H2O Industries
Company Summary
H20 Industries took over a customer base and a small quantity of assets from a predecessor company. By moving to a new location with more space, and by designing an efficient productive capability, H20 Industries will be ready to aggressively penetrate the growing market for portable DI exchange by October 1999.
2.1 Company Ownership
H20 Industries was established in October 1998 through the purchase of the assets of Commercial Waters Systems, Inc. (CWSI). CWSI was an under-capitalized, cash flow-starved DI exchange tank service provider. Three hundred sixty of the shares of H20 Industries are owned by David R. Smith, vice president sales and applications of PROSYS, a large manufacturer and system designer of water treatment equipment. Five hundred sixty of the shares are owned by John Jones who is regional sales manager for DUFF. The remaining 200 shares are currently held by the daughter of the seller, but are expected to soon be transferred to the new owners.
Additional investors have expressed a willingness to invest. This would help bring in needed administrative expertise, while also increasing the equity base.
2.2 Start-up Summary
Assets of a former operating company were bought out and customers of the former company continue to be serviced by the purchasing company, H20 Industries, partly from continuing operations and partly from farming regeneration work out. However, this plan is being written as a start-up primarily because there are no reliable financial figures for prior years for comparison purposes, and partly because of the move to new facilities and the sizable investment in new plant and equipment involved. Due to certain misrepresentations by the seller, the agreed sales price is under protest. It is expected that the matter will be satisfactorily resolved by payment of a much reduced amount.
The chart and table below summarize the start-up requirements for H20 Industries.
| Start-up | |
| Requirements | |
| Start-up Expenses | |
| Legal | $10,000 |
| Stationery etc. | $850 |
| Brochures | $6,500 |
| Consultants | $5,000 |
| Insurance | $0 |
| Rent | $0 |
| Research and Development | $0 |
| Expensed Equipment | $0 |
| Other | $0 |
| Total Start-up Expenses | $22,350 |
| Start-up Assets | |
| Cash Required | $124,223 |
| Start-up Inventory | $10,000 |
| Other Current Assets | $90,000 |
| Long-term Assets | $220,000 |
| Total Assets | $444,223 |
| Total Requirements | $466,573 |
| Start-up Funding | |
| Start-up Expenses to Fund | $22,350 |
| Start-up Assets to Fund | $444,223 |
| Total Funding Required | $466,573 |
| Assets | |
| Non-cash Assets from Start-up | $320,000 |
| Cash Requirements from Start-up | $124,223 |
| Additional Cash Raised | $0 |
| Cash Balance on Starting Date | $124,223 |
| Total Assets | $444,223 |
| Liabilities and Capital | |
| Liabilities | |
| Current Borrowing | $21,354 |
| Long-term Liabilities | $180,000 |
| Accounts Payable (Outstanding Bills) | $61,409 |
| Other Current Liabilities (interest-free) | $16,810 |
| Total Liabilities | $279,573 |
| Capital | |
| Planned Investment | |
| Jim Hunt | $56,000 |
| Mike Pacek | $36,000 |
| New Investors | $75,000 |
| Other | $20,000 |
| Additional Investment Requirement | $0 |
| Total Planned Investment | $187,000 |
| Loss at Start-up (Start-up Expenses) | ($22,350) |
| Total Capital | $164,650 |
| Total Capital and Liabilities | $444,223 |
| Total Funding | $466,573 |
2.3 Company Locations and Facilities
The facilities are located in a rented building on an industrial estate in Newark, California.
A description of the technology involved in the production can be found in section 3.5 (Technology). The following is a description of the production layout.
- City water is fed into the building and goes directly to a carbon filter tank to remove organic materials and chlorine.
- A centrifugal pump is installed, in the unlikely event that city water pressure falls below 40 pounds per square inch (psi).
- A hot water boiler is provided to supply hot water (100 degrees F) from part of the incoming city water. This water is needed for anion treatment due to the specific gravity of the caustic material.
- The heated water then passes through a cation and an anion filter tank.
- The deionized hot water goes to the caustic tank where it mixes with the caustic material used to regenerate at the anion pad.
- Part of the unheated incoming city water is deionized by passage through similar cation and anion tanks. These tanks, as well as the tanks deionizing the heated in-coming water, are regenerated automatically at night when production is shut down.
- Water, not H20 Industries, is used at the spent tank staging area to empty the incoming tanks into the separation cones, and more water (H20 Industries) goes to the cation regeneration pad for use in adduction as well as flushing of the regenerate.
- The rinse water, as well as the acid and caustic solutions, now pass into an 8,000-gallon blue tank where, with the help of compressed air for mixing, neutralization takes place to obtain the allowed Ph level.
- A 500-gallon neutralization tank and a 250-gallon polishing tank are provided prior to disposal of the waste water into the city sewer system.
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