Howdy Gang!!
I took some time out of my day and studied the articles being carried in Wall St. Corporate Reporter. I then called the publisher, John O'Hanlon, and asked for permission to copy and send it out to my fellow shareholders. Mr. O'Hanlon gratiously granted it, and welcomes all interested parties to investigate his magazine. His number is 717-296-2371, and fax 717-296-8519. I must say that his magazine is extremely well laid out and contains a number of companies that I have heard mentioned to me by professional brokers. Mr. O'Hanlon has targeted individual investors like ourselves as well as Wall St. brokerages for his subscription market.
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(Headline) OUR WHOLE FUTURE IS IN FRONT OF US
William D. Carraway, Chairman, President & CEO
Interviewed by Richard Franklin, Senior Editor.
Background on Business and Finance:
"I started out with the federal reserve bank, spent a couple of years with them straight out of college, then went with Hospital Affiliates, which was based in Nashville, Tennessee, in their financial area. I spent 15 years with them, moving up through the corporate ranks. They were a billion dollas New York Stock Exchange company which eventually went private and was acquired by Aetna. Upon leaving them I just became, more or less, a private investor investing in various companies over a period of years. Got involved in some real estate development, as well, and always leaned back toward a corporate structured entity. I started Green Oasis in '91 wiht an initial capital infusion on an idea, and that's where we've come from there to the present".
Green Oasis' position in the marketplace?
"We believe our position in the marketplace is strong. We have a patent pending on the process, still after two and a half years, but we are not aware of any competition that's anywhere related to our product. We have a single product. It is a mini-refinery for the conversion of waste motor oil or waste fuels and motor oil, primarily to diesel fuel and #3 heating oil."
Excellent growth potential
"Currently, when we initially started the company we envisioned ourselves as purely a manufacturer of equipment. Realizing shortly thereafter that the true profitability in this is not just in the manufacturing of equipment but processing of waste oil. The waste oil business is very much like the trash business was 20 years ago before the big players got in."
"It a very fragmented industry, not consolidated in any way. There's roughly 800 waste oil collectors in the US. Most of them are Mom and Pop type operations with no exit strategy whatsoever, nor does anyone want to acquire a dirty old waste oil highly regulated industry. So we see just a niche opportunity for us to acquire in the United States waste oil collectors, one of which we have under contract and we will put our own equipment in US operations and expand as an operator. Likewise, we will concentrate on marketing the equipment for sale with a royalty overseas."
We've had tremendous interest in Europe and Asia, and all through Latin America, Australia. Everybody has a universal problem of what to do with waste motor oil, and outside the United States diesel fuel is quite a premium priced fuel. So we see the company growing in the United States throught acquisitions and putting our own equipment in and off-shore by selling equipment and retaining a royalty stream."
Expanding overseas
"We've just begun an operation overseas. We're looking to do one project in Latin America that will involve several petroleum companies and we're looking to do a project in Europe with Georgian Petroleum in the State of Georgia."
Unique process equals competitive edge
"Our competitive edge is there is no one else that's adressing how to clean up waste motor oil with some type of a simple process. Everbody else is trying to get it back to motor oil, and just generally, worldwide, that is rejected. People who don't change their oil any more, they get it done at the Jiffy Lube and they're not going somewhere and buying recycled motor oil to put into their $50,000 car. Also all of the quick change operations are primarily owned by oil companies, therefore, they're pushing a new product, which is a natural part of refinement, so they don't want to see this product again.
"The reason the oil companies are not interested in waste oil is, they're sizing down their refineries or consolidating their refineries, transportation costs are prohibitive to move waste motor oil back to a refinery to try to do something with it. So these little pocket refinery operations that we can put into major regional areas, work and work within the system that's already established."
Conservative Growth Plans
"Five years from now our business plan calls for us to be producing about 12 units a year. So five from now we'd have roughly 60 units out there. That's keeping it on a very conservative basis. Putting part of those units in the United States in our own operations and selling part of them off-shore."
The future customer
"The only thing I see that could materially change is that off-shore there are much more strenuous regulations than those in the United States. The oil companies are being dictated to. In Australia they have to reclaim 'X'% of the motor oil they sell to be able to sell the equivalent amount next year or their quota gets reduced. I see what's going to happen to us over a few years is that we are going to be doing more and more business with the major oil companies. This is the situation that we're looking at in Lima, Peru, where we're doing business with Shell and Mobil. I think we will do more business with the major oil companies and possibly at some point in the future they'll simply acquire this company."
Sales and marketing
"We do sales and marketing on a very linited basis. Our demand right now is so far ahead of our ability to build that what we have been doing is using basically agents that are astute in different foreign markets, Asia, Europe, Latin America, and letting those people primarily handle the marketing effort for us. Again, in the United States we are attempting to not sell units but to acquire collectors and put our own plants in operation.
In the future, overseas one of two things will happen. We will either be active with an agent, one in Europe, one in Asia, and we'll handle Latin America out of here. Or we will enter into some kind of universal agreement with somebody in a European-based bompany or an Asian-based company to distribute the product or enter into some other form of agreement which might even be one where they manufacture as well. That will solve our current problem of the inability to build at the rate of the demand."
Future spending
"We're not a very capital intense company. What we're doing is basically reinvesting all of our profits back into the company at this stage. Trying to not become capital intensive, structuring with the people who are ordering units to make progress payments to us so that we do not have to go out and raise additional money simply to manufacture. So far, we've been relatively successful with that approach and also getting the acceptance of letters of credit by foreign investors honored by banks so we could draw against them. So we're going to keep our capital spending in the future as low as possible until our stock is at a much higher level than it currently is.
"Our R&D budget is about a half a million dollars for this year. I think our spending will remain pretty consistent. We now consider ourselves 99% efficient in the original operation of converting waste motor oil to diesel fuel. We're now going to look to see what other kind of things that are potentially possible by design changes that we could. implement (sic). This is purely a distillation process in the petroleum industry and by making modifications to that what other products could we distill or what other products could we receive by changing the existing system to make possibly a more profitable end product than even diesel fuel, like NAPA."
Hiring needs
"We've recently hired a very heavy chemical engineer with enormous petroleum experience to pretty much handle everything in the R&D side and to manage folks, the younger Chemical Engineers that go out to the field, install the units, and train them. We're also adding a financial guy who has considerable strengths in lease financing since most of our customers require some type of financing including even overseas financing throug the development bank. In addition we will be adding the typical manufacturing employees; electricians and pipe fitters and welders.
Blessed with strong margins
"Fortunately we are kind of blessed. We have a piece of equipment on which our manufacturing profit margin is very good and at the same time from the customer standpoint
the return on investment is less than 30 months. In the case of waste motor oil and the refining side or the processing side our profit margin in today's climate, which is diesel fuel, rack price of $0.55, we've got $0.25 a gallon profit. So it's the first business that I've ever been involved in that had margins that were so tremendous that when the market fluctuated the company did not have to change its whole business plan, its whole mode of operations because its profit margins were so thin. No matter what seems to happen to us our margins remain extremely strong."
Looking forward ten years
"I think we can effectively consolidate a portion of this very, very fragmented industry that needs to be consolidated; needs a corporate mentality to deal with the regulations of the industry; and in doing so I think we will build a very strong profitable very high cash flow oriented company. It is a temporary niche market. It is a cash cow situation as it's presently situated, and I see us being a take over target for one of the major petroleum industries within the next five years because Green Oasis Environmental offers two solutions, an environmental solution to a product they create, and a very profitable acquisition."
Key thought
"We're a small company, and so we have to continually prove ourselves day in and day our, prove that we can be successful in this niche market. That we totally understand this side of the petroleum industry. That we can communicate that not only to the customer but to the consumer that buys the fuel, that this fuel is better fuel than the diesel fuel that he's getting from one of the major petroleum companies because it was a better feedstock, highly refined, $5 gallon, and now all of the sudden 3,000 miles later, we say its trash."
Reasons to Invest in Green Oasis
"We are a growth company. We have just turned the corner where our whole future is in front of us. All the tough times are behind us. We've been totally in the development stage for three year and a half to four years, $5 million worth of losses to come to a marketable product. We've come to market. We've successfully made a small profit in 1995 and I think our future is in front of us and our stocks multiple is not even recognized with our 1995 earnings. We simply don't have the level of exposure yet. Once we have that exposure I think we will have a lot of investor interest in this stock. Not only because it's an environmental company but purely on the hard economic basis of return on investment."
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Finally, Bill has had the website updated to include extensive technical data on the EnvironEconomics (tm) process. Check out
greenoasis.com
and scroll toward the bottom of the page and click on technical information.
Regards,
Ron
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