In mid-July, Sphere 3D (NASDAQ: ANY) announced that it would be acquiring Rainmaker Worldwide Inc. (OTC: RAKR) (“Rainmaker”). Once the acquisition is complete, the company will change its name to Rainmaker Worldwide Inc. and apply for a change to its trading symbol from ANY to RAIN.
This is a massive move that changes the game for all involved.
Why This Transaction Changes The Game
Sphere 3D is a tech company with a focus on cloud solutions for containerization, virtualization, and data management solutions. However, the acquisition of Rainmaker will change this focus in a big way.
Rainmaker is a leading Water-as-a-Service (WaaS) provider working to solve one of the world’s largest issues — access to clean, potable water. Deploying their innovative Air-to-Water and Water-to-Water technologies directly to site of consumption, Rainmaker provides sustainable clean water for a competitive price per liter.
The vast majority of consumers in developed countries take water for granted. The ability to turn a knob on a faucet and end up with clean flowing water leaves the masses blind to the infrastructure needed to make our sinks, hoses, and bathtubs run or the fact that global freshwater resources are declining dramatically.
A Few Facts About Water That Will Shock You
- Only about 2.5% of water available on earth is fresh water according to National Geographic.
- Americans use about 2,200 gallons of fresh water per person per year according to Grace Communications.
- More than half of the world’s largest freshwater aquifers are not sustainable according to NASA.
- By 2025, the United Nations estimates that more than two-thirds of the world’s consumers will live in water-stressed regions.
- According to the Bipartisan Policy Center, America’s water infrastructure is aging to the extent that it will take more than $1 trillion and 25 years to repair it.
- Finally, according to Healthline, the average consumer can only survive between 8 and 21 days without access to fresh water.
I didn’t share the statistics above to scare you. I did so to show you just how valuable of a decision Sphere 3D is making with the acquisition of Rainmaker.
The fact of the matter is that, while we view clean water as a renewable resource, that’s not the case without cutting edge technology. NASA, National Geographic, the United Nations and other world leaders have been pointing to the depleting access to clean water the world has been facing for years.
We may not be feeling the pain at home quite yet, but without dramatic and costly updates to current infrastructure and the deployment of cutting edge, water generating, technologies, you may feel the pain very soon.
That’s the value in this acquisition. The value comes from a resource that everyone needs, takes for granted, and many may lose access to in the years to come — water.
What Exactly Does Rainmaker Worldwide Inc. Do?
Following a WaaS business model, Rainmaker supplies clean water on-site of demand using decentralized and scalable technologies. Rainmaker’s most game-changing innovation is their Air-to-Water units. While that may sound like a scene from science fiction, the company’s technology can pull humidity out of the air, resulting in clean, potable water for the end user.
We’re not talking about a table top unit with the potential to generate a glass of water every half hour. No, Air-to-Water is capable of meeting the demand of entire apartment and office buildings — up to 20,000 liters per unit — powered by solar, wind, grid or a combination.
Beyond Rainmaker’s Air-to-Water, they have also developed Water-to-Water technology, using Thermal Membrane Distillation to turn saltwater or contaminated water into clean, potable water for its customers. Drinking water is supplied to the end consumer without the need of expensive water piping or transport that is required with large treatment plants. Like Air-to-Water, Water-to-Water is energy input agnostic with a choice of renewable power sources.
Think of the implications of this technology:
Building Owners Become The Utility
At the moment, building owners generate zero revenue from the provision of water to their tenants. The local water utility sends the water in and tenants pay that utility directly.
But what if water costs could be reduced while putting a few shekels in the pockets of those who own the buildings? That’s exactly what Rainmaker’s technology is capable of.
Rainmaker’s Air-to-Water and Water-to-Water produces water at a fraction of the prices charged by most water utilities across the United States. Moreover, the company’s technology has the potential to produce enough water to feed the demand of an entire building.
As a result, building owners now have the ability to provide water at a lower cost than most clean water utilities, opening the door to happier tenants and a new revenue stream while reducing the risk of any interruptions in water access.
Utility Companies Reduce Cost While Assisting Aging Infrastructure
Water infrastructure across the United States is aging. Moreover, the resources we’re tapping into are beginning to tap out. This creates a big issue for water utilities.
Incredible costs associated with infrastructure repairs and growth are met with depleting resources, ultimately driving prices higher and profits down. Rainmaker’s decentralized water solutions can easily be applied to this issue.
By deploying the company’s Air-to-Water technology, clean water utility companies have the ability to tap into an endless resource of water, and do so at a lower cost. As natural resources continue to dry up, Rainmaker gives utility companies a low cost, efficiency, and an effective way to hedge their bets.
Reduce Costs For Miners
Miners spend massive amounts of money to truck water into their mining sites. Water is used in various aspects of the mining process, and the vast majority of these sites have little-to-no access to clean water due to their generally secluded nature. This leads to costs as high as $0.70 per liter to truck the precious commodity in.
Rainmaker’s Air-to-Water system produces water at about one-tenth of that cost, which could be a game changer for miners around the world.
Water Can Be Brought To Regions Where Consumers Have Little Access
Not all regions around the world are lucky enough to have access to indoor plumbing and water that flows to their addresses. In fact, according to the Centers for Disease Control and Prevention, about 11% of consumers around the world have no access to improved water resources.
This means that there are no water trucks or pipes that drive water into homes, or other ways to efficiently provide access to clean water. Instead, consumers in these regions often walk miles to streams and rivers with buckets. From there, the buckets are filled, at an average of 40 pounds each, and lugged back home to provide water for themselves and their families.
Due to this harsh reality, several charities have made it their missions to bring easier access to water to these impoverished communities. For many of these communities, a single Air-to-Water unit powered by solar or wind-generated electricity would provide enough water to supply clean water to the entire population of the community. For larger communities, projects can simply be scaled by adding more units.
Clean, Renewable, Reliable
Rainmaker’s Air-to-Water technology hits three important key points:
First and foremost, the technology provided by Rainmaker produces incredibly clean water. The company’s system uses state-of-the art filtration technologies to ensure that the water produced is of the highest quality available on the market today.
Both Air-to-Water and Water-to-Water use renewable resources, providing water to end consumers with zero chemicals and zero carbon footprint.
The systems deployed by the company are powered by wind and the sun, meaning a very low cost of operation and ongoing maintenance and an increased sense of social responsibility comes with each and every unit.
Due to the fact that these systems run on their own infrastructure, they are highly reliable. Customers who enter WaaS agreements with Rainmaker don’t have to worry about breakdowns in national infrastructure that lead to interruption of services.
Moreover, in regions like California, where drought is common, Air-to-Water and Water-to-Water provide unlimited access to water that won’t jeopardize the performance of the local water ecosystem as a whole.
Clean Water Is Big Business
Considering all of the above, it’s easy to see how the acquisition of Rainmaker Worldwide Inc. will bring tremendous value to Sphere 3D shareholders. But even considering all of the above, the sheer size of the potable water market might surprise you.
According to Grand View Research, the global water treatment market is worth well over $23 billion annually and the market is growing with a CAGR of 7.1%. As the depletion of natural water resources continue, and demand continues to rise, the market is only likely to continue to grow.
Moreover, as this takes place, demand for reliable water resources, like those provided by Rainmaker, will only climb. So, this is a massive, potentially multi-billion dollar opportunity in the making.
It’s clear that Rainmaker will bring incredible value to Sphere 3D. Now, it’s time to break down the details.
According to the press release announcing the acquisition, Rainmaker shareholders were originally slated to receive 1/3 shares of ANY common stock for each whole share of Rainmaker owned. Rainmaker shareholders were also expected to receive one-third of a warrant or option for each warrant or option held. However, in response to recent growth, the agreement has been amended, and Rainmaker shareholders will receive 1/15th of one share of ANY for each whole share of Rainmaker owned and 1/15th of one warrant or option for each whole warrant or option owned.
Finally, the company said that it expects the transaction to come to a close in the fall of this year. Considering the fact that we just crossed into the most colorful season of the year, the closing of the transaction is likely just around the corner.
The Bottom Line
With the acquisition of Rainmaker, Sphere 3D is making a massive move in the right direction. The global demand for water is only likely to grow as access to the resource continues to shrink.
This simple fact has led to the creation of funds surrounding nothing but what seems to be a simple fluid to most in developed nations. However, that fluid, and access to it, is overwhelmingly valuable as a crucial resource that makes life possible.
The fact that Sphere 3D is tapping into this vast and growing market will open the door to tremendous revenues, while solving one of the world’s biggest environmental issues, access to clean water without depletion of natural resources.
All in all, ANY stock is one for the watchlist.
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CNA Finance and its subsidiary, Alpha Stock News, are not investment advisors or broker dealers. It is suggested that all readers do their own research before making any investment in any company mentioned herein. Hart Associates paid CNA Finance two thousand dollars for the production and publication of this article.