Having grabbed investors attention following the Deepwater Horizon oil spill disaster in the Gulf of Mexico earlier this year MOP Environmental Solutions, Inc. (Pink Sheets: MOPN) quickly saw its fortunes turn when they received a purchase order from BP, pushing their share price from 0.08 to a 52-week high of 0.35 on June 7, the first day of trading following that announcement. Since that time shares have continued to dip and MOPN is now back down to the 0.09 range, slightly lower than its 50-day moving average of 0.1053 but better than its 200-day moving average of 0.0675.
While a favorable opinion of MOPN was recently expressed by Larry Oakley, often referred to as the “Elder Statesman of Emerging Growth Investment Writers,” his insistence that potential investors view Mop Environmental “from the posture of someone who has two intents: (A) To realize the type of appreciation potential that you would have enjoyed if you had invested in Microsoft, for example, when it was just starting as a public company; & (B) To be a part of & a backer of a technology that has the probability to save countless birds & animals from the ravages of oil spills; clean up not only Earth’s atmosphere, but a great many aspects of our industrial facilities” might be a bit much.
That being said, there are certainly a number of attractive qualities presented by MOPN that could turn the stock into a financial reward for investors. The most attractive of these qualities is in the fact that their oil recovery products work and they that claim has been backed by a number of testimonials from BP, USA Fuel Service LLC and others. Not to be overlooked, the company also points out that “MOP sorbents are the only oil spill remediation products on the planet that are green from “cradle-to-cradle” being manufactured with green hydro-electric power, and all natural materials that are 100% Biodegradable and 100% Recycled.” When it comes to cleaning up an environmental disaster the “greener” the process the more likely it will be received well.
The increased demand for MOP Environmental Solutions products following the Gulf oil spill actually put the company in a position where they needed to secure financial services so that they may continue to fill orders. MOPN opted to secure Bibby Financial Services for that need and according to Diamond the move would allow them to offer “better terms to capture large orders from large customer accounts.”
One of those larger accounts appeared to have been landed as the company stated last month that “one of the world’s largest oil companies, whose name we are unable to disclose without violation of their press release disclosure terms, has accepted MOP Environmental Solutions, as a vendor, with issuance of vendor number, internal contact hot line, and the confirmation of its vendor status.” While details surrounding that oil company remain vague it certainly has Diamond excited as he has expressed supreme optimism for what lies ahead. The CEO said the company now anticipates orders for spill kits designed for oil cargo vessels and with U.S. Federal Regulations mandating all oil carrying vessels in U.S. Waters to carry oil spill cleanup equipment the financial benefit for MOPN could be significant.
This growth has led MOPN to form strategic alliances with a pair of companies that would make meeting the demands possible. The company has turned to Leigh Fibers to help produce the sorbent materials while Global Sales Co. has the production capacity for booms five times greater than MOP.
Adding to the value of MOPN is the fact their breakthrough absorbent material MOP (Maximum Oil Pickup) is patented and according to the company clean oil can be recovered from the oil-saturated sorbent, making it possible to extract, salvage, and re-use up to 95% of the absorbed oil. That oil is free from contamination and the remaining 5% MOP material can be burned to recover 100% of the available energy.
Topping off all the positives for MOPN is their posted financial statements back in late July in which they revealed they had over $90,000 in cash on hand and total assets nearing $250,000 for the period ending June 30, 2010. In the month that followed that June 30, 2010 statement MOPN said they had about $200,000 in available cash and accounts receivable of over $165,000.
Despite all of the positive aspects of MOP Environmental Solutions the company’s stock remains in the 0.08-0.10 range and that should raise some red flags.
What MOPN appears to be lacking is any kind of presence in the consumer market. The company has insisted MOP is ideal for absorbing everything from gasoline, diesel fuel, motor oil and viscosity enhancers to jet fuel, ethyl alcohol and methyl ethyl and can be used in oil and gas production, petroleum transportation, gas transmission, health care facilities, rail transportation, service stations, airports and “many other industrial and service applications” yet it hasn’t found itself on the shelves of a major store.
Failing to reach the direct to consumer and the commercial industrial markets could have devastating effects on the company and it is difficult to see how the company is addressing the issue.
Much was being made about the opinion of Oakley and while he stated “the long-term benefits I see are amazing” and the product could “practically save this planet for our children’s children” there remains plenty of doubt in the minds of many investors. Oakley does mention that his opinion piece on MOP was without cost to the company but that he was “sufficiently impressed to invite Charles Diamond to have his company come aboard as a client” on his site. Naturally Diamond agreed and Oakley will now be preparing a Research Report in the next two weeks, a service that dos come with a charge.
While landing orders for emergency response projects and government deals will get MOPN some attention the company will need to rely on the consumer and commercial industrial markets to generate their financial rewards. If they are honest in their efforts to grow their products this could be a great time to investigate the stock but failing to take off following the BP oil disaster could be an ominous sign as they may not ever see a better opportunity to prove their products worth.
MOPN is a penny stock traded on the Pink Sheets. Penny stocks are shares of public companies that trade below $5 per share.
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