Riggs: Hi, this is Riggs Eckelberry, and thank you for joining me on the 18th of October on this CEO briefing. The thing I want to talk about today is really how we have an amazing water veteran and adventurer who's literally blowing up Modular Water Systems.
Last week I interviewed him in depth and it's really worth taking a look at that interview. You don't have to listen to it. You can just read it because it's also transcribed. In the interview I basically walked through what Modular Water Systems is all about, and what it is, is a unique way to deliver self-sufficient water systems. Now we've played a lot with terminology to try to explain this phenomenon. We call it decentralized water treatment but most people don't understand what that is because most people don't have a water problem. They get their water from the tap and when they flush the toilet, the water goes away, but for genuine industrial, commercial, and agricultural customers, very often they find themselves unable to get their water treated by the local municipality, and so there they are. They're stranded.
So what we've been working with is are these people self-service, self-reliant? I think self-sufficient is a good description because what these customers are being told by the local city sewage plant and so forth is we can't treat your water. You're going to have to give us treated water. Now why is this so? It's really interesting but the infrastructure for water in our country is degrading just like everything else because government can't get its act together these days. We're all fighting each other because the media figured out that's how they make money, so everybody's fighting everybody else. Meanwhile, infrastructure is not being taken care of in this country. It's going to take a quarter trillion dollars, 250 billion dollars, to fix the water infrastructure. It's not going to happen. So water mains are busting all over, and water companies, your local water districts, they're saying to local factories, the local farm, let's say a pig farm or whatever, "Sorry, you're going to have to treat your own water. We can't take your manure effluent” and there they are, they're stranded.
This actually creates an opportunity. It is a huge trend that's emerging. It is also the best way to get recycling going because think about it, when you are a central water plant and you're treating all this water, you're treating millions of gallons a day. How are you going to recycle that water? You have to build some kind of return line for that water to go to back to wherever it's going to be reused.
Here in L.A. we've got a huge water treatment plant down by the ocean in El Segundo, and the next step after them is the ocean. So, what are they going to do? Take the water and pump it back uphill, send it back to the Hotel Fairmont in Santa Monica? That's not going to happen because you need a whole infrastructure to reuse water. Guess what? If you have a housing community up in San Fernando Valley or even further north, that new community up in Tejon Pass. You can build that housing community, 2-300 homes. You can co-locate a water treatment system, self-sufficient. Then you can take the water, all that flush water you're treating, and turn it into irrigation water for your golf course, and save a huge amount of money.
In fact, in California, as Dan Early [President Modular Water] told us last week, you can pay for a system like that in just one year. We're talking about something that's five, six hundred thousand dollars, maybe even a million dollars. Pays for itself in just a year because in places like California, water costs a heck of a lot. In other places it might take two or three years.
So, we have this phenomenon of an on-site water treatment, a self-sufficient water treatment and Modular Water leads the pack. So much so that they have received designation for most of their projects as Basis of Design. Basis of Design means that the engineer of record, the engineer who works with the client has said, "This is the design we're using, and it's unique." Now the company that's selling the design can't be replaced very easily because nobody else has that thing. That thing is unique, patented, and so on. That's called being in the catbird seat.
Looking at our Modular Water Systems projects for this year, since the end of June when they started with us, there are 21 projects that are in this pipeline. I'm not telling you how many are going to go through yet because that's very private information for the time being, what we call non-public information. Out of those 21 projects, 20 are Basis of Design. We're actually the people who are responsible for architecting it. Now Dan has to go through a huge amount of evangelism to make that happen. It's a patient job. You've got to get in there, and you've got to teach people what's so special about it and so forth.
A great example is an insurance company, a large insurance company that decided to build a new office building. Insurance companies think in long life cycles, so they wanted this office building to last 75 years, so then they had to go find a wastewater treatment plant, actually a pump station, that would last 75 years. Their specific situation was that they were replacing an existing set up that had its own water treatment system, and in this case, it was the reverse of self-sufficient. They decided actually to go ahead and plug into the sewage system, which, again, is relatively easy if you're just talking about flush water from the building, and they've got no golf course there, it's just a building. So for them it was relatively easy to go, “Okay, we need a pump station.” They started at $30,000. That quickly doubled up to $60,000 and then it crept up another $68,000 and now the project is close to $140,000 range.
All of it is Basis of Design, Modular Water. Why? Because Modular Water are the only guys who have a system that can last 75 years minimum, because it is reinforced thermoplastic, not concrete, not fiberglass, and not coated seal. All those other methods are: a. More expensive; b. Take a lot longer to build; and c. Don't last as long. You wonder why the heck does anybody not use Modular Water's process? The easy answer is, it is brand new and it has got patents. Modular Water is patented. As a result, I can tell you that Dan Early is fielding calls night and day for his systems, and so far he's only been doing it with word of mouth. We're changing that. We're getting a whole marketing program going but meanwhile, he's delivering on a huge pipeline of business already.
Second thing that's going to happen with Dan Early, that is really going to start in earnest in 2019, is building a channel for himself. He needs a big sales rep network. He needs other companies to resell product. We need to have an international footprint, licensing, all that good stuff. That is going to dramatically increase the scope of Modular Water. For the time being, we're going to be extremely happy to have a lot more revenue in OriginClear, and we think it's going to be very, very good ultimately for our profitability. That is the picture with Modular Water and Dan Early’s Basis of Design situation.
I was talking to a reporter today who is in Florida, and he very specifically was interested in the situation in Florida because, you would think they have a lot of water, but their problem is they've actually done poor management of the water table and as a result, the water table has dropped. Salt water encroachment from the ocean into the water table. Now you've got brackish water in your aquifer, and you've got a problem. It's hard for people to drink. So as a result, 60 to 65 percent of the projects that Dan quotes for Florida have recycling built in so they don't have to pay for new water. Makes a whole lot of sense to me, and this is why we went ahead with the decision to bring this on.
Who's behind Dan Early? Dan is out there quoting things like crazy. He's got a secret weapon, which I call "manna". We code named it "manna" last week because this literally puts projects into his lap. How does it do it? Very simple. It is a piece of software; he’s about to roll out Generation 3 of this software. Only we have it. Literally you put the critical information into the input screen, and it pumps out full specs, drawings, blueprints, 3D modeling, parts lists, everything. It does in five or ten minutes what a normal engineering firm has to take weeks or even a month to do, depending on the complexity of the project. That is huge for the engineers that come in and want to find a solution because they can go to Dan. Dan goes, "Here's your blueprints and so forth." That is one very happy engineer. So that is kind of a secret weapon.
Now, beyond that, we have recruited a team in Los Angeles, and that is Brian Pearce in Operations and Gaby Campos in administration, and they are supporting Dan directly. In addition, we have Progressive Water, our existing subsidiary near Dallas in McKinney, Texas, and they have a fabulous capability for building any variety of system. Marc Stevens over at Progressive Water has built a 15-year business by basically telling people, "What do you need? We'll build it." They have tremendous versatility and they can build for Dan any innards that he specifies. The process basically goes that Dan has four or five certified plastic fabricators that he uses, so these pipeline kind of sections, they kind of look like submarines, get pulled together, and fabricated by these specialized plastic fabricators. (In fact we are going to take some of that in-house but that's in the future.) Then all the parts are put together by Progressive Water. They all get shipped to an assembly location near where Dan is physically located, which is Roanoke, Virginia, they all get assembled, put on a truck and shipped out. The actual commissioning of the water treatment plant is very, very simple because guess what, put it on a pad in the ground, tie it down with straps, and you're up and running.
The other thing that's really good about a Modular Water systems is that literally any 18-year-old can operate them. Why? Because Dan has delivered a number of systems to the army for the forward operating bases in places like Afghanistan, and he had to make it so that an 18-year-old G.I. could operate a waste water treatment plant. So now you are taking that know-how and translating it over to, sure enough, this civilian application. By the way, he continues to work with the military and has an active military project even now, so they, too, appreciate it.
Now the Modular Water Systems product line is two major things. One is waste water treatment plants, that is dirty water comes in, clean water comes out, to whatever grade. It can be desalination, it can be very nasty stuff or very simple stuff like flush water. Whatever it is, that's waste water treatment. And those [systems] are horizontal, typically. Then you have the pump stations and those are vertical. What a pump station does is it moves water from one place to the next. Example: In the case of the insurance company, they have a big pump station to take all that flush water from the building and send it out to the municipality by using a big pump station that gives it a whole bunch of pressure because you've got to push it along these high-pressure lines.
Now with [waste water treatment plants], conceivably you can use a shipping container instead of Dan's design. It is not as good. It's more expensive. It doesn't last as long. It is kind of clunky, etc., but shipping containers do work, and even Dan uses them occasionally. But you cannot use a shipping container for a pump station. It doesn't work. You have to have basically what looks like a well. It is a tube in the ground, and you're either going to build a concrete shaft and build it in there or you're going to take one of Dan's tubular designs and go ahead and put it in the ground, plug it in, and it's up and running. And that is the pump station. Those are the two product lines, and we are busy giving them brand names, etc. It is all going to be on modularwater.com. IIf any of you are in the water industry right now, we'd love to hear from you, tell you more about it. We've got product brochures we can send out that describe these systems and they really do fill a need.
In conclusion, the secret weapons for Dan really are the fact that he is proprietary, so he's Basis of Design. He has also got what I call "manna," which is the secret weapon that designs things from a simple input screen. We've got the patents, which make it very, very hard for anybody to replicate what he does without going to court, and which has a lot to do with Basis of Design. And now he has a team with Progressive Water providing the support, and we will be building up on that.
So that is kind of a background briefing on Dan Early. I wanted to give you guys and gals an opportunity to call in. We have done amazingly well so far with our funding round for the simple reason that we are not asking people to buy stock. We are offering people a piece of a major asset of the company that is precious. We have spent as much as half a million dollars a year developing it, so it's worth a lot to us and to our shareholders. We're offering your investment back, plus interest, and then we give you a chunk of shares.
Right now, in fact, the stock price being what it is; because a lot of what Modular Water and other good news that is happening has not been communicated properly because I can't. I physically can’t tell the world what's happening. I am hoping to change that as we get further into the quarter. As a result, the stock price is where it is, and that's actually a benefit if we are giving you shares. Obviously, [the lower the price] the more shares you get is a good thing for this purpose. It is a terrible thing for the purpose of where we want the stock price to be, but we have absolute certainty that this company is at an inflection point with revenue, with future profits, with acquisitions in the pipeline, a whole variety of things that are happening that make us very, very happy.
And by the way, I wanted to mention one last thing I've talked to you about before, which is our cryptocurrency thing. We are going to be at the Crypto Week in Los Angeles starting tomorrow with the StartEngine Summit in Santa Monica and particularly Crypto Invest Summit, which is next week. If you happen to visit those, just let me know. You can email me at firstname.lastname@example.org, and we can get together. We actually have a whole separate seed round going for WaterChain, which is going very well. We have investors coming in to take care of that. That's not something that we are proposing for everybody because we have to have a preexisting relationship with those people.
So what you can invest in is this wonderful offering that is going so well, and you can speak to Ken Berenger at 323-939-6645, extension 201, or if for any reason that gets to voicemail or whatever, you can also call 323-939-6645, extension 116 to reach Devin Angus. And I'll be very happy to be part of any conversation. I'm fully available to get involved with that.
I will be around to discuss things with you if you're interested in investing. You must be accredited or a foreign investor, and we really look forward to talking with you further. It's been a great pleasure as usual, and I'll see you next week. Thank you, everyone. Have a nice evening.
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