Ecosciences Inc (OTCMKTS:ECEZ) is starting to gain some traction at the small cap end of the market. The company currently trades for just shy of a dollar a share but, over the coming twelve months and rooted in a rebranding and refreshed marketing effort, could appreciate considerably beyond current levels.
Here’s what we’re looking at as supportive of that statement.
This one is a waste management company headquartered in New York. We’ll go into the product side of things in a little more detail shortly but, in a nutshell, Ecosciences develops and sells a tablet and a powder style product that helps to break down waste items in a variety of settings – septic tanks, car wash systems, portable sanitation facilities, all that sort of thing.
Users of these products drop a tablet or two in their waste collection system once every few months and, through a variety of proprietary mechanisms of action, it works to eliminate a host of problems generally associated with this sort of waste collection concept.
It’s not a particularly glamorous space to be in but it’s one in which there exists a large amount of unmet need and – by proxy – opportunity for the companies and shareholders that can meet these needs.
Which brings us to why we’re looking at this one as potentially poised to revalue near term. The company rebranded its commercial arm (which, in this instance, is the arm of the company that sells the bioremediation tablets outlined above) earlier this year (back in May) and it’s now working to drive sales of these products under the new moniker. The moniker in question is EcoNow and the product line we see as being the real near term growth driver is called OXY-TAB.
So where’s the growth coming from? Put simply, septic tanks. One in four American households relies on a septic tank as their primary form of waste management. These are underground (usually) tanks into which waste is pumped directly from the household and from which said waste is either filtered into the surrounding land (if it’s liquid) or pumped out by a waste removal company (if it’s solid).
This is a system that’s been in use for many years, but it brings with it a whole host of problems – waste buildup, clogs, odors, health concerns, etc. The OXY-TAB seeks to eliminate these problems by basically introducing billions of safe bacteria into the tank. The bacteria help to break down the waste, removes odors and makes the whole thing cleaner and safer than it otherwise would be without the product.
The thing with this sort of product is that it’s needed all over the US but unless someone has had an issue with their system (lots have, of course, but not everyone) there’s just not the degree of customer education in place to really drive mass adoption. With its rebranding, Ecosciences is working to change this and that’s why we like it right now. The company is attending all sorts of events and conferences to get the word direct to potential customers and – if the strategy pays off – this product could go from niche (we’re being a bit cynical with our use of the word niche here, but it’s far from mainstream yet) to a product used in 25% of the circa 125 million households in the US within a very short space of time.
Sales are low right now (between $5-10K quarterly) and that’s what we think is holding back market capitalization. Once sales pick up, the company should revalue to reflect a revenue boost and this one should really start moving.
Keep in mind that cash is pretty weak and there’s around $650K debt on the balance sheet, so we’re probably going to see a raise near term to fund the marketing push. This isn’t prohibitive to an exposure but – as many reading will already know – it’s got to be considered on the risk side of this sort of exposure.
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Image courtesy of Brennan Clark via Flickr
Disclosure: We have previously been compensated up to twenty thousand dollars by a third party Blue Diamond Ventures Inc for a two day awareness campaign regarding ECEZ. Insider Financial and its affiliates currently hold no shares of ECEZ. We have not been compensated for this article.