The potion is found in a Mermaid Mythology book by Lewis McCartney. According to the book, the potion has the power to fulfill wishes by a mermaid having the potion fungus on her face when a mermaid. 

The girls try it out but it doesn't work when Rikki tries it because she is not in mermaid form. Cleo discovers it when she is in the bath at her house. Rikki then heats up the potion with her powers causing the fungus to go crazy and flood the whole JuiceNet Café so Lewis turns Cleo into a mermaid (spilling water on her) and uses up the last of the potion that is in the bottle and gets rid of the whole sludgy mess.