Freshwater Moves Forward into 2009 Full-Sail
Freshwater Technologies Inc. [[FWTC.OB]] may not be the most well-known water treatment company in the market, but its unique technologies are certainly set to make some big waves. The Canadian company’s water activation technology removes scale or mineral build-up in an industry that spends some $25 to $30 billion a year on chemicals to do the same job. The company also produces a line of UV-based water purification tools for consumers.
Freshwater Technologies acquired non-exclusive distribution rights to the activated water system. The system works by using the flow of water in industrial and commercial heating and cooling systems to move ceramic balls inside the device in order to generate several forms of electrical energy without the use of any chemicals. The result is a change in the physical properties of the water that removes scale, rust, and corrosion in heating and cooling systems.
The encrustation caused by calcium and other minerals in the water increases energy costs too. Scale in industrial systems has a negative effect on the heat exchange coefficient and on the head loss and flow rate in hydraulic systems. As a result, energy consumption increases as more energy is needed to obtain the same results. In fact, 1mm of scale causes an 8 percent increase in total energy use – and that can be avoided with Freshwater Technologies’ systems. Considering that process heating accounts for 38 percent of all energy consumption in the manufacturing sector, this is a clear problem that needs to be addressed immediately.
In addition to this technology, Freshwater Technologies also offers a line of UV-based drinking water purification solutions. The company is a distributor for R-Can Environmental’s line of ultraviolet disinfection systems. The technology has received NSF Standard 55A certification, which means that it can provide safe drinking water from sources that may contain bacteria, viruses and parasites. Moreover, it can clean up to 1,000 gallons per minute.
Freshwater Technologies has built up an impressive distribution network through which it sells these technologies. The company’s expanded distribution network in six countries focuses on companies who are in the heating and cooling business, who have an existing customer base, and whose products are ideally suited to the benefits of water activation technology. Meanwhile, fresh regulatory concerns have been driving sales of these new technologies.
Despite Freshwater Technologies’ interesting product lines and distribution network, there are several risks associated with its business. The largest concern is the fact that it operates as a non-exclusive distributor, which means that it the same products could be sold by another company. The company also continues to operate at a net loss, with a $195,813 loss reported for the full-year 2008. Meanwhile, revenues have been slow with only $1,626 reported in 2008.
In the end, Freshwater Technology is a development stage company with some promising new technologies and distribution agreements under its belt. However, the company has yet to report substantial revenues and faces some key hurdles, which means that prudent investors may want to wait on the sidelines until the picture becomes clearer.
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