Insider Briefing of 6 August 2020
Helping you thrive in the world’s ONLY vital, scarce and recession-proof market
The water industry needs three million people… find out how we’re helping! And meanwhile, our Texas operation is seeing a boom in sales opportunities. Has the “V Recovery” begun?
Transcript from recording:
Welcome everyone to Water Is The New Gold. I've got the team again, they're returning from their repeat engagement from last week, because we've got so much more to tell. I've got my mood lighting going. I love my mood lighting, but, and then of course we got Dan who continues. We've now decided that his beard is a sign of good luck and the more it grows, the more deals he gets. So, he's going to turn into The Old Man and the Sea pretty soon, but if it gets us business, then buy yourself a pair of cheap sunglasses, That’s all I’ve got to say. And then we’ve got Tom here who just had a root canal, so he's feeling great.
Riggs: Party on. Excellent, dude. All right. So what I'm going to do is share screen, get into it and see how things go. So sure enough, Water Is The New Gold, “Helping you thrive in the world's ONLY vital, scarce and recession-proof market.” Why do we say that?
Well, there's never really been a recession for water. Why? Because water does not recede, right? It only increases with population and furthermore, the water industry is so far underperforming in terms of overall responsibility in the world. It's only treating one fifth of the water in the world that it's got a lot to catch up and that catching up is all going to happen at what we call “the edge,” which is businesses do their own treatment. We'll discuss that some more, of course, fresh water is scarce and it seems getting scarcer all the time.
With that, I'm going to pop into the safe harbor statement, which essentially, we're not God, we do our very best to tell you what's going to happen, but again, we do not have a time machine. And Regulation D disclaimer, is that any offering I discuss on this program has not been passed on the merits by the Securities and Exchange Commission, it's a private placement. And of course, it requires accredited investors, investing in securities always involves risk.
All right. So, our good friend, Bob Roos, who in fact, just reinvested, we saw his reinvestment come in yesterday in our bank account for which we thank him. And he's got a little statement he's going to make for us. So, let's hear what he's got to say.
Investor Bob Roos
“Especially now with the new Water Investor [Investor Water™] , I am truly excited about doing something for the planet and doing something that is positive in taking care of a situation that cities, in Michigan, Flint, Michigan, even Los Angeles and numerous other places that have had water problems. And I think you're right, it is time to do something about it. It's time to really be effective.
And I'd like to be a part of that solution by investing in OriginClear and the water project. I've been amazed at what you guys have done in the past, and I'm really, really excited about what the future is going to bring because OriginClear is probably one of the most innovative and interesting companies that I have ever been involved with and I think the sky's the limit for the future.
So yeah, and it's a way to make money and in this time of uncertainty with the market going up and going down and everything else, and you guys have been steady for the last two years with regular payments. So, I'm betting on the future. I think it's going to be great.”
Inspire Before We Expire
Riggs: So, that was Bob Roos, giving us his opinion of how things are. And I'm also going to run a quick excerpt from a podcast that I was involved with this week. And this is an amazing young man, Terrell Sumpter, who has a program called Inspire Before We Expire and oh my gosh, you would be amazed at some of the people on his show.
These are people with real life, like for example, the one I'm... if you go to the podcast right now, you'll see the most recent one was a billionaire who had a very hard time, a long time ago. And of course, turned it around. So, this is a really inspirational podcast. Let's see the little exchange he had with me right now.
Terrell Sumpter Podcast Excerpt
Transcript from recording
Terrell: All right. Why do you feel like this is such a much of a big responsibility and then you seem so much passionate about it?
Riggs: The water industry is only treating 20% of the sewage in the world. The other 80% is going into the rivers and the oceans and into the ground. And that is not okay. That is a source of disease. And that made me step up to the plate and go, okay, we have got to take responsibility as the water company for the new economy and the new economy is post-COVID and it's horrible and terrible, but it's also time of great future, if we can make it happen.
Terrell: Right. So where are you guys at today, right now, with the whole thing, as far as COVID going on and stuff like that?
Riggs: So, what we've been doing is we've been experimenting with how to create these solutions for people and finance them so that a young man or woman can actually start a business who has been put out of work by COVID, but this great business is out there to start. And if we can make it happen, then we've made water work for this new economy. And that's super exciting.
Terrell: That's a testimony right there. That's something that I'm sure my young listeners will love to hear because I'm sure that maybe a big brother or their parents or somebody may have just lost work as well.
Riggs: This is what we're excited about, is lighting this spark for these new entrepreneurs in water for the first time. Do you know that the water industry is aging? It's going to need 3 million jobs in the US alone to be filled in the next few years because people are retiring. Well, let's do this thing. You got people out of work in America, 3 million jobs. I think we could make it happen, right? So, we'd like to help.
Terrell: City water is legal, we all know that as well, but is it safe to drink?
Riggs: The water that we drink is not great, and Flint is only the worst of it. This situation is not as bad as Flint. For example, people don't know that South Bend, Indiana has very, very bad water, as bad as Flint. The solution is again, do-it-yourself water treatment to make things better over time.
Terrell: I'm totally behind you, man on your mission, man, to really solving water treatment, cleaning water, hopefully everything get better in those cities that you mentioned. Hopefully Flint, as we know, the water has been also bad out there. And as you said, the brown water in Compton California, I never knew that as well. Thank you so much, man. Much gratitude to you.
Riggs: Terrell, the inspiration was mine. Thank you so much. It was a great pleasure.
End of clip
Riggs: Well, that was a 45 minute interview that we cut up very, very tight for you, so you'd get the gist of it, but it was amazing because Terrell does podcasts to a lot of people who are trying to get a new situation.
Speeding Up Funding
Well, there's been lots of developments this week, and we'd like to say that Investor Water evolves. As you recall, Investor Water was born out of really the fact that we realized during COVID that the water industry has got to step up to the plate, as I said on that podcast. And we started looking at how we could speed up the funding phase and create a marketplace, but we've learned a few things about that marketplace and I'm going to get right to it here.
Investor Water’s Role
What we're learning, direct financing of credit worthy customers is very challenging, meaning that it's a huge, this is a trillion-dollar fund. A group like Cross Capital is vast and you're not going to compete with those people. They're sophisticated and mature. They got all the, billions have been put into creating this industry.
So, for people who are competitive, we just put them into regular financing. This is normal. I've been doing that since the '80s. And we all know how to do that, but what is Investor Water's role? That's something that we sharpened up beautifully this week. And I was starting to allude to it last week. Let's see where it went.
We're getting leads for Pool Preserver as a business opportunity. Now, these people don't just want a machine. This is that machine you saw last week, which recycles the pool water, so people don't have to drain it and potentially crack it.
They want training on how to build a business. Now we have the proforma, the website and more. A proforma is basically... shows how the business looks on paper, right? That's a proforma. And we have technical training available on the ground so that we can get people up to speed. But we also want to teach them how to market themselves.
So now we're putting together this integrated program, and it has the potential for double-digit return. Why? Because it's packaged in with a bunch of value-added services. Cress Capital, or any other Wall Street company, is never going to do this. It's not going to happen. So, there's a services and hardware bundle, and it's literally Water as a Career™, WaaC.
Water as a Career
But water as a career is a new concept, remember these 3 million people that are retiring from the water industry. What's that all about? Well, here it is. In WaterWorld there is an article, "Silver tsunami, generation of workers retiring from their jobs and taking their institutional knowledge with them."
This is a big deal. "As many as 3 million workers will need to be replaced over the next decade." That's a lot of people, and guess what? There's a lot of people out of work right now. So, one-third of the national workforce in water is going to be rotating out. This is huge, so we have an opportunity here to create something special.
Double the Performance – Half the Price
Now here's another amazing thing that the guys on this show are going to be able to talk about is we have a gen-two pool preserver. Again, the video that we showed you last week and the website and so forth were really about a machine that does an amazing job. Well, we've managed now to double the performance. We believe this is a potential because we've now penciled it out, done the design, and we believe we can get this, so we double the throughput at half the price.
Now this was, call it a $100,000, $120,000 machine, so now it's $50,000 or 60,000 and it's twice the machine. Each of these pools is a $600 to $800 job, you see how it massively improves the turnover, right? It doesn't use membranes, which means no more cleaning costs. It is a revolution developed by Dan and Marc who got their heads together, and I greatly appreciate it, guys. More news to come. Now we're going to move to Tom Marchesello report.
The Tom Marchesello Report
Tom: Hi, everybody. Thanks for tuning in today. I appreciate it. Dan and I actually are both here because we're kind of a tag teaming it today. Things have been picking up on the operations side as far as making product and getting quotes out the door. What we did see was everybody was worried about coronavirus and the big question is, how does it impact your business?
For us, the truth was we never really saw any slowdown at all, even from the moment of the beginning, from February through today. Instead, what we've been witnessing definitely in the last 60 days is an uptick in our business where we're definitely seeing continued new business.
So our revenues have been on pace to actually exceed our expectations. We're really growing at a good clip, and we've noticed that we're getting more hits on goal. So, there's been just literally a flood of inbound quote requests.
People are looking for all sorts of equipment, from reverse osmosis, EDI, lift stations, pump stations, wastewater treatment, as well as other things that we're doing, tankage and so forth. It's been really good and I feel real positive about what the team's doing. We're really trying to churn our way through it right now and get to the next spot so it's really showing a couple factors as to why this is happening.
We've actually been asking our people who are making requests saying, "Why is this happening? What's going on?" Talking to our own salespeople. They believe that what's happening is there's a couple of things that came together. Obviously, people were a little scared with coronavirus. They did hold back on a little bit of budgetary as far as placing their bets, so to speak. When they did finally decide to go back to work and put the money to work, they wanted to buy American.
So, sitting here with our Texas facility is really great for us because then people are saying, "Well, these guys are here in America. We're not going to have the supply chain slow down." Because what we found with some of our competitors, they were buying a lot of their equipment overseas. They were buying a lot of Chinese-made stuff, India, Mexico-made stuff.
Bogged Supply Chains
A lot of those supply chains really got bogged down and there was a big hit to some of the orders that some of the folks were making in the industry because they really couldn't get the parts the way they wanted. At least with a group like ours in Texas, we have all our own stuff onsite, so you're not going to experience the same problems. So I think that's really worked out in our advantage.
The other thing was, we just reached out to a lot of people. We said, "Hey, we're all here. Everybody's healthy. We're still working full steam." We had a lot of essential clients that really cared about drinking water systems and wastewater systems. Those weren't going to stop during this time. If anything, the need for disinfection increased. So everybody really cared more about making sure that sanitation was taken care of, which really plays into the theme that you've been talking about, Riggs. So that's a good piece of it.
In The Right Spots
We've also just been pushing on our own initiatives, putting our CRMs in place. We got up onto different directories like Thomasnet. Dan and Marc wanted us to get into different government systems like Costars, which is the Pennsylvania system for purchasing, so we got into that. That's made a difference in how we work with some of our consulting engineer groups.
We basically been placing ourselves in the right spots of the supply chain and that's worked into our benefit because as this picture is talking about, the big picture is this topic called onshoring and reshoring. As the threats to international trade have been increasing, what you're seeing is the desire to reshore here in the United States. Make sure the supply chain from beginning to end can be done right here in America and basically trust the products that you have, as well as the quality. That's an area where we win. We always have great quality, and we're buying stuff from people we know.
I think it's really working in our favor right now, and I really think this will be a trend that's going to continue, as a matter of fact, because I really see this accelerating for the next couple of years. Regardless of how this election goes, this is going to be here with us for a while.
Riggs: Well, in fact, Tom, you're responsible for a huge amount of this, and I appreciate it. The slide went into the decentralization trend, which, of course, I've got a 2016 article here, so that's proof that I was talking about it back then. But in addition, Dan, you were doing this stuff 15 years ago in decentralization. Am I right?
Dan: Yes, that is correct, Riggs. I have quite an extensive background. I saw the vision, I saw the future 15, 20 years ago with respect of decentralization. Just coming up from the engineering background and coming up through the ranks, like I did early in my professional career, decentralization is the key to the future success of water and wastewater.
Riggs: Amen. As it says on the previous slide here, it is now a megatrend. People are getting it. We often talk to consumers who go, "Well, wait a minute. The central water systems, I still get water coming through my tap, and I flush the toilet and the water goes away." But what they don't realize is that businesses are being told increasingly to only provide treated water to the municipality because of problems with capacity. So, all of a sudden, you've got either a lot of waste being trucked away.
There was a famous case history of a brewery in San Francisco area with the Bay area, which, for a long time, had to truck its brewery waste to the other county. Finally, they bit the bullet and put in a system themselves to deal with the uptake and the local municipality was not going to help them. So, there's real crises, and I think that OriginClear, with your help, too, Dan, is definitely stepping into the breach. So that's super exciting.
Tom: While you have Dan on for a second, Riggs, I just wanted to tap him because I was about to throw a bone his way. One of the things that Dan was doing was, during the COVID-19 time, he was doing a lot of webinars and teleconferences and reaching out to a lot of engineers and consulting engineers, which I think was very valuable because they get continuing education credit, but also at the same time, they all got to learn about our product lines. And after continued effort of a few months of doing that, Dan, what's happened since then? What was the effect of that?
Webinars And Video Conferences
Dan: It is the webinars and these video conferences that we have done remotely since mid-February, late February of this year, and have continued up till even just this past week. The impact that we are seeing is we have reached out to 50 to 75 different engineering firms. We have touched at least 300 to 350 different specifying engineers.
All of these folks are decision-makers and in the gestational process of a water project. What we are finding as we use this very intimate capability to meet with these people and what is happening is, is that we are able to much more effectively communicate who we are, what Progressive Water™ is, what OriginClear is and the Modular Water System™ product line.
And we're introducing them to our EveraMOD™ pump stations, our packaged EveraSKID™ wastewater treatment systems, the booster skid product lines and all of that. And we're basically pulling back the veil. These firms did not know that we had all of these capabilities. They didn't know that some of these new solutions, that we have been promoting for the last few years, existed. And the result of that is that we have had a tremendous uptick in inbound requests for technical permitting packages and budgetary quotes, and we're finding ourselves in basis-of-design on numerous projects.
And, Tom, just the impact that this has had, it's just been overwhelming. We're really struggling. Robb Litos, who's my counterpart is the technical project manager, Mike Jenkins and Marc Stevens are struggling to keep up with the inbound requests for information, product information, technical support, and those types of things.
I am so, so very pleased with the response. The response that we get, the reception we get. And more importantly, the adoption that we get by the consulting community as these consulting engineers are working with their clientele. That has been probably the most rewarding part of this whole process. And what does that mean?
Tip Of The Iceberg
That means that we're now closing deals that started and opportunities that came to the pipeline six and eight months ago. And there is going to be a very deliberate, continued increase in sales activity, top line revenue sales, and we're going to see a tremendous increase in that over the next six, 12, 18, and 24 months.
And we're just really, really just only touching the tip of the iceberg. It's amazing what success that we have had in just what limited time and what just few firms that we've been able to work with.
Tom: Cool, that's exactly it. It's like, I've been on some of the calls with you two and literally like engineers who are world class engineers with amazing firms are like, "Wow, this is great. It's exactly what I'm looking for." Like, it's perfect.
Tom: Like when they say this is exactly what I'm looking for, you know you're in a good spot. You know, so a lot of testament to you, Dan, so thanks.
4M-5M In Quotes
Riggs: No, you guys are rock stars. And it brings me back to the slide I was just showing off. Coming back to the screen that we're talking about here. This is, Dan, where you were talking about a particular rep organization that has become extremely comfortable with us and has given us, I believe this is correct about four to five million dollars in current quotes.
Dan: Yes. Yes, sir, that is correct.
Riggs: And then, very interesting how, Tom, you really spearheaded the integration. I recall, Dan, at one point, we kept you guys separate, because, I don't know, it was what we thought at the time. And you were like, "Oh my gosh, I'm overwhelmed." You were running around like a madman. And then really things have calmed down tremendously when you now have a production facility, right?
Stability From Integration
Dan: It has. I have been being able to anchor myself with our own in-house manufacturing capability, with Progressive Water Treatment in McKinney, Texas. That has really stabilized things. We have really gelled as an organization over the last six to nine months.
Riggs: I'm loving the creativity of the designs. I'm seeing some amazing stuff come out, just like that Gen 2 device on the Pool Preserver product line. How far do you think we are away from the Pool Preserver Gen 2 to actually make it a reality?
Dan: So, I was on the phone with Marc Stevens earlier today, following up, and he and I have been working proactively and collaboratively for, I would say, the last 30 days on the Gen 2 version of the Pool Preserver. And as of today, when I asked Marc, I said, "Marc, if we were able to pull the trigger and start fabrication, how fast can we turn the unit and have a field deployable system ready to go?" And his response to me was he felt like in 30 to 45 days that we could easily do that.
And we feel very comfortable, Marc and I do because of the simplicity of the system and some of the new technology that we're going to integrate into the Gen 2 version. So I would say, I would dare say that 30 days from now, if things continue to click forward, that we might be able to show real world photos of a unit, the Gen 2 unit.
Riggs: Well, that's fantastic. You know, what I really love is the fact that we've now moved, Tom you're the one feeling these leads from people who are looking for business opportunities, and that it's no longer just a straight equipment sale.
The Business Opportunity
Tom: Now it's a little bit more than that. They need equipment, obviously to do the basic job because machines changed the world, you know. Like, it's the old, "Why dig with a pickaxe when you could have a backhoe, right?" That's the key piece, you've got to get the machine there.
But now they're also looking for the business opportunity and I've had a lot of calls, actually I'd say more than half of the inquiries have come where it's like, "Hey, you know, coronavirus really sucks, and I lost my job." And I'm like, "Yeah." And there's a lot of people that had that happen. So, they're looking to re-employ themselves. Or it's like a father, uncle, grandfather kind of thing where they're like, "Our family wants to put our nephew or son in business, you know, with one of these machines."
And honestly, it's a great opportunity. I really think it makes perfect sense because the money's there, the business is there, and they're just looking for the best way to get it done. It's a very viable alternative. We talk a lot, like this. I mean, realistically, if we really want to push it, it's like the makings of a franchise business, like the pool version of Jiffy Lube, right.
In our hands right now. And we're not ready to launch a big, massive franchise business yet, but we think we can at least get some people out there working effectively and making money. That makes me happy.
Riggs: Well, it's the beginning of a great thing that our partners, as you notice at the beginning of the presentation, we have this brand called Water PhilanthroInvestors™. And this is a group that has spawned some fascinating successes in a niche just like what we're talking about here. So this has tremendous potential, and I'm just going to show their slides in real estate. And they really had amazing success in real estate.
They have a process which again, is this value-added type process where they pick up foreclosed properties, they buy these homes in bulk, the investor purchases the properties, they become the trustee. They add value by improving the properties. They sell these to families who could not otherwise own properties.
And I know from having spoken at length with Ivan, who was on the show a couple of weeks ago, that he told us that he was promised many times people say, "Well, why don't you go into higher end type properties?" And he was wise enough to stick to this.
So, we're really looking at something like this, which is it a protected zone where other people cannot step in because frankly it's too much work, but it's a protected zone because so many people in America do not have access to buying a home today. It's really a scandal. And it's very much the same way now in water with 3 million jobs up for grabs. And we are there to put people in them. So again, I love this what we call value add because it gets into, now it's water as a career, very, very fun and different.
I really want to thank you guys, because as I was showing in an earlier slide, we did not expect the conventional side of the business to take off the way it has been. You know, we had this early on, Q1 like, "Oh my gosh, what's happening with COVID? Where's this going?" And then Q2, "Well, okay. You know, not bad." And Q1 was actually ahead of 2019, as I showed. And then Q2 seems to be on trend as well, where we have our quarterly filing coming up the 15th. So that's basically next week, the next webinar is the day before the quarterly filing comes out. Hopefully I'll be able to give you some guidance then, but the numbers continue to improve.
And now in Q3 it's really taking off, and this was totally unexpected. So, I'm really grateful to you guys for being all over it. Good management, good focus, staying on the job, implementing things like Thomasnet, and the outbound marketing. Very happy about it.
Regulation A Offering
Okay, Grant Brandon ask, “Riggs, is the private placement still on the drawing board?” I think what you're referring to, Grant, is the unaccredited investor round, because I'll be showing you guys how you can be involved with the Regulation D, the accredited round.
But just so you know, we've now refiled the Regulation A offering.
Reg A Refiled
All right, let's take a look right here. There is a 1-A, preliminary offering circular. So now this has been resubmitted to the Securities and Exchange Commission. Unlike the Regulation D offering, which is not subject to review, this is. So now this is in review. You can do up to $50 million a year that we're doing roughly 20.
And in here, it really shows what the deal is, which is basically a $500 investment. And what's cool about it is we simplified everything. Minimum $500 investment, you receive a 10% dividend, paid monthly, automatically. And then we can only retire the debt by paying you 150% of your investment, which is pretty good. Now, eventually we do intend to list this bond on the stock market, and therefore, you theoretically will be able to sell it. But frankly, if you're making 10% a year, and we have to give you 150% back, you're pretty much in the catbird seat. So we think this is going to play very well.
These things are done really mostly online. Now, if we go back to the presentation I was just giving, there you go. Now the current offering is for accredited investors only, and it's going to go parallel. Grant, I think I answered your question, but if it's about this, this one's up and running, and it's doing very, very well. For accredited investors, it's less cash than the unaccredited, but more overall because there's a stock component.
And also there is a redemption or repayment of principal price at the time later of conversion. So there's no real concerns with the stock price outside of the usual stock risk. Of course, I don't want to minimize that there's a such thing as a risk.
Expeditionary Water Recovery System (EWRS)
So, Ken Bogert, “Military bases still use septic in many locations. Are they on the radar?” Well, Dan, you've got your Expeditionary Water Recovery System, EWRS does that job, right?
Modular Water System's peerless EWRS line of portable, rapid-deploy military and disaster relief systems deliver solid and reliable performance by incorporating latest technology designs that harness cutting edge PLC digital systems, proven state-of-the-art operating devices and the highest quality components
A Preferred Customer
Dan: We do. We have that military capability. In fact, I was actually speaking with some folks with the US Navy a couple of weeks ago, they called us to talk to us about our black water and domestic wastewater treatment capabilities, containerized treatment capabilities, that we promote and market. So yes, we have that capability and the military, The Department of Defense actually, is a preferred customer, a preferred client of ours. So, they're definitely on the radar screen.
Riggs: That's a beautiful thing, and we can't discuss it, but we're in talks through a partner with another country's armed forces. So definitely exciting to leverage that capability, which is that the other partner has all of these government relationships all over the world, but we've got the arms and legs to get things done. And as you say, the design capability, so it's a good marriage.
Byron asks, “When will the offering be available to unaccredited investors?” Yes, I hadn't answered that. The review typically will take 45, 50 days, it might take less because this thing was previously approved. And then the problem was that the previous version was immediately convertible into common stock, and we were concerned, and so was the SEC, that it could be used as a cash machine, cha-ching, cha-ching, cha-ching, and hurt the stock.
So that's why we pulled it back. We did very well in the first month, we did $200,000 in just one month in investments. And of course, it was online, very, very efficient. So, we think it's going to be a wonderful way for us to clean up our balance sheet to get these major projects going, create this business opportunity type businesses.
Building Businesses Around Innovative Products
There's Pool Preserver, the Pondster™ product line, pond monster, which handles trailer park ponds as well as ordinary retention ponds, and real estate, as well as animal farms, which is a huge market. And I think we can get people into that business too. Our Wisconsin partner is literally making a business himself. And that's the kind of thing I think we can do more of.
So with that, I really appreciate everyone. I appreciate everyone who stuck with us, it's been slightly longer than usual. But really, really happy with the news with how well you guys are doing. Thank you. And Tom, do recover tonight. Chill out. Thank you for coming on. And Dan, don't cut that beard now, you're stuck.
James, “For the pool preservation machines, how much will it take to build and deliver?” James, Send an email right now to email@example.com.
Riggs: And before I forget, and somebody beats me up, I'm going to tell you that you can contact the team. This is the 800 number, 440-4603. Ken Berenger who's the master, well, he and I developed this Investor Water™ concept, which is starting to take off. Devin Angus who's my assistant. And if you want to talk to me, talk to him. To schedule with Ken, just go to oc.gold/ken. Everyone, thank you very much. Please join us next week. We have lots of updates for you. Have a great weekend. Thank you again. Good night.
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