Jeff, I wrote you some e-mail not long ago with a few questions about Environmental Digital Services. I really appreciated your quick and thorough responses. I have thought of a couple of additional questions that I was hoping you wouldn't mind looking at. (If you do mind, please feel free to stop right here - no problem!)
(1) How do the company's prospects for sustaining long-term revenue
streams appear? Here's my concern spelled out:
First, since most of our attention is focused on the imminent introduction to market of the CAPSCAN, it seems that much of the company's near-term future will be based upon this product. It is my understanding that EPA requirements will force all UST owners to have their tanks up-to-standard by the end of this year. Although this makes it appear that the time is perfect to introduce the CAPSCAN, do you think many USTs have already been equipped with the necessary monitoring devices since year-end is quickly approaching, i.e. is the CAPSCAN coming on the scene just a bit too late?
Second, after year-end when the new EPA regulations go into effect, how much market will there be for the CAPSCAN? I assume not all UST owners will come up-to-standard by the deadline, so there will be some leaking into 1999, but what are the longer-term prospects for the CAPSCAN, at least as a UST monitoring device? (I'm guessing that the inventory monitoring and reporting features will be strong enough benefits to encourage many UST owners to spring for the measly $2150 even if they have other monitoring devices already present - I just want to hear your opinion!)
The EPA's intent is certainly to get all these UST owners compliant by December 22nd. I don't think it will happen. This is extremely expensive. Check out some of the numbers at this web site.
Estimated cost to replace USTs:
If you are replacing your existing 3-tank facility with 3 new USTs and piping you can estimate an approximate cost range of between $60,000 and $150,000+ depending on tank sizes and locations (includes closing the existing USTs and putting in new USTs), this is assuming no cleanup is needed. Replacement would also involve about 2-3 weeks for construction resulting in interruption of business and no petroleum sales:
schoellmadson.com
Ok so what are we talking about in terms of compliance? To be in compliance, underground storage tanks must have corrosion protection on the tank and piping, a method of leak detection, catch basins to contain spills from delivery hoses, and overfill protection such as an automatic shutoff device.
cbia.com
EPA rules are the same nationwide but rules vary from state to state. The average steel tank is supposed to be replaced every 10 years because there is no realistic long term corrosion protection. It's unfortunate but I believe many UST owners will try to say their tanks are not over ten years old even if they are. The point I'm trying to make is that not all these tanks will be in compliance. Even new tanks with the double walled fiberglass construction that ColleenB described for us will eventually leak.
The CAPSCAN is a great idea at any point in time because even new tanks have to be monitored.
In October 1984, the Resources, Conservation and Recovery Act (RCRA) was passed as an extension to the Groundwater Acts of 1976 and 1982. Loosely explained, all underground storage owner operators who have fuel tanks of 1,100 gallons or more must:
1. Keep accurate daily inventory records.
2. Make the daily records available for at least 5 years.
3. File types of tanks, their age and other criteria with State and Federal EPA.
4. Have insurance in place to cover the requirements of the EPA financial responsibility laws.
Ask yourself this question. Have you noticed your local service station being closed lately while their USTs were brought into compliance? Personally I've noticed a few new stations going in but exactly how are even these new service stations keeping inventory records? Texaco tested the CAPSCAN at it's regional headquarters in Kirkland Washington. They have Veeder Root Systems in place to monitor leaks and to help keep their inventory records. In my investor booklet it is clearly spelled out that this system does not meet up to the EPA's strident monitoring rules. The CAPSCAN should sell and sell well because it goes beyond the EPA's expectations and it does it for a reasonable cost.
(2) Following upon my last point, is EVDS touting the automated inventory monitoring and reporting capabilities of the CAPSCAN, or are they focusing primarily upon the leak-detection and other EPA-related features in their marketing and trade show efforts? I'd hate to see such a nifty product be overlooked by the market because some of its features were overshadowed by a single, perhaps short-term benefit (the EPA-related leak detection and monitoring functions).
Lets look at some of the benefits of the CAPSCAN to a service station UST owner. It's an inexpensive, highly accurate, electronic measuring and monitoring device. It is an underground security system(if someone syphons off your fuel you will know). It allows for computerized data reporting. It's state of the art, affordable, and because service stations will not suffer short deliveries anymore it will actually be profitable for a service station to install the CAPSCAN. In addition the CAPSCAN provides service stations with a far more accurate method of inventory control than they might ever have thought possible while exceeding EPA requirements. It will monitor the tanks and reads both fuel and water levels. Using the hand held computer and a reverse 1-800 number the CAPSCAN will provide service station owner/operators with statistical inventory analysis and electronic data reporting.
How about the mandatory $1 million Environmental Impairment Liability insurance that UST owners must have? Because of the CAPSCAN and EVDS's insurance connections the company can offer risk management at discounted rates that will prequalify UST owners for a discount on their insurance so they can meet state and federal requirement conformity.
(3) I've read generally good comments about the feedback EVDS is receiving at the trade shows, but do you have any additional details or hard numbers that would give an indication of where in the range of projections the numbers of orders EVDS is taking for the CAPSCAN fall?
I cannot give you any hard numbers because these are simply pre sales but if all the CAPSCAN were ordered that have been presold the company has already sold all they need to meet estimates for this year and half of next.
(4) Looking ahead, are you aware of EVDS' plans for the future?
Basically, what do they plan to do with all of the cash the CAPSCAN is going to generate? ;-)
They are looking to expand into the home heating oil UST market. They also have some other plans for this device in other industries that I have yet to ascertain. As far as the cash goes that they will generate I can't specifically answer that question but I think they will be looking for responsible ways to grow the business.
I've been following the company, SI thread, and stock price closely since I first e-mailed you with questions and I'm feeling very confident about everything I've seen. I'm planning to buy in pretty soon and hang on for the ride! Any idea where the company stands in its plans to move onto the NASDAQ?
The company knows they have to be fully reporting by year end. They have plans to meet the various NASDAQ requirements by that time. Obviously I can't guarantee that will happen.
One last question, not to sound greedy, but certainly excited: (OK, this turned into a few questions... :-)
- I don't have much experience with companies in this market/industry - how big do you think the company's niche is/can be?
All the company's earnings projections are based on a penetration of a mere 10% of the United States UST market.
- Is EVDS' business and products of the sort that might make eventually make the company the target of a takeover? I'd hate to see a blooming EVDS gobbled up before it could blossom.
Any company with a potentially great product in early stages of development could be an acquisition candidate. However I think we will see EVDS remain a separate entity from even the largest major oil companies with which it should be dealing. I am hoping we see the advisory board filled with executives from several potential customers like Mr. James Bartel, formerly Texaco General Manager, International Marine, as well as Texaco's senior representative to Aramco, has agreed to be the first member of the Board, as well as serving as its Chairman:
biz.yahoo.com
- How far do you think the company's current business and market could take its stock price up? Is EVDS in the type of business that will attract investors' attention or will it just perpetually float about a narrow trading range despite positive results?
Oh the stock price will move higher. Probably very soon because the web site will open, volume will pick up and good news is certain to be released. Check the thread header for some price expectations based on the Communications Capital Report:
Subject 22787
This last question is just me after the personal opinion of an EVDS
investor (that's you). I don't expect crystal ball predictions or anything and please be reassured that I'm certainly not basing my decision to invest on your response. I'm just curious about the opinion of someone else who seems to have more experience and insight into this particular company and market.
The stock closed today at .81250 up a bit but still in the trading range. Volume is picking up.
quote.yahoo.com
Check out the chart and imagine what will happen on a 500,000 share day due to good news:
bigcharts.com
Whenever I get a company with earnings(which I believe EVDS will have soon) I apply my own personal rule. I call it the rule of 10. If EVDS can show enough sales to make the 6 cents they are estimating then 10 times that amount would be a share price of $3.60. Keep in mind that earnings and revenues should grow very rapidly and therefore the P/E could get much higher.
Well, I do apologize for such a long e-mail and list of questions. I hope I'm not being presumptuous in sending my questions to you. If you haven't the time or inclination to respond, I will completely understand. Please feel free to post any or all of my e-mail to the SI thread if you think it would be helpful to others looking into EVDS.
Thank you very much for your time Jeff! I hope we will all be sharing in the rewards of investing in such a promising company soon!
Hey you might have a hard time believing this but I appreciate your questions. I love doing just what I am doing now. Researching a company and sharing my knowledge is a blast for me. Lets just hope all our expectations are exceeded for EVDS and it's shareholders.
Interested investors should call the company for further information:
Contact: Jim Crehan (Chairman)
2700 Donald Ross Road
Palm Beach Gardens, Fl 33410
(561) 630-8009
Fax (561) 630-0150
OTC BB: EVDS
InvestRight
Regards, Jeff
|
