Insider Briefing of 22 October, 2020
Helping you thrive in the world’s ONLY vital, scarce and recession-proof market
In this briefing I analyzed the true rate of inflation. How can investing in water beat it? Next-gen infrastructure visionary, our own Dan Early, floored us. Hear his prediction on WHY OriginClear will become a household name, in the near future! And now the media is saying what WE have been saying about entrepreneurs...
FEATURED OR COVERED IN THIS BRIEFING — QUICK LINKS
- What the existing model is for decentralized water treatment and why OriginClear's is so uniquely different.
- How OriginClear's standardized solutions streamline and revolutionize decentralized water treatment.
- Why Dan Early predicts that in the near future OriginClear will become a household name and recognized brand in the water industry.
- Dan Early, his patents and the Modular Water Systems product line.
- CEO OriginClear's appearance on Radio Entrepreneurs with Host Jeffrey Davis.
- Riggs on Ellis Martin Report discussing COVID-hit workers becoming Waterpreneurs, captive financing for Water As A Career, and an investment that beats inflation.
- President Trumps executive order forming a water sub-cabinet and what that means for OriginClear and the water industry.
- The true cost of living and what that has to do with 6 million people missing their rent or mortgage payments in September.
- What the hidden problem of actual true inflation means to the dollar's value and people's survival.
- How to get a higher annual yield than the 10% average true inflation, plus a substantial gain on principal return.
- The rule of 72 and how OriginClear's corporate bond beats it with a double-digit yield and 200% return on conversion.
- Philanthroinvestors and the first Water Philanthroinvestor Ambassador.
Transcript from recording:
All right. Welcome everyone to Water Is The New Gold™. And I'm going to do the usual disclaimers while people join us. So let's jump right in.
So we say it's, "The world's ONLY vital, scarce and recession proof market," and that's true because of course water is way underserved. Imagine if there was not enough oil in the world, it would be very high priced. Of course, we know that there is a lot of oil, so of course it responds mostly to people playing monopoly practices, but that's for another show.
Anyway, there is too much demand for good water. Water is way underserved. And as a result, it's a huge upside opportunity industry. And of course it's a humanitarian endeavor. It's probably the combination of the most good you can do for the planet with the most good you can do for yourself if you choose how you participate. Okay. So it's Thursday, October 22nd, and it's briefing number 84. So let's jump right into it.
We've got our Safe Harbor statement and that's of course that if we say things like we think, we may plan, you know exactly what we're saying. We are hedging our bets in terms of a public company, but we do our very best to say exactly what we think is going to happen and as much as possible, how it's going. And I'll just be sharing some good news with you in this half hour, as you will see.
Transcript from recording:
Chief Engineer OriginClear
Existing Model — A Hodgepodge
The existing model that has dominated the marketplace on decentralized technologies is all custom. It's all, one-off, it's all snowflake, everyone's different. And when I first got into the industry 25 years ago, if you were to buy a package, a decentralized packaged, wastewater treatment facility for a single family home, or for a commercial development or for a multi-family residential development, it would be this hodgepodge of parts and pieces.
And it is up to the consulting engineer, working for the client to piece this puzzle together. And so the thing that I am doing, the vision I've got is to standardize these products. Standardized the permitting, standardized the engineering, standardized the manufacturing. And what that does, it makes it super easy for those consulting engineers and specifying engineers that work with us on a daily basis.
It makes it super easy for them to specify our technologies. And that is a very unique differentiator for us compared to the other competing companies that are in the marketplace.
Standardized Solutions — Emerging Technologies
Even the early stage developers of new technologies, new decentralized technologies, 20 and 25 years ago, they were still very... There's this custom element, this custom design and custom manufacturing element that went with it. It's clunky, it's inefficient, it's expensive, takes a much longer time period to implement those technologies.
By approaching a very standardized solution and by leveraging these emerging technologies, all of that really speeds up the way you can build and implement and commission and operate these things. So the analogy of a custom car manufacturer versus a very standardized assembly line car manufacturer model, that analogy does apply, it does.
Focused on Innovation
The vision that we have and the model and the business model that we're pursuing, it's different. It is different from what you see with the mainstream, conventional existing equipment suppliers and technology providers and the people that we compete with on a day-to-day basis. They're very entrenched, very conventional business models. Not really conducive to innovation and evolution. We're radically different than that. We are really focused on innovation.
The consulting world, the engineering world that I work with and engage with on a weekly basis, when they learn about what we are doing, the technology solutions that we're developing, they're like, "Wow, I haven't seen anything like this in 20 or 25 years. This is really exciting. Glad to see that people are out there trying to change things and trying to shift the paradigm." Paradigm shift, that's a word I commonly hear.
Becoming a Household Name
I think the next two or three years, we will see just profound changes in the company. Where the company is today, it will not look like this 12 and 18 months and 24 months from now. It will be a radically different model. Top line revenue is going to increase, product innovation continues to grow. The focus that we have on those things are really going to change the way the company functions and the way it's perceived in the marketplace. Especially as we're getting more market exposure, we will become a household name. That's the best way of describing it. It will a recognizable brand in the water industry.
End of presentation
Riggs: Wow. That is an amazing testimony by our chief engineer, Dan Early, as he discusses, really the decentralization phenomenon as we're enabling it with our new Modular Water Systems™, which of course is anchored by his five patents that we have licensed. And of course he is on a roll right now. He's doing a lot of deals. As we reported the October numbers and the third quarter numbers are really great, we think, and also Q4 is looking great. So I'm going to jump right into the next one. I've got a couple of interviews that I'm going to play some quick excerpts from. I think they're very interesting. Here we go.
Transcript from recording:
Riggs: All right. So we've got several layers of clients. First of all, we have our standard legacy business, municipalities, large corporations, and that's doing well. In fact, we were concerned that COVID was going to shut it down. And in fact, it seems to have sped it up. Not because more water deals are happening, but because we emerged as one of the really, really adaptive players. And so that's going fine.
But as I said, it grows 20 to 35% per year. How do we grow multiples each year? And that's where we moved into a whole new space, which is recruiting entrepreneurs. And by the way, there's lots of entrepreneurs out of business this year. Recruiting entrepreneurs to operate small water companies that we fund through a career building program. And that's amazingly successful and popular. And now that's the whole new game we're playing.
Jeffrey: The industry going right now. What's the future?
Riggs: That's a really good question. So prior to 1960, huge concrete, central sewage systems were built in this country. And most of the volume of water treatment went through these central facilities. These hyper plants in various, mostly big urban concentrations.
Unfortunately from 1960 onward, we stopped maintaining them. We stopped building new infrastructure. And as a result we really have a failing central water infrastructure in this country that's held together with bandaid and PR. So, the water industry is like, "No, everything's good. Everything's fine." But it's not.
What is happening is called decentralization. Just like mainframes to PC, just like landlines became cell phones. You go where there's no infrastructure needed, which is right at the point of use. And so increasingly water treatment has been getting done by the people themselves, like breweries treating their own water and so forth. And that is a major trend that a lot of the big-big players are not yet ... They're still on the IV drug of big municipal projects because those are the billion dollar deals, but the future is small.
End of presentation
Riggs: So, that is a fascinating interview that we had on Radio Entrepreneurs.
New video presentation
Transcript from recording:
The Ellis Martin Report
Ellis: Riggs, welcome back to the program.
Riggs: Thank you, Ellis. It's a pleasure.
Ellis: This year has been a long year. It's been COVID — year one, hopefully COVID — year zero. But we really don't know how long this pandemic is going to happen.
And this recession is actually also spawning, according to an article that you're sharing with me with Bloomberg Wealth, entrepreneurs in the US amid this joblessness, there are opportunities. So let's talk about that.
Landing on Their Feet
RIggs: It's surprising data, "Americans continue to create new businesses in surprising numbers, a potential tailwind for an economy." So really what's happening is that people are creating new jobs. It's mostly booming in the Midwest and South, but it's happening all over the country, really. New business formations are up 77% from the previous months and 82%, almost double from a year earlier, which is astonishing.
Americans that land on their feet and they've got to do something. We don't have much of a safety net in our country, especially for people who've been freelance or had their own businesses. They've got to do something.
The Human Element
Now, the reason this is so important is because we arrived at this conclusion a few months ago, which was this new idea we had of speeding up water treatment by bringing in new funding, had another element, which was the human element. Let's say, call it 100,000 businesses have been shut permanently in this country.
Those entrepreneurs are free to get into a new career. It's called a "Waterpreneur" and it's called Water As A Career™. This first pilot that we did, the entrepreneur is super happy. He's making something like 16 jobs in the first month, each of which was six to $800. The machine is 3000 a month. So you can see that he's doing just fine. That's the kind of thing that we do that's very innovative, both on the product side and also the financing. And now we're deploying these mini water companies.
Ken Berenger, my co-strategist likes to call them micro-utilities in the concept of a water utility. Imagine a little micro utility going out there. Well, we want to spawn hundreds, thousands of them. And then through our partnership with a group called Philanthroinvestors®, get to 26 countries because that's their footprint. And this is how we're going to expand.
Our Corporate Bond
Ellis: How are you subsidizing all of these machines, potentially thousands that you're going to put into the hands of entrepreneurs, some of them with great credit, some of them with questionable credit, but folks that you've screened?
Riggs: We have a dream of letting investors directly invest in the water equipment. And that's the whole idea of an Airbnb for water in a way, but that's down the road. For now, we want to be the financier. And we have a very successful corporate bond, which earns double digits on dividends, as well as superb upside, price protected upside. This is a very good high yield instrument for investors.
And we're able to of course pay for all the development costs, but as well, we're now starting to pay for these machines. We did one already. We're going to keep on doing more.
We're actually talking to high net worth investors about creating a quote unquote, kind of a GM financial, where it's a captive finance organization, like what they have in the car business and bring these high net worth investors to create our bank.
Ellis: I know there's all sorts of opportunities given by banks and other firms to open a savings account with less than 1% interest. This seems like another option, potentially.
There's a site called the Chapwood index, which talks ... you can go to the Chapwood index and you can look at the true inflation and gosh, San Francisco at 12.1% per year, Portland 9.8, Seattle 11.6. Let's just say it's 10% average cross country. Well, 10% using what's called the rule of 72 means that your inflation will double over 10 years, right? That means your dollar will be worth half in 10 years.
You cannot afford to hold dollars. It's important to at least make double digits per year to at least hold with inflation. And then you have a potential upside in the payoffs. Investing in Origin Clear is not about investing in the stock. It's about investing in our corporate bond. It drives this cool Waterpreneur thing. As we like to say, "We're The Water Company For The New Economy,." We are the post COVID water company.
Ellis: Riggs, it's always great to see you and chat with you. Thank you so much for joining me today on the program. I look forward to more updates in the future.
End of presentation
Well, as you saw that, I kind of slipped the story a bit of what I was going to talk about in this briefing, in that last little clip. And I see I've got some chats. Before I, you know what, actually, I see that John raised his hand. John, to all panelists, "I'm happy to hear you are to put new revenue on the balance sheet this year." Yes. Dan Early was very good as you saw in that clip about the ... how we're becoming a household name, but a lot of people including us want to know what's happening this year. And I'm very happy with the progress of our revenue this year, so yes.
Trump's Executive Order
All right, let's jump right into the rest of the show. And we had some interesting news on the 15th, which was that we have an executive order to modernize America's water resource management and water infrastructure.
There's now a "water sub-cabinet to facilitate efficient and effective management and modernization of water supplies and systems." Let's take a look at what that means on the internet.
This is the story that broke in the water trades. And what this is about is to coordinate between the department of interior, the EPA and then US department of agriculture, commerce, energy and the civil works.
And the goal here really is to try to coordinate because there's too many agencies doing too many different things, "Get a national water strategy going and also work on water infrastructure, which is badly needed."
Now of course, meanwhile, the infrastructure is messed up. So even though this is a good sign, regardless of who becomes president, I'm quite sure that the focus on water will continue, but we need to focus on the problem right now. Even with maximum government focus like this, it's going to take years to turn things around. But it's really a good step.So happy to see that. Let's now take a look at some of the other stuff that's going on here.
I was teasing everyone in my CEO update on the cost of living price index. What's that all about what's going on? What is the true CPI? You know it's really interesting because the government has interesting things like what you might call an enjoyment factor that they throw in. For example, if you get a car that let's say costs the same, but it's got better features, it's got, I don't know, airbags and radar, then the government thinks you've got more for your money. And so they'll actually lower the inflation rate. It's crazy.
So what is the true cost living price index? Well, first of all, it's important to look at the fact that more than 6 million households missed their rent or mortgage payment in September. And that is a really dire situation. And I feel for the people who've done it, I also feel for the real estate industry that's having to deal with this.
Here's the story in U.S.A today. What this means is that this should be deflationary. It should mean that inflation doesn't happen. Why? Because there's less buying going on. And this is true up to a point. Now the situation has improved and the third quarter, the percentage fell slightly from the prior quarter, but you think this would be deflationary.
Here's the issue. We have another problem waiting for us right now and it's a looming problem. It's best explained is something called the Chapwood Index. Now, this guy named Chapwood went and looked at, he basically contacted his friends in 50 cities and had them go to the grocery store and so on and price the top 500 items. Just literally look at what the prices were. And then he assembled the pricing and the actual inflation is quite intense.
Inflation by City
Now, there's places that are pretty steady. Take a look at San Diego for example, it runs around high 11s pretty steadily. New York goes up and down a little bit, but have you noticed the big cities tend to be high inflation areas. Houston's below 10, which is good. Phoenix is very nice 8.1. San Antonio looking good. And if you were to look at the website, you can actually take a look at it.
Hidden Problem — True Inflation
If you go to chapwoodindex.com, you'll be able to look at some of these. Jacksonville, eight and a half percent. That's the five-year average. You notice that this year, many of them, not all of them are running up like Detroit is well up. Why would it be up in the COVID year? That's a puzzle, but what does that say? It says that basic commodities, what we call the softs. Softs are things like food, a soft commodities are in scarcity and they're difficult to procure.
Denver's looking good, but it's up this year from eight to 8.6, it's been trending upward for some time. Look at Baltimore. Baltimore has terrible poverty, and yet it has some of the highest inflation in America. How could this be? So this is a hidden problem that there's actual true inflation happening. Albuquerque is looking really good, right?
California is Worst
Obviously the more rural areas tend to be lower inflation. And I think that relates to rents, which I guess will go down, but who knows? Look at Cleveland, it jumped right up, back up in 2019, it was doing fine and it's pop right back up. Okay. Oakland 13.3%. That has got to be the record holder. And if I were going to play with the sort here, Albuquerque is the lowest and Sacramento 13.4% is the highest. In fact look, all of the highest ones. The top on two, three, four, five, six are in California. Then we go to New York and then back to California Long Beach. So it's pretty amazing.
How to Make More than 10%
What I'm trying to get at here is, we are looking at the Chapwood Index right now. And as you can see, true inflation is not, we know 2% or whatever. This is bullshit. It basically is 10%. And if you're in an urban area, then it's much, much worse. What does it say? It really says that you have to start thinking about how to make more than 10%. Now, we have warnings that there's a flash crash coming. I saw that coming from one of the people that I deal with in crypto, that there's going to be a lot of uncertainty around the U.S. election.
And this is regardless of who wins. We could be as much we could go into December, not knowing who the president is. This uncertainty is going to be very tough in the markets. So I ask you to look at your unprotected positions and protect them.
This still doesn't deal with the fact that there's no easy ways to make more than 10%. And that's what we're talking about here, is how to do better than this inflation rate.
12% in a 0% Economy
You guys know what this is about. You can basically make 12%, which is just about it's more than the average [inflation]. And by the way, in one of those interviews, I was talking about the rule of 72. What is this rule of 72? Well, this is a handy way to figure out what interest does when you're looking at, and so in the case of 10%, if you assume 10% inflation, the rule of 72 says that your prices will double in 7.2 years. I was incorrect in that interview. I said, 10 years, it's actually 7.2 years. The 72 is a rough way to figure it out.
Double-Digit Yield and 200% Conversion
And so in 7.2 years, you could have half your money. This is not acceptable. Now, what OriginClear offers is this double digit yield right off the bat we'll give you 25% of your investment as a bonus grant, and it's priced to when you adjust it later, at the time of conversion, and then here's the cool thing, is that down the road, whenever you want to redeem it at your decision, you can redeem any part of it or all of it for twice it's value in stock priced at that later time of conversion.
And you can also invest in fractional units, fractional units means, you can do less than a hundred thousand. We're going to have a hard time doing like a thousand. But please, first of all, you need to be accredited, which means that you are making $200,000 as a single filer and $300,000 as a joint filer or a million dollars net worth excluding your primary residence. Or be an offshore investor. And offshore investors are basically people who invest from outside the country, American or not, that's not important. It's where they invest from.
Investors are Happy
So that's probably a great, I mean, our investors are extremely happy with this. They love the dividends that they get. We've paid more than two years of dividends now on time ever since we started this program and it's got a lot of people, if you've been with us for a couple of weeks now, you've listened to some of the testimonials.
All right, so why would you invest?
Well, again, we're developing this Waterpreneur thing. Remember in the Ellis Martin interview, I was talking about this article that showed that yes, 85% increase in new corporations in America, this is a wonderful sign. People are getting back to work, and it's mostly happening in the Midwest and the South. But it's really happening all over the country. We want to help. We've done our pilot program. We're rolling it out.
In the interview, I also spoke about how we are working with high net worth investors to have them come in, help us create a financing subsidiary. I can't really discuss the stage this is at, but these are multimillion dollar investments. And that's going to ... Assuming that we get it, which is, of course, not a done deal, but then we will have an amazing financing capability and also an asset that will help us get onto a major exchange. Again, never rely on big deals. That's one of the lessons I've learned in my many years, but it's very favorable.
Revenue and Assets
So we get the revenue and assets from these finance water equipment systems eventually. And this is, everything we're doing from our own financing of systems and our Water As A Career is to eventually create what we think is a world marketplace for water equipment. We call it the "Airbnb for water." That is not immediate, because we need to exercise the model really on our own time.
Get Paid to Wait
Why are we getting paid to wait? Well, because you're getting these double digit dividends and they're paid, That's annual double digit dividends paid monthly. And then you can convert it at a future price when the time is right. So let's say, you see the stock price go up and you go, "I think I'll catch that." And that's when it's the time to do it, but you choose, really. And until then, gosh you're "only making 12%" on your money. There's worse fates these days, right?
So who to talk to? Now, Ken Berenger is reaching out to existing investors and he has amazing news for current investors that you really should take his call. So please do, and I'll be happy to participate. Ken Berenger is at extension 201 and here's the toll-free number, but the easiest way is just put oc.gold/ken in your browser. In fact, I just learned the keyboard shortcut. Control L will put you right in the browser. Control L, there you are on the browser, type oc.gold/ken. And it will schedule your call. Or just email email@example.com, which is what our Devin Angus handles. And it's also a way to talk to me. All right. And I noticed a couple chat questions. Please give me your questions. I'm going to be answering them shortly.
Here is our disclaimer, which says that the offering we've been talking about is not registered with the securities exchange commission. Therefore, they have not examined it. And, of course, these involve risk and loss, all investments do.
Coming Next Week
I wanted to tell you about next week. We have an amazing, amazing, amazing investor who has been steadily investing in the regulation offering for unaccredited investors. But, in fact, he is soon going to, we think in a few months, is going to become accredited, which is also going to help him invest in the regulation D, the accredited offering.
And this gentlemen has a unique point of view and reasons why he's invested in what he plans to do. And it's actually a Water Philanthroinvestor Ambassador is the correct way to put it. He's actually a Water Philanthroinvestors Ambassador. And meanwhile, I'm going to also take a look at some of the questions you guys have.
Wow, Michael Gilbert wants to offer us money at less than 1%. Well, thank you very much, Michael, if you would just reach out to firstname.lastname@example.org, that's wonderful to hear. Michael is with a group called Value Corp. So that's cool.
I wanted to tell you guys that Philanthroinvestors is an amazing group, and they have really done wonders for us by opening up our network to international, also helping us with ... They really have figured out how to make things work both for making money and also for helping people. They have just an amazing real estate model, which we are learning from.
Okay. Well, guys and gals, thank you very much for being with me tonight. I just think that we have the best time. I loved Dan Earley's quote. Oh my gosh. I may actually just replay it right now. And in fact, our first Water Philanthroinvestors Ambassador says, "I love it." So thank you. I'm not saying the name because I'm being very, very teasy.
Keep Your Money Safe
But anyway, remember that, first of all, stay cool about the political environment. This situation it will pass and then we'll be in the new year and water will still be in demand. And so we definitely want you to ... Don't be exposed during the election period, keep your money safe, put your money somewhere where it's going to make real money. And remember that every penny that you invest in OriginClear, even the small $500 investment you might put in regulation A on the unaccredited offering, helps us to roll out these water preneur projects and even to build our existing business down in Texas.
Investing from IRAs or 401Ks
So it does a lot of good for your pocketbook. And remember, also that you can invest directly from your IRA or your 401k either from within it, or you can also borrow it penalty free as long as you return it. Is it one year? Is two years, I believe. So, that's a COVID thing. Talk to Devin Angus, who's our specialist about that.
Clean Water Demand
But anyway, thank you very much and I trust. All is well with you. Paul Fetcher, who was with us the other week says, "Politically, either way, the increase in demand for clean water is undeniable." And with that wonderful thought, I will end the show tonight. Thank you so much. Be here next week for a wonderful discussion with our new First Water Philanthroinvestors Ambassador. Good night.
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