales programs of many of the country?s fastest-growing companies. Loren Howard has managed all levels of business related to environmental clean-up and government regulatory bodies.
Proprietary Technology. As stated, the Sand Dragon is the only known technology with the ability to remove sand and grit from waste water treatment facilities without causing lengthy and costly plant shutdowns. Because of its effectiveness, and the fact that its utilization can cut cleaning cost up to 50%, it is a blessing to plant operators trying to mollify disgruntled taxpayers and customers. The best summation about the Sand Dragon System comes from the plant operator in Port St. Lucie (see Company Background).
Unlimited Market. When one considers the nearly 600,000 or so wastewater/water treatment plants in the U.S., and the 2 million acres of lined ponds in North America, the company will not want for customers. Even if superior technology is developed elsewhere, there seems to be enough business for everyone.
Favorable Revenue Prospects. On the surface, the $709k loss incurred last year looks ugly, but it is typical with most small companies experiencing growing pains. Dragon presently has 20 employees, and foresees that 150 will be on the payroll within the next year. So, more losses may be in store, but, since they appear to be growth-related, there should not be much cause for alarm. The focus here should be on the potential revenue, and the 40% gross margins. One Sand Dragon and Mud Puppy System costs $300,000 to manufacture and can attract nearly $600,000 in annual revenues. The company plans to have 6 to 10 systems operational by year end which have the capability to garner between $4 million to $6 million in yearly revenues, with gross margins of $1.6 million to $2.4 million. That is a pretty nice cushion. If, during 1998, the company only has 15 systems online, revenue could run to nearly $8.5 million with almost $3.5 million gross margins. And let?s not overlook Dragon?s five-year goal of capturing 1% to 2% of its $5 billion market, which would translate into $25 million to $50 million in annual revenue. Should Dragon grow this quickly, it would become one of America?s fastest-growing companies. Obviously, sand, grit, and sludge can be cause for excitement.
Depressed Stock Price. At 62½ a share, this looks to be a no-brainer. The twelve-month range is 31½ to $3.50; so, the stock is touching its low. For you bottom fishers, this looks like a steal.
We feel very comfortable with our one-year target of $2.25 to $3.00; and two-year target of $4.50 to $6.00.
For additional information, call the company at 800-726-0033; or CLICK HERE .
This report prepared by:
George T. Schlieben, Publisher
Global Penny Stocks
Box 372
Yardley, PA, 19067
pennystock.com
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