Soaring mortgage rates may be crashing Real Estate, but things have never looked better for Water. The interview we saw with Dan Early proves it—10X production becoming the norm? Big Name National accounts ordering 4-5 high-ticket units a month by years end? And that's SMALL compared with the gorilla in the room—Water on Demand! It's how everyday investors can assure water independence for business and communities… See for yourself here in the replay!
Transcript from recording
I'm Riggs Eckelberry, co-founder, chairman, CEO of OriginClear. The government needs to continue to provide a lot of abundant, clean water, but what happens to it after it's used when it's dirty? Do you know that 80% of all sewage is never treated, it's just dumped? That leads to water scarcity, but it also leads to a lot of disease and pollution and the ocean turning into something horrible.
At the same time, the cities and counties are not getting the funding they need to really treat the water and so they can't keep up. The solution is let the people who use the water clean the water. Water on Demand is investment in actual capital assets that earn income. Sign up to hear my weekly briefing every Thursday night, 5 p.m. Pacific, 8 p.m. Eastern. Just put oc.old/CEO in your browser. Register for the briefing and look forward to hearing more from you.
And welcome everyone to the Thursday night briefing. Robert Baxter says, "Hi, guys." Hey, Robert. All right, so we got a lot to cover. Very exciting. So let's just jump right into it. Water is the New Gold for the 16th. And yeah, we're in the business of developing high growth, clean water assets with the Water on Demand. Let me tell you something. We did some financial analysis that showed that Water on Demand really is the gorilla in the room. We're launching all these companies and it's fantastic. But Water on Demand is like, whoa, it's powerful. All right.
So today I interviewed Dan Early professional engineer on the monthly record that was set with this announcement this morning. And so why don't we go ahead and play that.
Start of presentation
Riggs: Cool, good afternoon, Dan, how are you doing?
Dan: Well, Riggs, it's good to see you this afternoon.
Riggs: Indeed. Indeed. We had a great announcement this morning, and I thought we'd go through it. But you're doing a lot with a very small team, aren't you?
Dan: We are very, very busy right now. Could use a few extra hands. If there's anybody out there looking for an engineering job, we'll gladly bring you on board and need some manufacturing help. But it's all good. It's very good.
Riggs: Well thanks. We recently played a video on this show about the Houston Polytank manufacturing site. And I have, when we review the press release in a minute, there's a couple of photos of that. So it sounds like you've got yourself a nice, stable fabrication partner.
Dan: We do. We do. Ron and Michelle and the fine folks over their at Houston PolyTank, very important to our to our program and the business model moving forward. The strategic relationship that continues to evolve with them through the help and assistance with Tom Marchesello, our COO. That is really starting to bear some fruit.
We were out there just last month, about three weeks ago to call on Houston and to look at the progress of a variety of different systems that are in final stages of fabrication with their facility. We have since taken delivery of some of those units in our final up-fit facility in McKinney, Texas at PWT (Progressive Water Treatment). But that relationship is very is evolving very nicely. Very pleased. But it's a very mutually beneficial relationship for both parties.
Riggs: Well, it's important to have a stable partnership. And theoretically now, since you have a standardized product line, you could start building inventory. And I know that we've been discussing ways to, these are not small units, so you have to find a place for them. That is a concern. But it's exciting that we could get into like, oh, you want a pump station? Well, we got right right here on the back rack, aisle 17, just like an IKEA, right?
Dan: That's right. That's it. I mean, that is I mean, we we sort of laugh out a little bit, but it is our model and delivery model is moving to that level and that is important for the water and wastewater infrastructure world. These big large systems, people think that you might not, could not commoditize them. But with the standardization program that we have underway, there are there is the ability to inventory systems because of the standard models that we have. And the and when we drop basis of design, there is predictability in our pipeline of future opportunities. And that's hugely important.
Riggs: That's absolutely true. And and I know that we're going to be moving to that as we scale. Tell me a little bit about your team. Who's on board at Modular Water?
Dan: Well, Modular Water starts with me. I am the the president and the division manager. But I have with me also Robb Litos. He's been with us for about three years now. Robb serves as our technical project manager. He's very instrumental to the scoping and tip of the spear efforts that are underway, working with the consulting engineers and the specified engineers in our and our customers.
Well, recently, now six months ago, Mark Massaket, he joined our team. Mark is, he is serving as our engineering manager. He's been on board six months, been a fantastic addition to the team. He's a licensed professional engineer, much like myself and his background, his specialty is in decentralized water and wastewater, brings a treasure trove of experience, design experience to the team. So very, very, very talented individual.
We have Guy Yo. He is he is assistant production manager. He's based out of our McKinney facility working with Marc Stevens and his team down there on all of the Modular Water Systems™ production orders. So that's what we're currently staying. And obviously we've got our support with Tom and Prasad and the rest of the folks over to corporate office.
Riggs: Yes. And speaking of that, you, Prasad and Tom are working on making Modular Water a business unit of its own and its own in its own right. And I guess the second half of this year is where we're really going to see that kick in. Correct?
Dan: Correct. We are we are on pace for Modular Water Systems to basically step out on soon and operate as an independent business unit. I'm really super excited about that because a lot of, we're building a lot of process and setting up a lot of the framework that the corporate framework and the things that are needed for Modular to to step out and to operate as a sister business unit to Progressive Water Treatment. We're at that stage now, the pipeline, the current production orders we have in house, the book of business. It is now time to do that.
Riggs: Yes. And in fact, it brings to mind our change in business model at corporate, where we had the historical model was basically to keep building, building a value beginning, biggying it up constantly. And of course, the problem with that is it's constantly requiring more capital. More capital. There's also a danger of not having quite as much focus on one or another unit. In a big family is always one red-haired stepchild.
And so now we're, of course, moving to more of a sequential launch mode where we're able to really focus on one thing at a time. And as part of that plan, as you can see, as you can visualize, we're not only going to be eventually giving Modular Water Systems a place in the sun, but even the EveraMOD™ pump station line.
Dan: Yes. The EveraMOD Pump Station product line, that has really taken off like gangbusters. A lot of the, a lot of the pre promotion work, a lot of the pre-engineered development product development we did two and three years ago that has now taken root and it is starting to grow, starting to bear fruit of our pipeline of production orders related to the EveraMOD system. Those things are increasing on a month over month basis.
The thing I'm really pleased with is that I am happy to announce and I think there's been some some press release at corporate with regards to some national account activity that we've developed. We just landed our very first major national account. It's a company that's committed to our program. They love what we do.
They love that we have a one stop shop, single source, single point of delivery, engineered solution for wastewater lift stations. So tickled to death. What we are seeing is we have several others that are in similar stages and not quite as far along, but we have other national accounts that I feel like and I had one call today that I feel like may allow us to have a second add a second national account to our program.
Riggs: Wow. Yes, they are a national account. But then we have to get their approval to talk about them. And that's a whole separate step. But we're very excited. And I understand that this particular national account just gave you another order this week.
Dan: They did. They did. Yes, tickled to death with that. Our, the relationship is not even 30 days old. And we've received our second commitment, second order commitment from them that probably I think we're probably looking at 4 to 5 units a month, probably by the end of the year. I think that the production level will be at that level.
Riggs: Well, and this is, they're aggressively building their sites. This is going to be obviously just, you know, pocketa—pocketa, right?
Dan: Yep, exactly. It's very standardized. They want, they want to buy the same thing over and over and over again. And they like that the engineering capability that we have to make sure that our product gets integrated into their facilities correctly. And so it is a match made in heaven.
Riggs: Fantastic. I'm going to go ahead and share screen and we're going to review today's this morning's press release. Right now, you literally in May did almost what you did in the entirety of 2021 in purchase orders.
Dan: We did.
Riggs: You believe that that is sustainable?
Dan: Yes, it is definitely sustainable. I think it will become the norm. I think as the, I think as the back half of 2022 unfolds, I think that we will see these million dollar, these seven figure months become the norm as we continue to build the internal program around the EveraMOD, around the Modular Water Systems division, around all of our different product lines, in 2023, it definitely will be the norm.
Riggs: Well, that's amazing. And so really looks like you're 10X at least going forward and that is for water company, I mean, Lord have mercy. That is, isn't it?
Dan: Very pleased. Very, very pleased. Very pleased with the progress. Very excited for what the future holds. Riggs, we are heading in the right direction.
Riggs: I love it. I love it. All right. And then here's a cool photo of you at that Houston Polytank fabrication showing off one of your pump stations. Right.
Dan: It is, the photo that you see of me standing there with my hand on that structure, that's a valve vault assembly. That's part of the packaged pump station, an EveraMOD packaged pump station system. This particular package right here is shipping tomorrow to our customer in the panhandle of Florida, a mixed use commercial development site. And we were the design build vendor on this particular project.
We teamed up with a a local consulting engineer and that consulting firm. I'll give kudos and I'm going to call him out. Columbia Engineering, Jason Hurst and his team. Those guys really like the value that we bring, the capability that we bring, and how we're able to leverage our engineering and equipment manufacturing prowess to to help their them and their customers. So this one out here is going to a to a grocery store, mixed use development facility, new construction along a major highway just east of Pensacola.
Riggs: Blue Seas of Pensacola. That's fantastic. And sure, so May, this is the kind of mix we're talking about. You had a big power plant order. You had that summer camp, which they typically are off sewage. Then they need to have that capability, a couple of lift stations. And not to make it clear what the difference is. A pump station is fresh water, a clean water and a lift station is sewage. Is that right?
Dan: That is correct, yes.
Riggs: Good. So generically, we call them pump stations, but really that's the difference. And then you're really seeing this growing need for, ability to not have to depend upon municipal sewage connections.
Dan: Yeah, the thing that we've seen, and we've talked about this quite a bit, Riggs, over the last three or four years, this move towards decentralization. Decentralization is driven by, driven by two things: by demand, the market demand, there's a need for it. But that is fostered by the fact that the public sector, the existing public utilities, there's both water and public sewer districts. They, especially in high growth areas, do not have the capability to provide the collection, wastewater collection and treatment capacity. And so what happens is that basically forces all the construction, all the new development and the construction to look towards decentralized options.
So the future, I will tell you, even with the, even some of the prognosticators out there and looking at things over the next 12 months, the demand is so great and the lack of capability is so great at the public sector level. I think that we are in a very strong position over the next 24 to 36 months to continue to take additional purchase orders, to see our, to see our production level and our our contract closes to increase in number and quantity over time.
So it is what it is. It's just a function of where we are in this modern day and age. I'll share this with you. I was in a conversation with a potential strategic partner down in the Georgia region outside of Atlanta earlier today. There is in DeKalb County, which is just I think is just northeast of the Atlanta metro, downtown Atlanta metro region.
They are, they're getting hammered by growth. And they have absolutely they're chasing their tail, trying to keep up with wastewater collection, conveyance and treatment. They don't have the ability. And so it's driving needs down there and that neck of the woods as well. And you see that in all the major metropolitan regions in Texas and Florida, we're seeing these massive mass influxes of new population, people migrating from the West Coast and from the northeast.
Riggs: Yes. It's moving into the entire southeast. Really?
Riggs: Texas, Carolinas, Georgia, Florida are just getting, as you say, hammered and areas that were where, you know, they're not really geared up for that kind of concentration.
Dan: They're not they're not, so decentralized water and these these infrastructure solutions, even like the EveraMOD pump station, while it may not be a decentralized component, it can be part of a component. But it we're seeing mass adoption of that. We're seeing really, really, really serious uptick in orders to keep up with just pumping to public sewer where it is possible.
Riggs: Wow. Well, that is amazing to hear. And yes, this is this is the trend of almost the trend of the century. Really amazing.
Dan: In the water industry, I'll tell you right now, I was having a conversation with a vendor, another vendor on Monday of this week. And it is a good time to be in the water industry. It really is.
Riggs: Well, it it brings a smile on my face because we made a big decision in 2018 to to grow this business. And at times we're like, is this child going to grow? And, you know, then we hit I guess we were there at the right moment for the inflection point, right?
Dan: Yep. Yep. It's the water industry. It has its own gestational cycle. And once you get to an inflection point, it takes off.
Riggs: Wow. And you mentioned basis of design. And that's one of the key strengths, because these patents make you unique and proprietary. And that means it's very hard for other people to come in and carpetbag you.
Dan: It does. When we work with our engineering partners, strategic partners early on in the conceptual planning phase and the design development phase. And we get chosen, we get evaluated and compared against other vendors. And then when we are selected, we become basis of design. We get integrated into the technical permitting package which is approved at the regulatory level.
When you get approved at the regulatory level Riggs, what that means is, is that it is very difficult to come in after the fact and to swap out a piece of equipment because the approvals are already there and they're mandated, really, you'd have to reinvent the wheel, re-engineer the system, that type of thing. That's time and time is money. And so it really works very, very well.
Riggs: Yes. And certainly not getting ripped off by competitors is a good feeling.
Dan: Correct? Being able to be king of the mountain. Once you're on top, it's really a lot easier to fend off everybody else. It is much, much harder to knock somebody else off who's already in spec position.
Riggs: As your king of the mountain, you're still going to talk to the rest of us, right?
Dan: I will. I am not. I will remain good to my country boy roots. I'll be down to earth.
Riggs: Right on. Now here's an outdoor lot that shows some of these these these designs, these sort of, in the video, we saw them being rolled out, these high density thermoplastic units. And that's a great material for you. And the final thing is, is that, you know, we're looking at using your technology to standardize these pre-funded Water on Demand service contract systems to so that we have a consistent fleet across the country. And that should be, finally get us into the licensing business. Right.
Dan: It does the EveraMOD or the Modular Water System Program, the wastewater treatment plants, the EveraSKID™ systems, the EveraTREAT™ systems that we are actively selling and delivering to the marketplace, they really set up the Water on Demand model and the reason for that is that the owner, these customers that commit to the Water on Demand program, their engineering teams, their construction teams, the owner, end users, they know the quality and the type of equipment that they're going to get. And it's really huge on the operation, on the OpEx side, on the operations and maintenance side. And so when they know that they're going to get a really durable, well manufactured piece of equipment, it really makes it makes the Water on Demand model turn and move much faster and much more effectively.
Riggs: Well, for sure, because we're effectively, effectively the customer and we're being paid only on performance. We want these systems to remain, have good uptime, right. To not have a lot of maintenance issues, to just run and run. And so I think that's a major, major driving factor for standardizing with your technology. Daniel, I think I am so excited about what you've accomplished so far. It's a red letter day for us. Thank you for your hard work. And please tell your team that, you know, if if they don't come in on Saturday, don't bother coming in on Sunday.
Dan: I will pass that word along to them. I will definitely do that. I may not get a good response, but I'll tell them.
Riggs: No, no, it's a it's an old it's an old joke from high tech days when Larry Ellison, Larry Ellison used to come into the parking lot and see what cars in the morning still had, hot front hoods who had just arrived, you know, and he used to say that, he used to say, "If your not in on Saturday, don't bother coming on Sunday." Well, fortunately, you guys have a life. Keep having a life. Thank you so much. Keep up the great work.
Dan: Thank you, Riggs. My pleasure.
End of presentation
Riggs: All right. I'm so blown away. I mean, look, they literally are doing ten times the run rate of last year, four people that, you know, $1,500,000 a month in purchase orders and it's growing from there and they're standardizing. And you know what happens when you can start doing production line assembly and you just have you got three sizes. This is what you get. Water industry isn't used to that. It's not how the water industry operates. It's does things by hand and expensive.
But but if you're putting stuff in at a brewery, they don't want to know about the big fooferah. They don't even have any water experts. They just want the thing, put that thing in the side, there in the corner, and you're going to maintain it, right? Right. Okay, good. If it's standardized, then we will have some degree of lot less risk if it's our designs by the brilliant Dan Early. So that was a fantastic interview.
And now I'm going to jump right into excerpt from a podcast. This is the FI Show that links, the fish show. No, it's the FI show. And you can see this "scaling from nothing to 20 million with covered calls" and "building a major following online as a couple." So a lot of e-commerce and real estate stuff. "How Ms. Excel retrained her brain to build a brand with 100K days and a million plus followers." How cool is that? Well, I had the opportunity to tell them a story that was completely different, and you'll see that they had fun with it. So let's take a look.
Start of presentation
Cody: All righty, Riggs, let's kick this thing off. I read that. Waters inflating it at, I think was three times the rate of normal inflation. Is the reason for that it overpopulation? Are we just using more water than we have in the past? Or like what's contributing to a 300% increase over the regular inflation rate?
Riggs: Well, part of the problem is that the high point of federal funding for municipal water systems was in the seventies when it was roughly $7.6 billion a year, which even that's not a lot, but it was better than nothing. And over the years, it's gone down to almost nothing. And even that, almost nothing is loans, not grants. So federal support for water systems has disappeared.
Meanwhile, environmental standards have risen more and more dramatically, demanding, like, get more arsenic out of your water and get the fluorine out of the water, etc. all really needed, but it adds to the cost of that municipality. And then that municipality has a problem. A few years ago, when Compton residents in California saw brown water coming out of their faucet, they said, What's going on? And the local water district said, Well, we've been asking for money for a decade now, and your city council never allocated the money. And by the way, that water is not, is won't hurt you, it's just magnesium, so good luck. Well, that water district got closed down and taken over by the city of LA.
Riggs: But the bigger picture is there's a lot of funding problems, and so municipal water districts, for example, Austin, Austin's seen a tremendous rise. Why? Lots of in-migration, lots of pressure on the water system. They're trying to fund it somehow. The water rates go up and they're relatively unregulated. There's there's actually a lot of freedom to raise water rates. You'd think they wouldn't be, but there are. And so one of the good things about water as a service is that a housing development, an HOA, or a business like a brewery can enter a long term contract for water by the gallon. That limits the amount of inflation that there can be and includes all of the maintenance all built in. And it's a very sane decision because it locks out the the imponderable. Right. It's okay. This thing is set. It's going to rise a certain CPI index and it's going to be fully taken care of. And now we can move on to other problems. And that makes it very a very popular idea.
Cody: And all of the funding dried up from the municipalities and the government just seems to not care about water whatsoever. But I've seen more than ever recently, probably in the past decade, that, you know, just regular people are starting to invest back into water. They want clean water. They want renewable energy. So how are people actually going about doing this?
Riggs: Right. So the we had a realization when we when we figured out that we needed to solve that, that we could accelerate the adoption of good, decentralized water systems, that what would really make it work would be to get rid of the capital problem. Sign here. You get your system. It's not your property, it's ours. And it's basically you're paying for use. And that is a very attractive thing because people don't mind operating expenses versus capital expense typically, especially since most businesses have not really planned for a big capital expense in water treatment that wasn't on their business plan. So we solve that problem and it takes it takes the problem away.
Now we then realize, wait a minute, we're very good at raising money from regular investors is what we do. It's how we've paid for our development all these years. It's no secret that we've chosen to have a burn as opposed to living as a small water company in McKinney, Texas. We've chosen to kind of try try bigger. And so we raise money for that, and we're good at that. And we have a bench of really, really loyal investors who who've done well with us and who are who are willing to look at, you know, helping us along.
And we realized, wait a minute, we're good at doing this. Let's let the ordinary investor invest in water systems. And the structure is very similar to what the oil industry calls master limited partnerships, which is a basket of of energy properties, pipeline, oil and natural gas production. And that basket of assets generates royalties. And so you and I can. It's a sophisticated investment, but we're free to invest in a in an MLPs. There's about 60 some MLPs and it's a big market, about $300 billion dollar value. And it complements big oil. It doesn't it doesn't take it away. It's a it's an alternative alternative source of innovation, of financing, etc.. We adopted that idea by creating this Water on Demand capital and letting people invest directly in it.
And thus, all of a sudden, it's no longer just a, you know, high risk microcap investment, you know, high risk, high reward. It's actually, you know, to a great degree, an asset, a productive asset. And not only that, it's as opposed to precious metals and oil and gas and real estate. It hasn't had a big run yet. Why? Because people have not been able to invest in water systems except by getting, you know, an exchange traded fund or buying shares in Veolia. There's been no direct investment in the asset. And that is a first. And we believe we're, you know, really pioneering new ground.
Justin: We're talking about investing, we've been talking about raising money, you know, and talking about decentralizing things. And I know that there is you've mentioned crypto with a water company and I'm like, how do those two things that are locked in and what do you why do you feel the need to create your very own currency?
Riggs: Well, I, I was very excited in 2018. I remember in December of 2017, going to some, there was a miami Bitcoin conference and there was the StartEngine conference in L.A. and all these. And I was very excited about the idea of a water coin, which we branded WaterChain™ at the time. I spoke at some industry, in fact, d-10E, which is a decentralization conference. I spoke to them about decentralized water.
The problem with WaterChain was twofold. Number one is we had that famous crypto winter that cut in and later 2018, which is like, whoa. But the more important problem, we could have kept going that wasn't the issue, was that there was no stable price for water. All over the place. Water pricing is totally political. You know, the Michael Burry, the you know, the famous Big Short, where he says, "Next thing I'm going to do is water."
Well, he went into water and the rest of that story is he learned that it's highly politicized and he basically gave up and went into farming as an indirect water user. And he's doing quite well. The point I'm making is that the whole water, legacy water thing is highly, it's very archaic and it's all depends on, you know, "Was your grandfather a water holder in the 1800s" and that kind of stuff. So we just found we could not. Get a stable price for water. Fast forward to today.
Now we're building a network of functional water systems that are paying by the gallon. So every single gallon of water is paid for. Well, now, hey, guess what? The second big thing that's good about the crypto industry is you no longer have to build a crypto from the ground up. You can build, the NFT, nonfungible tokens, is a great thing because you just you're sitting on top of the Ethereum standard. There's a market existing already, and all you've got to do is package it as essentially a royalty bearing NFT, which is there's nothing science fiction about it. It's already being done. And bingo, you've got yourself a digital bond that you can then transfer. And in that bond is embedded all the future revenue from your water royalties.
And I decided, you know what, I'm going to sell that to Cody and he's going to buy it for some discount to the net present value. And I got my cash. Cody's got the future revenue, we move on and that for investors will be very good because one of the problems with people investing in the 25 year revenue cycle is I don't know if I want to be around. I mean, I could be around it 25 years. So what do I do? Well, this will create liquidity and ultimately, we believe will create a market, because the problem with water is. There is no world market for water. Why? What is local? It's too heavy, too cheap to send it from New York to Atlanta. So the people who have a water price problem in northern California, they can't hedge their water risk with options on Singapore water. Impossible doesn't exist.
But once a crypto world is created where let's say they're NFTs, I'm just throwing that out as a as a placeholder, right? It could be an asset, a straightforward asset coin just as easily. Then we start getting into exchangeability and every one of these is paid for. Every gallon has money attached to it. So it's monetized. And so that makes it something that I think, you know, my personal opinion about crypto is that the crappy concept coins are going to be washed out and we're going to be left with things that have, I'm excluding Bitcoin and Ethereum, which are special cases.
Everything else is really going to get, you know, get, you know, looked at like, well, is there something real there? Is there a business model or is there real asset? And if it's not, that I think is going to have a hard time. So we think it's going to be very popular coin. We're not doing it right now and there's very good reasons for it. Number one, it's just not part of the business cycle for us is we can deliver dividends using ACH just fine, not an issue, you know, automated clearinghouse. It's painful because then people change their bank accounts and you got a poor customer sales rep trying to update things and it's kind of lame, but it does work, right? It's a workable system. Mortgage companies do it all the time.
But you know that next step of being able to transfer just by changing addresses and all that, that's really exciting. What we're running into is the fact that the SEC does not love crypto and we'd just as soon not create barriers. So we've explicitly excluded it from the current business plan of Water on Demand because we believe, we've already made plans to file for Regulation A offering for Water On Demand. Currently it's only accredited investors or non-U.S.. But you know, I'm a strong believer, like I think it's a piece of crap that only the 1% can invest in interesting things. I think that's really stupid.
So Regulation A, which is the Jobs Act thing that was created for unaccredited investors, has become extremely viable. And we this summer will we expect to have an offering. And the last thing we want is for the SEC to go, what's this crypto? So we are choosing to defer it and actually make it a separate spinoff completely that will be funded using more conventional crypto type. There's a whole crypto world for financing, which is separate. That's a long way to say that it's really tokenizable. We want to create water communities and the crypto world, all that good stuff, but all in good time. We want to lay in the fundamental financing of water systems that everyday investors like Cody and Justin can have access to.
Cody: Awesome. Well, I love everything you're doing. I love the innovation. I'm sure these things are going to unfold with time and kind, going to continue to just advance the technology. And I think that the crypto thing is such a good idea and commoditized, something like water, something that hasn't really been done before. For those who are like me and are really interested in what you're doing and all the companies that you're running, where are the best places for people to keep up with you, know what's going on, get invested and all that good stuff?
Riggs: I thought you'd never ask. Okay. So the as I say, if you're accredited, it's very simple. You go to OriginClear.com and there's a big green button on top right. Press that and bingo, you'll find you'll find yourself talking to the amazing Ken Berenger, who is so smart and a co-creator of this Water on Demand with me. If you're unaccredited, you should still do that because it'll register you and you should start, everyone should start listening to our Thursday night briefings.
Every week I do about a 45 minute briefing. Of all the things that are happening, we are the most transparent public company in America, we believe. I basically tell it all within the legal bounds of what I can say. And as a result, people really, you know, over time, they really get to know everything we're thinking of. So an easy way for people to sign up is to just type in their browser oc.gold/CEO. oc.gold/CEO. Or just go to OriginClear dot com and they'll get an invitation to go on the briefing. I would love to have people join it.
We respond to all questions, even the tough ones. We will take it. What's up with your stock price? Okay, I'll take that. We'll do it all. And so we love to, you know, there's a reason why we have a strong investor base and because they understand that we are responsive. If you receive one of my newsletters when you hit reply, it comes into my inbox.
And even though there's 30,000 people who receive it, I do answer your emails and we pride ourselves on having that kind of relationship because I believe Main Street investors are the future of America. Decentralization of finance means that there's going to be more and more growth of everyday investors, even if they only plunk in $1,000. That's really, really healthy to have a very large amount of small investors. It makes for a very, very healthy future and a very healthy investor base.
Justin: So thank you so much for coming on the show. That's the great thing about having this podcast. You learn something new every day and this has been a really neat kind of deep dive into this water market. So thank you so much for coming on the show.
Riggs: I really appreciate your great questions. It's been fascinating and and I guess I just kind of let it all hang out. But that's I guess you guys are good at that, right?
End of presentation
That was a fun podcast, as you saw. They're very smart and they asked great questions and drew me out. Of course, this is a very small these things are 40, 45 minutes, maybe sometimes even an hour long. You don't have the time. But we will be publishing all these podcasts on our site and you'll get a chance to experience them fully if you're interested.
But as you can tell, we really, really, really feel some things very strongly. And as I was saying there, the strength of the everyday investor, the main street investor going directly into an asset without having to be mediated by the all the grand poobahs. Right. So that's the fun part of what we're doing here.
Mortgage Rate Increase
How Could This Affect Real Estate?
All right. We're getting close to the end here. I wanted to do I promised to cover what's going on in the mortgage rate increase story. And there's a very quick clip here. I'm going to play and we'll discuss it briefly.
Start of clip
Joey: Mortgage applications data out a short time ago and it isn't pretty. Diane Olik joins us with more. Hey, Diana.
Diana: Hey, Joey. Mortgage demand is now less than half of what it was a year ago. How's that for a headline? That's according to the Mortgage Bankers Association. Sharply rising interest rates are decimating refinancing volume. And those rates, along with sky high home prices and a shortage of homes for sale, are hitting demand from potential home buyers.
Now, last week, the average rate on the 30 year fixed increased to 5.65% from 5.4% for loans, with 20% down. That was the average rate for last week. What you don't see on that chart is that rates surged much higher this week, with the average daily rate hitting 6.28% yesterday. And that's according to a separate measure from Mortgage News Daily.
Now, weekly mortgage application volume last week rebounded slightly compared to the previous holiday adjusted week. Mortgage applications from home buyers rose 8% for the week, but were 16% lower compared with a year ago. Some of that may be thanks to a little more supply finally coming onto the market. Refinance demand rose 4% for the week, but was 76% lower than the same week one year ago. The MBA did note both purchase and refi demand were lower than the week before the holiday. So that's just that holiday messing with the data. Now, we know the mortgage companies have announced layoffs. But yesterday, two major real estate brokerages, Compass and Redfin, did the same.
End of clip
Riggs: Yeah, may you live in interesting times, right? Well, what does this mean? There's a comment here that that really quantifies the situation. So 76% decrease in mortgage origination. What does that, what does that come from? Well, in 2021, a 30 year fixed was at 3%. So you could get 458 K mortgage with 100 K income. Now, 305,000, 33% decrease in purchase power.
So decrease in qualification with real estate prices being high. Also, people's credit rating has been dropping and there's been a lot of default in those triple-A. Is this 2008 all over again? What's up with that? Triple-a rated mortgage backed securities and you have the perfect storm. It's not theoretical. It's not prediction it's here. This is a very, very smart man. Aryeh Rifkin on t.me/maninamerica.
Inside the Numbers
Okay, so inside the numbers, let's take a look what's going on with inflation and what is really happening behind the scenes. You've seen this graph. Basically, it just keeps going up. It's at 8.6% in May, and that's a dramatic number. But it's been dramatic before. Look what happened in sunny 73. Right. And also in the Carter years, 79. So things went straight up. They went, they came back down. Of course, major medicine was applied.
Price of Crude
Let's take a look at this is what's driving it, of course is the price of oil, which if you look back here, 2015, 2016, that's when we had to bail out of the algae industry because biofuels were impossible at that price. And that's when we started in the water industry.
Fast forward to today. We're actually right back in that price point and theoretically we could start doing algae again, although we won't. So that's the, and by the way, crude prices have not stopped. Well, let's take a look then.
This took the CPI, if you count food and energy, is at the top line there.
But then look at without food and energy.
So prices are actually dropping for things that are not food and energy. And that, I think, gets to the bottom of the story. Very, very interesting.
Free Wheeling Discussion
Well, with that, Ken, I'm going to invite you on because this is the free wheeling discussion. So as long as we don't eat or go anywhere, life is cheaper. You know, you can buy manufactured goods from China, still is still a decent price and so forth. Robert Baxter says, "Thank you, Riggs." Darrell Polston says that prices are expected to rise up to $200 a barrel. And I actually believe that. Let's show the audience what might be happening to you next week.
Ken: You mean with me? Not to me. I mean, it sounds so sinister.
Riggs: Well, a very strong investor of ours, Adam Koller, is actually presenting at the show. He runs a global trading service for the wealthy. And he said today, we were talking to him, he said, "Hey, why don't you come?" And we kind of said, okay, so this thing here.
Ken: That's not what happened. You said, I can't make it, but Ken can go.
Riggs: Yeah, exactly.
Ken: I was like I was like, what?
Riggs: But see, the number of attendees is quite low. It's you know, there is only a couple hundred.
Ken: Offices, family offices. Look, when I was I had a very spirited discussion with Adam and I started talking about it and he says family offices, his his words. And this is not a Wall Street guy. He said they are desperate, desperate, desperate to find things to invest in and if it's beneficial to the planet, he goes even more so because you have to be there. And he was so adamant, What did I do? I pulled you in to the call. I said, Come on the call with me, with Adam, you know, and let's flesh this out. So it looks like I'm catching a plane on Sunday night. Late, really late to go to London.
Riggs: So it's in London and this is the whole agenda. But I wanted to go down here to these are all the events that they have. So there's one coming up. You're not going to go to the Weisbaden one because it's German speaking, but there's a New York one in October.
Ken: Get in touch with my German heritage.
Riggs: Exactly. Bien ja.
Ken: Well, how about just my New York heritage? That's a that's easier.
Riggs: It would work just fine. Yes. Well, that would require you to go to Israel.
Ken: That's true. No, I'd be the goy there too, so it doesn't matter.
Riggs: Yeah, but you could be a you could be a goycha goy. So October is so this basically what we're looking at here is Adam is going to get us get us in there on a last minute. Ken may speak, but we don't know. But the very least, he's going to walk the floor, hand out cards because now we're starting to talk to family offices and ultra high net worth individuals, UHNWI's. And here's the thing, is that he told us that they are desperate for good do do good things for the world kind of things. Right. And they want to be super early like I was about to say.
About Family Offices
Ken: I was going to say and he's just, "Forget about that second round stuff because these guys want super, super early, they're aggressive, they want to take risks." I said, "Well, this isn't that risky." He goes, "It doesn't matter. "He goes, "It has the big upside. They want it."
What was also interesting and he said this to me again, not a Wall Street guy, he goes, these guys are in really rough shape right now. They have big, big positions in commercial real estate and real estate in general. And they really are desperate to diversify into other sort of generational assets. He didn't call it that because that's kind of a street term. But he, I was paraphrasing,
£150 Million in Assets
Riggs: The definition of a family office is a minimum of £150 million in assets from only one or a few families. So this is a whole different world. And you're right, the problem is that that real estate people might have in America on a smaller basis are bad enough. But then when you've got a big portfolio, yeah, that's a different story altogether.
Ken: So what I explain a lot of times is that family offices have a unique problem because their wealth is generational wealth and it's not replaceable. You or I can have a bad year in the market. We have income, right? Their wealth is their income. Right. So there's really no room for for a bad for a bad year if you find it breaks it breaks the continuity exactly.
Riggs: So Gene Tully says, "Knock 'em dead Ken." And he also says, "Ich bin ein Berliner." Yeah. Well, you know what? That it's a funny joke because JFK said that when he visited the Berlin Wall in 62, I believe it was. But actually a Berliner is a pastry.
Ken: Well, I'll bring everybody back. Bagels. I'll get bagels.
Riggs: JFK was saying, "I am a pastry."
Ken: Yeah, he's a pastry.
Riggs: Anyway, it's a bad joke. I have to do my dad jokes anyway. But I think it's a great opportunity to jump in and see what's up. This is not the only one. There's another one that...
Ken: No, We'll do New York and we'll be completely and we will go in as presenters there.
Seeking Beneficial Investments
Riggs: But there's another operator, Denny Habad, whom we've already spoken with separately that Adam doesn't think is that great. Whatever they had, they had a moment. But Denny has also an amazing network and he does have the in addition to the UAE and so forth, I believe he has an Israel date. He does a blockchain one anyway.
So this is really exciting and. I think that what we've what's coming out of all the situation is we are in a perfect position. The worse things get for existing assets, the better off it is for us. Because we're the bargain. Yeah, the bargain. My God, it's like. Go ahead. Take something that was costing. It was costing you 50,000. It's gone to 20. Get something equivalent for a dollar. You'll. You'll even out. You'll even out just fine. Right.
Ken: And the green or ecological, beneficial, you know, the beneficial end of it apparently is really, really, it never used to be important. These guys were big in oil and gas. They were like, screw it, we need to...
Riggs: No, they've divested, a lot of them.
Ken: And they're really, really looking for beneficial investments. And I don't I can't think of a single asset that would be more beneficial than this. So I think it's going to be look, this was something that we kept saying. We knew what we were doing was right for this audience. I believe that with the hard work of Dustin and you and the entire team putting together a true institutional grade kind of presentation, I think this is going to be incredible. He said to me, it'll be incredibly fruitful there. Okay.
Riggs: And he should know he's been marketing, too.
Riggs: Exactly. So great. You're going to go ahead and do that next week. I'm going to show off those amazing graphs which show the historical performance and how important Water on Demand is to our company's future. Remember that, everything, if our baby does well, we do well. So OriginClear remains the play of the day. There'll be Water on Demand. There'll be eventually the crypto. There'll be EverMOD pump and lift stations, Modular Water Systems and Progressive Water Treatment, and then we'll continue. And this is starting to get fun. I'm starting to have fun with this shoot.
Ken: Why stop there? I mean, listen, I'm hiring, right? I'm hiring and I'm hiring in Pittsburgh. So I'm going to create this machine and I've done that for years. So I think that this will be something that is going to be a lot of fun. And what I'm really looking forward to is to finally get this story out. We speak every week to the folks that already believe in us. And I want to start speaking to folks that don't even know. And never even knew this opportunity exists that I think is going to resonate amazingly well.
Riggs: Yes. Well, this is this is our time. And I think we've matured it to the point where it's we've covered all the bases. So. oc.gold/Ken, to schedule a call with Ken, he's the man. Gene Tully says, "Excellent job." Sharon Skonestsky says, "This is so exciting and love the candid briefings." Thank you so much, Robert Baxter, "Same thing. I love my Thursday nights with you guys." It is a pleasure doing these. I love talking to you all. And invite your friends, join us and I'll show you some astonishing graphs next week. And also Ken will be back. He will tell us some of the things that.
Ken: In theory, I'll be back.
Riggs: You'll be back.
Ken: I'll be back. All right.
Riggs: All right, everyone, listen. Have a great weekend. Everyone can convince your wife it's okay for you to go.
Ken: No, she's like, "Let me pack for you. I mean, how long are you going? Yeah. Oh, did you leave the Amex, Kenny? Did you leave the Amex on the counter?" I'm like, "Yeah, honey I left the Amex on the counter."
Riggs: Very funny. That's cute. All right, guys.
Ken: All right, guys,
Riggs: Gals, have a great weekend. Bye bye.
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