Green Investing
-- A Close-up Look at IET

by Gregory Allen Butler

Companies that outperform on the environment, outperform financially. And for me, green investing, at least in one particular company, has never been sweeter. After all, how many companies can you walk into, tell a staffer you are a shareholder, and get a personalized 90-minute tour by the President and Vice President. That's what happened to me this week when I visited Integrated Environmental Technologies , Ltd.. I guess they just can't contain their enthusiasm for what they do. What a great pleasure it was to spend time with business people who are inspired.

And they have a lot to be inspired about. IET is the manufacturer of a machine that makes a huge beneficial impact on the environment. It's called EcaFlo®. The machine simultaneously produces two non-toxic solutions from tap water and a small quantity of table salt with applications for washing fruits and vegetables, cleaning storm run-off water that pollutes beaches, killing anthrax, E-Coli, removing bacteria from well water and disinfecting hard surfaces and food processing equipment. It's also making headlines now in the oilfield services industry for use in controlling bacteria that can adversely affect oil and gas production.

The two solutions that the machine produces are catholyte and anolyte. Catholyte is an anti-oxidizing, "green," solution used as a degreaser or detergent. Anolyte is a biocide and is a broad spectrum , non-hazardous, neutral pH, "natural" germicidal agent used to kill all types of bacteria, fungi and microorganisms.

The volume and price of the company's stock (IEVM) is rising sharply. Green investing is paying off once again.

The market value of their stock has tripled over the last few weeks, spurred by the news of a new sales contract with Benchmark Energy Products. Benchmark is one of the world's leading suppliers of specialty chemicals for the oil well pressure pumping services industry. They bought IET's EcaFlo® equipment in order to produce biocidal solutions that will successfully manage bacterial down-hold and in "frac" water, without the use of hazardous chemicals. But that is just the beginning. Both companies see many more applications for EcaFlo® fluids throughout the industry.

Benchmark isn't alone in its enthusiasm. The U.S. Department of Agriculture has approved its use in federally inspected meat, poultry and egg product plants. The U.S. Food and Drug Administration (FDA) approved its use in meatpacking and processing plants as a replacement for chlorine solutions. The FDA also approved its use in Dentistry. The U.S. Marine Corps states that the EcaFlo® Anolyte solutions are highly effective biocidal agents with a neutral pH that are safe for eyes, wounds and skin.

My visit started off with Larry Jones, Senior Vice President, giving me a tour of the 14,000 square foot production facility, showing me the equipment, and explaining to me how everything works, and answering my questions. And then we were joined by William Prince, President and CEO. He shared with me about the history of the company and what the future holds. Both of these gentlemen are truly inspired by what they are doing.

It seems that the demand for the EcaFlo® machine is greater than the production supply. They are in the midst of increasing production and staff. I asked Mr. Jones how many of these machines they manufacture a month. "Well, right now we are producing probably three or four a month. But now that we have Benchmark and our Food and Safety guys, we are about to gear up so that we can produce a machine about every three days."

When the president of the company, William Prince came over to speak with me, I mentioned to him that it must have been a great feeling when the stock went up so high last week. He nodded his head and said, "It is. Some things that we have been working on for a long, long time started working out for us, and there are still a lot of subsequent steps to get through with that deal in which it just gets better."

Larry added, "What we announced last week was essentially that Benchmark has placed an order for six machines (at a price of $300,000). That's the beginning of what our relationship is about to become."

I asked about the use of their technology in cleaning up polluted beaches. They both said the same words at the same time, "Not yet."

Mr. Jones continued, "It's a storm water thing. The economy here (Myrtle Beach) is a tourist economy. And it's very disheartening for people who have shelled out $1500 to spend a week here in the summer, they may have already bought the timeshare, and then all of a sudden the signs go up on the beach warning swimmers to stay out of the water. That's not a good thing.

"We've done some preliminary research through Coastal Carolina University that shows we can in fact mitigate the storm water bacteria. If we can mitigate those then we can pretty much keep the bacteria levels below the threshold which the South Carolina Department of Health and Environmental Control stipulates as unsafe for swimming. So the potential for treating storm water is very, very large. In fact we are continuing to work with some folks to get a program underway with the city of Myrtle Beach that will address that."

Mr. Prince added, "One of the things that actually got us here was the storm water issue, the city of Myrtle Beach and the state of South Carolina, wanting us to be here and to work with that problem. It took us a while to get to the point where we can produce the volume of solution necessary to do it. We know we can treat it. We're teaming with the city and looking at the various EPA grants and so forth to accomplish that.

"But heading down the road now, along with the oil and gas industry is food safety, with all the applications for fruits and vegetables and meats. That market is being pushed towards us as well with the mandates to eliminate the hypochlorite residues that we all eat everyday, the residues that are left on the foods that are treated with chlorine today. We can eliminate all of that and provide a much, much healthier product, much more free of bacteria, and we don't have any of the hypochlorite residues left. The hypochlorous acid and the anolyte solution are non-detectable. So that's a huge market for us. We all get excited about oil and gas right now, but the other markets dwarf the oil and gas market.

I asked again about the beach cleanup applications and if that would be a big market. Mr. Prince said, "We're trying to put our arms around just how large that will be. We know that we have four other major, major resort areas watching and wanting this Myrtle Beach project to move forward because they want to see the results of it. Areas such as Daytona and Miami have the same issues. The entire coast has the same issues. Houston - there is a great deal of interest there. Even the Great Lakes area. This is a natural remedy to clean up a natural problem. To define that in dollars, it's well beyond what we can imagine right now."

"While we are extremely encouraged and excited about the fact that EcaFlo is a green technology and all the nice things it does for our environment we've learned that out in the market place, that no matter how good a technology is, how green it is, how much good it does for our environment, we like to think and assume that everyone is going to want to use that, but the lesson we've learned is generally speaking, environmental stewardship is something very popular to talk about and to claim to be on the side of that. In reality, people are simply resistant to change. If all things are equal in cost, do you use this product that is harmful or this product which is helpful - they've been using the harmful one for 20 years. The one that is helpful is new. And if they cost the very same thing, they're going to stay with the old one because it's too big of a paradigm shift for them.

"So what we had to do was rethink, re-gauge, and then move towards markets where we had to show that not only was this a better product -- this was the green product - but it outperformed the other one by giant strides both technologically and more important, not only was it cost effective, but it was cost efficient. In other words, if the user could figure out how to make more money by using the green product, then they use it. That's how we're in the oil and gas industry. Simply put, that's why we're there."

Mr. Jones added, "People talk a good game about wanting to be green, as long as it doesn't cost any more."

"That's the reality of the world we're in," said Mr. Prince. "Realistically, as Larry explained earlier, our natural environment is obviously being damaged each day, every time we have another housing development, or commercial development, we have more impervious surfaces and more stuff is running off quicker. And it gets into our waterways. We know that happens. But we simply can't stop it. We can't forbid people to live where they live. That's the good side of living in this country. The downside is that this creates more problems environmentally. Would we all want to fix it? Yeah! Once again, it's back to yes we want to fix it as long as it doesn't cost me anything. It's the cost and effect. If that margin is such that the effect is much, much larger than the cost, then we're ready to go for it. That's the whole position now and the reason we're ready to move forward with this storm water opportunity. It's really an economic issue. The tourism driven economy of a coastal resort community is all about the dollar."

I asked if there were any other solutions that could clean it up. "None," he said.

"So you have a monopoly," I said.

"Yeah, we do," Mr. Prince replied.

Mr. Jones added, "There are plenty of solutions that could do it, but not safely. If you're going to clean up storm water, it's gotta be OK for kids to swim in. Monopoly? Perhaps. Unique? Yeah! Very much so. The city of Myrtle Beach is real interested because it is green. They cannot only talk about the improved environment in which the tourists can come down here and enjoy themselves, but they're doing it the green way."

Mr. Prince added, "Actually, it is the only solution. There are other ways to kill bacteria, but that's not a solution to the storm water issue. The storm water issue has to be environmentally green. If you're looking at processed water for the treatment of foods, there are other things you can use, that are being used today that solve the problem without the residues. But with the storm water issue, there is no other way.

"We had a hard time for a while defining who the competition was. And actually we come back to the fact that the competition is the chemical companies. Now we're learning that the chemical companies are seeing that maybe they need to be aligned with us instead of against us. While we're still very, very small, we're beginning to get their attention because this is a product that will replace a considerable number of chemicals that are being used in the market place today. It works more effectively, and even more cost efficiently. That becomes a threat."

I asked them if they are so excited that they can't sleep. Larry said there was a lot of that going on. "I think we decided that Bill is getting less sleep than any of us. It's between Bill and Marion. (Marion Sofield is Director and Vice President of Operations - interesting side note is that Ms. Sofield was honored in Washington, D.C. in 2003 as the Business Person of the Year by the United States of America's Business Advisory Council.)

"We've come a long way and we have to give credit where credit is due and Bill and Marion have positioned us extremely well."

"Two years ago," Mr. Prince said, "I declared that we would never use the term "water purification" again as long as we lived. That is such a confusing two words. We don't purify water. We make a solution that can help to do that. We don't filter water. There is a lot of confusion, people thinking we are another home water filtration company. That isn't the case at all. We make machines that use electro-chemical activation to convert ordinary tap water into a natural biocide.

"There is another market that we didn't even mention. And that is potable water. For the drinking water supply in this country right now the number one treatment is chlorine. We taste it in our water everyday. In every municipal system you taste it. You can't get away from it."

With hundreds of possibilities, they are trying to focus on a few things and do them well.

"We're not using scare tactics, but if folks were using these solutions, we wouldn't have had the e-coli outbreaks and the problems associated with that. This eliminates it. E-coli is hardly even a challenge for it. It eliminates it on contact."

I asked it they work closely with the USDA. "Yes," Bill said. "We're finishing up on one grant and now we're moving into phase two of that grant. Everything to date has been very successfully accomplished and the USDA is anxious to see us get into that second phase."

I asked if they have gotten into the animal waste market. "We can, but we haven't gone there yet." said Mr. Prince. "Right now we want to focus on selling our machines and solutions into areas that are already believers. We'll always have a new market place out there."

"That's exciting," I said.

Mr. Jones said, "It's a pretty exciting time."

Mr. Prince added, "It's been kind of fun to watch the market cap go from four million to 12 million in three weeks. And the volume of news!

"The one announcement with Benchmark provides legitimacy for us. Those who recognized the potential early on are now beginning to see that the potential is very legitimate."

Very legitimate, indeed, I'd say. And another reason to love green investing.