This press release on the $5 million financing is, imo, very significant for a small company like STWS. According to the PR, this financing is a “ WIP “ (work in progress) financing package that involves NO equity component. In other words, no dilution. And, there is not debt service--meaning no interest to be paid.
I checked to see what a "family office is.
"A family office or single family office (SFO) is a private company that manages investments and trusts for a single family. The company's financial capital is the family's own wealth, often accumulated over many family generations."
Reference: en.wikipedia.org/wiki/Family_office
So it looks like that a Family Office has partnered with the company and is providing capital for a small percentage of the NET PROFIT. So, STWS gives the Family Office a cut of the net income of the projects--probably 10-15%. (BTW--can you IMAGINE the level of due diligence that is required before a Family Office decides to put the family money into an investment? Talk about pressure for the money manager/ family members deciding Yes or No on a potential investment.)
Lets say that a typical water project is around $3 million with a profit margin of around 30%. The customer/project are municipalities that have taxing authority, so you do not have to worry about a customer not being able to pay STWS. Let's assume the profit is $900K and the company gives up, say 15% to the WIP participant ($135K). The company retains the $ 765,000 profit for just one of the nine projects mention. Do the math, and you can see why this is a big Plus for STWS.
IMO, the current low price is because of the lack of news on contracts. But with this financing, it sounds like we are, at the minimum, going to see nine Press releases on the nine projects. And that is without factoring in the pipeline maintenance contracts and desalinization contract potential.
All in all, I am pretty excited about the near term future potential here. $0.61 will look like a gift in thirty days.
AI
