CEO

We're really starting to see that in regions, especially arid regions like out in the Southwest and California and places like that where water scarcity is a serious issue. However, the statement that I would like to make is that as a practicing professional engineer and having been in this industry now for the last 20 years, where I have practiced primarily in the Eastern portion of the United States and primarily in the mid-Atlantic, what we are seeing is where water scarcity is not an issue, nitrogen pollution and environmental pollution are becoming problematic, especially at the local source, and so in this instance we were approached by a consulting engineer that was working with a customer of theirs, it happened to be an automotive dealership.

The automotive dealership had identified a preferred piece of real estate and a jurisdiction in a locality where they wanted to build a new facility, as their facility was growing, so the economic pressure was on them to expand their facility, to expand their dealership capability to service their customers. It happened to be that this particular piece of real estate was located in an area where public sewer was not available. It was several, three, four, five miles away. The cost to connect to the public sewer was prohibitory, it was just onerous relative to the engineering and the easement acquisition and just the construction costs.

So for those on the call that may not be familiar with wastewater demand and wastewater usage and those types of things, a facility such as a car dealership, while it may be a big facility, maybe 20-30,000 square feet or more under roof, the actual wastewater demand is not that great, maybe up to 2000 gallons a day. And that is in the form of the toilets and urinals and hand sinks and those types of things that generate the wastewater. So, we had an opportunity with a small piece of real estate, no access to public sewer and a small flow where it really lends itself very, very well to using a closed loop, zero discharge recycling wastewater reclamation system. So we worked with the consulting engineer, we worked with the permitting and regulatory agencies in the state and we were able to successfully procure and make use of their regulation and were able to get a permit to allow this particular automotive dealership to implement this technology.

And so what happens is that this allows the dealership as the developer of the real estate to take a piece of property that was, for the most part, from a commercial standpoint, almost useless, it did have some small value but they were able to take that real estate and with the implementation of this closed loop wastewater recycling system, they were able to develop and extract and improve the value of this property by allowing them to build the dealership and to use it to provide this type of level of service. And the dealership, while it will go unnamed, they were very hip on the idea of being able to promote this type of reuse and reclamation capability to their customers and to the environment, to the citizens of the community because it really represents a brand-new mindset and a huge change and a huge difference in being an environmental steward.

So an amazing story. Very, very amazing story from start to finish to get us through this point. I will share with you Riggs, and with the rest of the folks that are on the call, we've been in operation now for the better part of 60 days as the lead engineer heading the charge and delivering the system to this customer, I am extremely pleased with what I've seen. Performance has been very, very good and so I'm very excited. The engineer of record that I worked with locally, they are telling me, as are other folks in the industry in that region, are telling me that people are looking at this and they're starting to recognize that this represents a way of delivering wastewater services where public wastewater and public utilities may not be available and to do so in an economically viable fashion. So just very, very, very, very enthused about where we're going with this technology and I can't wait to get others on board and get those out there in the field.

Riggs: Well, thank you very much and you've underlined a part here that is really significant is that the dealership was really taking a very poor piece of land, it was not a developed piece of land, it did not have sewage, and so they got a bargain on the land and then when they improved it, now they have a return on their investment that is caused by the water treatment. The water treatment literally civilizes the land and makes it, essentially, they become a micro municipality or micro utility by doing their own work and that's huge.

Dan: That's correct. The cost benefit analysis, as you just indicated, that is what, that was the driving factor, is that it allowed, the lower price of the real estate allowed them to get in and get the preferred location and the money they save on the initial purchase they were able to take and allocate that savings towards the development of the closed loop recycling system. And the end result is, is that the value of the property now is substantially increased. And they also, the better part of this, and this is the other underlying message that I'd like for everybody to understand, is that this capability, as the technologies continue to improve and their capabilities continue to improve, this allows commercial applications and residential applications where you can control your destiny and you are not beholden to a large, cumbersome, limited public utility that may not have local public water and public sewer. Huge, huge upside on a number of different fronts.

Riggs: Yeah, so I'm driving right now in Los Angeles on a very crowded freeway and the way that Los Angeles was developed was that the developers got somebody into city hall who was in cahoots with them and went ahead and laid out streets and all the infrastructure as a city function and then of course the development along those lines. What we're doing here is you are able to literally say, "we're just going to go ahead and take some land and we're going to develop it and we'll be, essentially, we'll be the city and we'll be creating these structural environments." And that's pretty fascinating because more and more we have a problem of city environments becoming either too crowded, like this freeway that I'm on and doing 18 miles an hour for the last 15 minutes, or, because real estate costs have gotten so high, it becomes really persuasive to go find some fallow land and develop it and here we have the tools.

So I think that's pretty amazing. I wanted you to talk a little bit about advanced materials and how did this differ from using the standard, cast concrete and so forth, methods that the industry uses.

Dan: Okay, I'll be glad to talk about some of the technical nuances that are a part and a function of our wastewater systems. So I'll try to paint a visual picture to the listeners, if you are familiar with me as a practicing civil engineer, a practicing licensed professional engineer, having dealt with utilities, public utilities, public water, public sewer, and work with civil infrastructure like that for the last 25 years, there are a number of issues that have plagued the civil infrastructure industry relative to the materials that they use in deploying these large central utilities.

However, in pump stations and wastewater treatment plants, the materials of choice that have been around for the last 50 years, or the last 100 years for that matter, have been cast in place of precast concrete, painted steel, those types of materials.

Unfortunately, in the wastewater industry, the struggle is,  wastewater  and steel and concrete do not mix very well. Great materials in construction. You can build good roads, you can build awesome bridges, you can build massive skyscrapers. But when it comes to holding a corrosive liquid or containing corrosive wastewater, steel and concrete have their limitations. And as a civil infrastructure futurist, if that's the proper word to use, it's really, you need to plan and try to implement technologies that will stand the test of time so that you don't have this contingent liability looming over the horizon relative to replacement of a corroded or failing steel piece of infrastructure or a concrete manhole, a concrete tank or what have you.

So, that ramble leads up to what I'm trying to tell you, and that is that our focus, and my visionary focus, is the implementation of heavy plastics and heavy plastic manufacturing to create durable, robust vessels. There are materials out there in the industry that had been around in the periphery of heavy civil infrastructure that we are now mainstreaming and using and leveraging advanced materials and advanced manufacturing capability to allow us to design and innovate and create new products, especially as they relate to civil infrastructure.

Well, it might be something as simple as a wastewater pump station, but more so as it relates to a decentralized water and wastewater application where we can build a wastewater treatment system out of high density polyethylene or polypropylene, and basically build 20,000 gallon-per-day, 50,000 gallon-per-day, 100,000 gallon-per-day, or a half a million gallon-per-day advanced waste water treatment systems using these materials for the structure.

And so, what that gives us, that material, the use of heavy plastics, gives us the ability to deliver an infrastructure component that doesn't have a 20-year life cycle and a very costly future replacement. It gives us an infrastructure technology, an infrastructure capability, that will last 50, 75, 100 years, and that represents a huge, huge upside, especially if you are a public utility and you are trying to mitigate and eliminate contingent liability cost of future replacement.

If you are a real estate developer or if you are an individual or an entity, an end user, that wants to control your destiny and not be burdened with the fear of corrosion and the cost of providing continuous service while you're trying to repair and upgrade, the use of heavy plastics and what we call Structurally Reinforced Thermo Plastics, and that's a term that I sort of developed and have been using and promoting in the industry for the last 10 years. But when you use Structurally Reinforced Thermo Plastics, or SRTP, that allows us to deliver these vessels and deliver these engineered solutions and these equipment packages and we've eliminated the maintenance concern that comes with those tankage systems. And that relieves a tremendous future financial burden on the end user and the owner of that type of infrastructure or that piece of equipment.

Riggs: Yes, and, very importantly, a business, obviously, is never in the business of wastewater treatment, they are in the business of doing what they do. This is an auto dealership, they're not a municipality, they're not trying to treat water, they're trying to make the problem go away. And so, in that context, it is really useful if they've got this nice Water System in a Box™ that is not going to bleed all over the place and it's going to be lasting a long time and they can essentially have a maintenance contract on it and just let it be. And that is the new trend of business self-reliance. This is the product that goes along with that megatrend.

Dan: Exactly.

Riggs: Now, what is, just for the audience, for a mind picture, what does this unit look like? Is it in a basement, and when you come upon it, is it gurgling away? I mean, what does it look like?

Dan: Okay, good question. So, again, to try to paint a picture for those listeners on the call, I will assume everybody's familiar with a car dealership or an automotive dealership. They're everywhere. So, when you pull up to this dealership, just imagine a modern glass facade, steel structure. Beautiful, beautiful landscaping. But on the backside of the facility, at the rear of the lot, tucked out of the way in a landscaping green space area, is where we designed  the wastewater treatment system with the engineer of record, the local consulting engineer.

The only significant portion of it that is visible upon first view is the control building, the control structure, that we deliver as a part of our package. And to anybody that may not know otherwise when you would look at it, it just appears to be just a routine accessory structure or a utility building, but in fact what happens is, when you open the door and you look inside the building, you're immediately presented with computer based controls systems, aeration equipment, permeate pumping and piping and plumbing systems. There happens to be a tank, what we call a permeate water tank, which is a portion of the reclaimed water that is stored temporarily. That is there. There's an ultraviolet light disinfection unit, all housed in this little structure.

The building is only eight foot by eight foot, so it's not very big. What you can't see, or at least the limited portion that you can see, is the actual treatment vessel itself. In this particular application, we had two heavy plastic buried structures. The heart and soul of the treatment system is, and again, I'll try to paint a visual picture for the listeners, is an advanced treatment unit built out of heavy double-walled thermoplastics, build out of HDPE, high density polyethylene, and it is an eight foot diameter by eight foot deep vessel. It's buried all the way up to the surface and has an aluminum access hatch.

And when you open up the aluminum access hatch, it grants you full access and exposure to the internal workings of the actual waste water unit itself. It is compartmentalized, which means we have subdivided the vessel into three specific chambers, and those chambers have their own unique, specific purposes. There's a primary clarification chamber, there's a flow equalization chamber, and it's divided up almost like a pizza pie would be divided up.

Submerged in the water, providing the treatment, and it's tough to see because it is sort of a murky environment, it's just the nature of the industry, there is a submerged membrane bio-reactor module - a filter of sorts. And so, we are aerobically treating, which means we are using aeration and atmospheric oxygen. We're transferring that oxygen into the wastewater. We're fostering the growth of a bacteria or a biomass, and these beneficial bacteria, which are naturally occurring, colonize the wastewater treatment plant and that bacteria colony will consume and oxidize and degrade the carbon compounds and the nitrogen compounds and there is some phosphorus uptake. So it does a good job of removing the nutrients, that's the carbon, the nitrogen and the phosphorus, that's in the waste stream.

So the module, the membrane bio-reactor module, it allows us to keep all of the solids, all of the biomass, all of the nasty stuff, we keep it in the tank and we pull a very clean, very pure, wastewater effluent, we pull that water through the membrane and then it goes into the building where it's disinfected, and then we take that water and then we'll pass it back out of the building into a large, a very large, horizontal cylinder tank, cylindrical tank, that is compartmentalized into two pieces. The first half of the tank, and the tank's 10 foot in diameter, about 40 feet long, so it's a big tank.

The first half of the tank holds 10,000 gallons, or has the ability to hold up to 10,000 gallons, of highly polished, double disinfected, reclaim water that is then pumped back into the building for reflush purposes. And then the other half of the tank is a sludge holding or a waste solids tank that we use to remove solids that are in the actual treatment unit in the smaller vessel.

So if you could imagine a 10 foot diameter, 40 foot long, horizontal tank buried in the ground with a couple of hatches, access hatches, and a small eight foot diameter, eight foot tall, vertical cylinder with an aluminum access hatch. That's the heart and soul of the membrane bio-reactor. And then the eight by eight equipment building. All of it was landscaped, shrubbery, grassed over. If you would look at it, you would never know what it is. It's tucked out of sight, out of mind. And this particular system has an average daily treatment capacity of up to 2,500 gallons per day. For what it is and for the size of it, it has a tremendous capability.

Riggs: Because it's going all the way to tertiary, which as we know, is the full nitrate removal.

Dan: That is correct. And when you, in advanced tertiary systems such as this, you are complying with the most stringent of reuse and reclamation regulations that are in place in most states around the nation.

Riggs: Now the reflush is ... I mean, what if it's not all used for reflush? Where does that excess go?

Dan: We can't violate the laws of physics. So here's what we do. The reuse tank has a working capacity of up to 10,000 gallons, so we would charge that tank initially with about, 1500 gallons of clean water. And then we would start reusing that water into the building, pumping it back under pressure, and reflushing the toilets and urinals. But what happens is, when customers and patrons use the restroom facilities, obviously they'll flush urinals, they'll flush the toilets and that water goes down and goes to the treatment plant.

But when they wash their hands at the hand sinks, those hand sinks are connected to the city water. There was city water available, it could have been a well, but in this case they did have city water. So, as they are washing their hands and using the hand sinks in the bathrooms and the water fountain out in the lobby, and I think they have some other courtesy sinks maybe in the kitchen area, that city water combines and co-mingles with the wastewater from the toilets and the urinals so that gradually, over time, starting with 1,500 gallons a day, by about the third month, we will gradually fill that 10,000 gallon tank.

So, then we will purge a portion of that water over into the sludge holding tank, for temporary storage. And then we'll just basically repeat the cycle. And about once every six months there'll be a need to service the tank and that's where the operator will waste a portion of the water and a portion of the solids and take those to a much larger regional wastewater treatment plant, and we just basically repeat the process. Then everything just proceeds on per the automated control feature and per plan.

Riggs: Okay, so that purged water actually helps liquefy the sludge so that it's easier pumped out and and processed by the regional facility?

Dan: That is correct. There is a net water savings of a minimum of about 50% on this particular project.

Riggs: Now, dealerships have a certain amount of grease that is generated just from service activity and so forth. Does this tax the system? What does that do?

Dan: In this instance according to state regulation, they have to separate those particular waste streams. This facility is a modern facility so there is a maintenance bay and there is a carwash where they service the customers and wash their vehicles and prep them for release back to the customers after a service call.

The carwash waste water is a completely different closed loop recycling system. It remains segregated from ours mainly because the petroleum based products, the oils and grease that are, obviously, a part of an automobile dealership, those require a different type of treatment technology and this dealership has that. I think they have that capability here onsite, as well. They have to remain segregated because petroleum products would be detrimental to the biological process that we use for the type of treatment process that we deliver.

Riggs: Yes, and they're very tough when a municipality has to deal with a blended stream because of poor separation happening in just business, in general. They've got quite a challenge and it's much better when it's properly separated like this.

Dan: That's correct.

Riggs: How much was this project, round numbers? How much did we charge the customer?

Dan: With the options that we had for the large storage tank and the large solids holding tank and the prefabricated control structure, that whole package retailed for $130,000.

Riggs: In this particular case, the customer did not have to lease it, they simply paid?

Dan: Yes, they purchased it outright and they own it outright. They control their destiny. We have the support function that we at OriginClear provide to the customer. Obviously, we are process experts. We're engineering experts. We're service providers, support entities, so our remote monitoring, we have an advanced PLC-based (Programmable Logic Controller) program that runs the system automatically, but we, as the vendor, have retained the rights to remotely monitor that system and to support the customer as a secondary set of eyes and ears.

In fact, I was on a call to the customer today. They were asking a couple of questions, just looking for opinions from us, and we were able to log in in real time, look at the trends relative to flow rates and liquid levels and water chemistry conditions, and I was able to make comments back, recommendations back to their operator about how to tweak and optimize a certain particular process in the treatment system.

They own it outright, as I stated, but we as the vendor, we remain engaged with the customer and ensure that the product does what it's going to do and that, if they need additional insight or support, it allows us to do that very readily. That's a very, very powerful feature and it's so, so affordable today. It used to be only the wealthiest of end users could afford that technology. It's available to the masses today. Smart phones, tablets, iPads, you can control and operate these things and monitor them anywhere in the world now.

Riggs: Well, and this brings to mind that, of course, over time we can build a customer base that we are monitoring and providing the kind of reactive support where a technician shows at the facility and the customer doesn't even know that the spec was being, you see this a lot with refrigeration, for example. The technician shows up, "Yeah, your fridge has been acting up." It’s like, "Really?" "Yeah, we know it and we're handling it." That's a whole wonderful income stream and long lifecycle and loyalty building feature. I'm glad that you've got it built in. Thank you. Well, that's wonderful. Any other particular comments you had about this experience, what it means for us and where we're going with it with more customers and so forth?

Dan: I'll close by saying that I'm very, very proud of the delivery. This represents the future. This is where the world is going to go as it continues to deal with the problems associated with waste water and nutrient pollution that's inherent with the domestic and municipal waste waters. I cannot stress enough and emphasize enough to everybody that may be listening, and even to those that I meet in my day-to-day travels and day-to-day business, that we are going to see more and more and more of this type of technology. In the next 10 years you will see this driven down to the single-family residential level. It will definitely happen, especially in those residential and mixed-use residential developments that are off the conventional utility grid.

This will be the norm. It is going to happen because the technologies are there, the capabilities are there, the regulatory bodies recognize it and they're encouraging it and it's becoming more and more and more affordable. It's almost like the car. I always use the car analogy from the automobile industry. A hundred years ago, only the wealthy could afford a car. Now, everybody has a car. Most families have three or four cars and it's become affordable because of economies of scale and mass manufacturing and those types of things. The same thing is going to happen.

It will be just like an air-conditioning unit or your refrigerator or your washing machine. It will be the exact same thing. You will see this. That day is coming. It is easily within the next five to ten years.

Riggs: That brings to mind the competitive picture. In other words, what stops other people from doing what we're doing, and are we too early in the cycle? Where are we at and are we in the sweet spot?

Dan: We are ahead of the curve. That's a good question. So, having the ability to see into the future and recognize where the future is taking us when it comes to water use and waste water reclamation and reuse, OriginClear and the Modular Water product line, especially as it relates to the advanced treatment systems and our reuse and reclamation capabilities in those systems that we're selling to our customers, we are definitely way ahead of the curve and that's, actually, a very, very good spot to be in in this industry. It is a very unique industry when it comes to this type of thing and being out front and blazing trails and blazing a path through this brings the attention to us. We're being recognized as an industry leader and as an industry expert when it comes to this type of application, this type of deployment. So, I'm just very, very enthusiastic, very, very pleased to be where we are. We are in the right spot.

Riggs: What about the barriers to entry? Can't somebody just benefit from our pioneer work and just start copying and doing it?

Dan: There'll be some entities that will be able to derive a benefit from the momentum that we build in the industry. There are some trade secrets things that we are working on that, obviously, we can't release to the general public, but relative to plastic manufacturing and the way that we rapidly assemble some of these systems, those types of technologies, as you implement and as the economy of scale of manufacturing increases and you drop down your direct cost, that becomes the barrier to entry because the other companies have to figure out what we're doing, then they have to invest in the infrastructure and then they have to successfully execute that.

Riggs: And get around the patents, too.

Dan: That's right. There's IP and trade secrets they've got to work around. I mean, Elon Musk is a good example of that.

Riggs: Well, you have made something that most people don't spend a lot of time or interest in, which is sewage. Very, very exciting and it is something that, if we don't do it right, we're going to end up with all kinds of barriers to improving our environment and also barriers to commercial expansion, so I'm really, really proud of what you and the team have done there, Dan, and this is going to be one of our pillars. Hopefully, people will beat a path, under nondisclosure agreements, they'll beat a path to the site and take the tours, take selfies in front of these structures. It's going to be very cool. So, I congratulate you on that. As we get more done, I want to bring you back and have you discuss the particularities of those other ones. It's going to be a great series.

Again, everyone, we've been talking with Dan Early, the evangelist and Chief Designer for Modular Water Systems™. If you're interested in hearing more, first of all, contact Devin Angus or Ken Berenger, 323-939-6645. Ken is at extension 201. What does this mean for the company and how are we applying it to our finance? Devin is my assistant. His extension, 116. If you want to get the questions to me, you can also email invest@originclear.com.

We'd love to hear from you, get your reactions, things we might have missed, how we can improve this podcast. We will be publishing this full interview, not just summarizing it, in a proper webpage because we're going to create a whole section of the site that is about this case study, the black water reuse product application and so forth. I believe that, along with the hog agricultural effluent space, these are very similar spaces and I think that we're going to be developing a major pillar in that area. So, Dan, thank you so much for your hard work on this and hope to have you back again soon.

Dan: You're very welcome, Riggs, it was great to be with you this evening.

Riggs: Wonderful. And, everyone, thank you very much. Good night. It was an extra long 40 minutes, but I think, well worth it. See you guys again next week where we hope to spotlight another major application of ours, perhaps one by Progressive Water out in Texas. In the interim, have a great weekend, everyone, and make sure you get ready for Thanksgiving. Good night now.

Dan: Thank you, Riggs.

Riggs: Thank you, Dan.