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CEO

Scaling Water for End Users

Apr 9, 2021 11:54:49 PM

Insider Briefing of 8 April, 2021

We watched ABC7 News interview Tom Marchesello on the Piney Point toxic leak plus got insight from him first hand... What's OriginClear's plan for handling the disaster? Water on Demand is rapidly taking shape...And now a subscription plan for water?! Get the scoop here in the replay.

 


FEATURED OR COVERED IN THIS BRIEFING — QUICK LINKS


Transcript from recording

Introduction

Riggs Eckelberry:

Good evening, everyone. Riggs Eckelberry here, joining me is Tom Marchesello, our Chief Operating Officer, for a very exciting... Because he was on TV.

Tom: My 15 seconds of fame.

Riggs: Yeah, 15 seconds of fame for sure.

 

WITNG 8 APR 21 Title

 

Water is the New Gold

Riggs: So let me just do the honors while people are joining us as always. This is Water is the New Gold, and it is a new asset class that we believe is recession-proof. It is April 8th, briefing number 105.

 

Safe Harbor

 

Forward Looking Statements

And we have a usual safe harbor statement, which says we do our very best, and that's about all you can say.

 

ABC7 News at 7 Roundtable Discussion

 

TV News Interview

So now I'm going to switch to a video share mode because Tom, you were, as you said, you had your seconds of fame, so let's see what happened.

Tom: I'm almost famous now.

Transcript from recording

Start of TV News Interview

News Anchor:  Many of you have questions. A water treatment expert, joining us now with some answers about the site failure and concerns for water contamination there. Tom Marchesello, Chief Operating Officer of OriginClear in Clearwater joining us now. Thanks for coming on tonight, Tom.

Tom: Thank you very much.

 

Doing the Right Things

News Anchor: So some new developments tonight, the department of environmental protection saying just a few hours ago that they found what they thought was a second breach, but it is in fact not the case anymore, the EPA and DEP both coordinating on site there. What are your thoughts on these latest developments that continue to change almost hour by hour these days?

Tom: Well, it's a very dynamic situation. Thank God. There's not a second breach if that's true. We've seen today a lot of people from the governor and Vern Buchanan, our congressmen, talking about the situation this afternoon, and I think they've done the right thing.

You've got the Army Corps coming in, you've got the different guys from the EPA coming in as well, and they're making good recommendations and obviously safety is the biggest concern, but everybody's left with this question of what the heck is going on. Why did this happen in the first place? Right? And that's got a lot of people very concerned.

News Anchor: Exactly. What are your thoughts on what happened in the first place with all of this?


Disaster in the Making

Tom: Well, from our research and understanding of the industry this was a disaster in the making for like over a decade plus. This unfortunate site was part of a bankruptcy of a company who didn't deal with the problem on site and then just kind of left the bag hanging on the public and nobody really stepped in to actually ever fix the issue, and you just kind of waited for it to decay and turn into a problem. And that's really terrible.

News Anchor: You mentioned we've now got Army Corps of Engineers coming in. We've got DEP, the governor, but this all started what was a week ago. Should they have been coming in sooner?

 

Reducing the Load

Tom: Well, there's a ton of information about the site where they were here sooner. There's reports from 2013 and on where they've been looking at situations like this. This particular site should have been cleaned up many years back. The truth of matter is they've been discharging now water to try to reduce the load on the gypsum stack, to prevent the walls from breaking and having a catastrophic failure and flood.

 

Piney Point toxic waste leakDrone arial photo of wastewater spewing from the Piney Point phosphate plant breach


What is in the Water?

But that's different than actually treating the water. When you have these ponds full of toxic water, they're very intense. They are basically at a load level where the nutrients and the phosphates and the heavy metals that are in this water are so many magnitudes greater than the normal amount of wastewater people are used to dealing with.

People get very upset when they see sewage leaking into the bay, but then they think, Oh, gypsum stack water, and they don't really think about it, but it's like 20 to 50 times more toxic.

News Anchor: That's a very interesting point you bring up. We keep asking what is in this water? What about that actual water contamination? Every time we hear about it, they kind of pass it off and don't really give us exactly an answer. So what we're being told is not direct about what is in this water. Can you clear that up for us?

 

Chemical Compound of "Goop"

Tom: Well, they'll tell you it's salt, which is really kind of humorous actually. It's a type of salt, that's accurate, but it's sulfuric acid. It is also things like possibly mercury and there's cadmium in this stuff and radium and uranium. These are actually metals that are part of what happens when you dig up phosphate rock and then you put it through the fertilizer process where they add sulfuric acid to it.

And they basically make this wonderful chemical compound of goop, that is not healthy for humans and or sea life. Unfortunately, the way they dispose of it is by putting it into these gypsum stacks and they allow time and some other processes to try to reduce the load over time, but it never really goes away and that's a real mistake.

 

How Dangerous is it?

News Anchor: A lot of big chemicals, a lot of big words with all of this we know that it could potentially kill animals, fish kills, red tide, something to be concerned about. What could it do to humans?

Tom: Well, that's a tougher question. The Army Corps has said it's not dangerous for humans when dealt with properly. But what we do know is the bay has had a long history of red tide. So on the easy way, on an environmental level, this could be very disastrous. There's always discharges into the bay and the gulf, but it's done over time and stretched out over the course of a year. This thing if it actually burst, would basically drop a load in the bay, the equivalent in one day would pollute the equivalent of one year's with the pollution into the bay. And there's no way the bay can absorb that much nutrient and not cause algae blooms and fish kills.

News Anchor: Wow. What does this really look like? We're hoping for the best that there isn't an eminent massive collapse, there's not some sort of what could potentially be a 20 foot wall of flooded water. If it were to flood into the streets, into the bay, what would that look like for us in the future, like moving forward days after that happening?

Tom: Well, you'd have a contamination zone that the EPA would cordon off and they'd have to actually let it settle and wash it out. It would take some time to clean the ground water systems, the actual bay area. I don't think anybody really knows because this would be a really one of a kind event, which everybody's watching. It's really that big a disaster if it really blew up like that.

 

200-foot Gypsum Mts (1)Gypsum stacks can be hundreds of acres wide and hundreds of feet tall


27 Gypsum Stacks

News Anchor: Wow. We know that here in Florida, there's I think, 27 of these types of gypsum stack facilities here in Florida. Possibly I think there was a recent acquisition of more of them, I'm not a hundred percent sure on that so don't quote me on that, but what can Florida do to fix this problem? Clearly, this is a detrimental problem to the sunshine state. What do we do from here?

 

Need to Modernize

Tom: The industry, needs to modernize and step up a bit. There's a combination of regulation that needs to happen at the state level because the state regulates this and they have to make what's called onsite water treatment, more mandatory. At the point of mining, they can do onsite water treatment, and at the point of the fertilizer plants, they can do additional treatment.

So the things like, MBRs, which are Membrane BioReactors, they basically can sidestream this water that's sitting in a pool, push it through a machine that does like reverse osmosis processes and remove some of these contaminants from the water and then separate the water from the contaminants and then sequester those materials and push them to other sites. It's basically waste management.

 

Looking Ahead

News Anchor: Lastly, before we go, if you don't mind, can you give us a snapshot of what this would look like short term and what it would look like long-term for both the Sarasota and Manatee counties surrounding areas if Piney Point were to collapse?

Tom: Well, obviously the closer you are to the site is the higher problem you're going to have. So Manatee is obviously going to possibly be impacted as well as the bay. Look, we're a tourist attraction. We have all these beautiful beaches that people come to. I live here in Sarasota and I take my daughter to the beach all the time. I don't want to be worried about, is the water bad? Is they're going to be algae? Red tide problems where I can't breathe.

And those are things that people worry about obviously in our communities. It hurts our tourism industry, it hurts the real estate business and it basically makes people uncomfortable. But in the end of the day, this is a problem that's been building for years, and I think you got to address this. I think that people really should get focused on making sure that this doesn't happen again.

News Anchor: All right, Tom, thank you so much for coming on tonight. I appreciate it.

End of TV News interview


Tom and Riggs 8 April 2021 briefing

Team was Prepared

Riggs: All right. Well, that is quite an interview.

Tom: I did good, right? That was fun.

Riggs: Yeah, first of all, I was impressed with the interviewer. She seemed to have her act together and then you were responsive, which was great. So thank you for that.

Tom:  Well our team was really  prepared. They gave some talking points to the media person, as well as we were prepared because you and I had actually been talking about this last summer. Remember?

 

9 Apr 2021 press release

 

Our Next Steps

Riggs: We were covering this in one of these very same briefings. I agree. I'm going to preview the press release we're putting out overnight and with the next steps we're taking,  So we want to come in and let us give free advice. Obviously it's a major, major project, So we can't give it all away, but we want to help. And if we go all the way down here, we've got Dan Early commenting on how much of a mess this is.

Tom: It's amazing. The numbers are shocking when you do the mathematics. The whole engineering team on Tuesday actually took a look at this, and we calculated what are you really dealing with here in the border? And how much load is this really? It's millions of pounds of toxins. It's crazy.

Riggs: Yes. And Piney Point alone is four years with a cost of $50 million. And we don't know who's going to be selected for the job, but nonetheless, we want to be in there giving any advice that we can possibly give, and of course at no charge since we live here. So, that's excellent. So that's what's going out in the morning.

 

How Was the First Quarter?

Riggs: So I thought we did a pretty good quarter in Q1. How did it go?

Tom:  We were really close to our normal quarterly number. We were running a little bit behind in January and February. It just seemed like there was a bit of a hangover lag coming out of last year. But then all of a sudden, March came roaring in. It was overwhelming. Marc and Mike and the guys really closed the quarter out really strong, but it was a little bit on the tail.

Riggs: Well, they did pull it through. And do you think this is,  I got some commentary that maybe buyers are trying to get ahead of the commodity prices rising. Is that, maybe?

Tom: We've seen a lot of that. We've seen people concerned about commodity price inflation, and things like steel. Supply chain impacts. COVID has been with us for all too long now, and there's been some realignments of getting supplies in the supply chain, so it started to filter its way through.

And then there's just a lot of this inflationary concerns where people are a little uncertain, but a lot of businesses weren't quite sure what to do. They were holding off trying to see if it got clear. And then all of a sudden they're like, "Oh, we better do something." And you see a big rush right now.

 

Annual Report for 2020

Riggs: Good. Well, and that's actually bullish for us and bullish for the rest of the year. I know that we're getting ready to file our annual report for last year. The only brag I allowed myself was that we did not qualify for the PPP's second round, which means that we were not down quarter to quarter for any of the look quarters last year. And you know what? Hold my head up high that we did not take the government's money this time around. Anyway...

Tom: Yeah. The guys worked really hard, and everybody stayed pretty safe too, considering last year was a wild year for sure. And I think the team really rose to the occasion and did a good job.

Riggs: Well, that's excellent. So Tom, thank you for that.

 

New OriginClear Presentation

Planet threatening crisis

 

Riggs: I'm going to run the presentation that Ken Berenger and I have been working on, and feel free to stick around Tom, but I'm going to have Ken come in on audio and comment as he wishes. This is a new PowerPoint that talks about a planet threatening crisis, and how OriginClear can help.

 

Water is in trouble

 


And of course we know despite what people think, that this trillion dollar industry really only treats one fifth of the world's sewage. And can we get any higher? And of course, a lot of people don't think so.


 

The issue-funding


Funding

Well, let's take a look at the trends. Big problem of course, is that the federal government contributes only a fraction of what it wants contributed to water costs, despite all the talk of infrastructure. It seems that Washington, Republican or Democrat, talks a lot of talk about infrastructure, but just doesn't get around to it. So it's a sad but true fact.

 

The issues - inflation

 

Inflation

And cities are charging more, which also means... It's good for us I guess, but it also means that businesses now can spend money on their own treatment. And you know this Tom, from looking at Dan Early's growing backlog, that he's got a lot of private parties in there who need help, like breweries and stuff.

 

A strategic opportunity

 

Estimated Backlog

So here we have, in fact, here's what we've gone ahead and estimated it. Estimated two-thirds of our bidding backlog consists of such private customers, and the Dan Early product line really is the one that meets the needs of Water System in a Box™ and so forth.

I'll never forget Tom, when the chief engineer for that hotel chain came in, came to you, and he said, "I want that thing." It was definitely a thing that they wanted. We had communicated that it was modular, and businesses want modular. Anyway, two-thirds of them would adopt our products, which means that a generously eight figure pipeline, half of it would close if we went to water as a service.

 

Is this sci fi

 

Digital Transformation 

Now, Water as a Service® has already happened. AquaVentures invented the term, and got sold to Culligan for a billion dollars cash. Not too shabby. And recently Autodesk acquired an AI for a water software company for a billion dollars. And of course, Dan Early has some great software too.

 

Introducing the next-gen


Next Generation

So, the next generation is us. We want to move into the next generation of water as a service. It's called Water on Demand™. So high speed deals, high margins. Dan Early estimates that what we charge now, let's say it's $500,000, will over the life of a service contract, it would turn into a million dollars, but the client's happy because they only pay for the water they use.

 

Water on Demand adds

 

Just Subscribe

Now, here's what's great. Water on Demand a money for money play. In other words, if for some reason we don't have the capacity to do the work ourselves, we farm it out to another water company. We do like the modular designs, more income streams. This is a beautiful thing, because people just subscribe to water treatment.

 

OC Capabilities

 

Capabilities

Of course, we've got our 20 plus year manufacturing company, our patent protected Modular Water Systems™, the capability of running it as a network, and of course we're bringing in capital through our partnerships, especially in real estate.

 

Enables doing to water

 


So it really enables doing to water what cell did to telecom, and what Netflix did to entertainment.


 

Cell phone networks

 


And sure enough, you have ridiculous sums of money having been made in cell phone networks, on Netflix of course.


 

Cell phones-what it took

 


What did it take? Well, cell phones, it took 10 years.
And then to get to that monthly cell plan?
Well that now has begun to happen in the water industry. Netflix, remember DVDs?


 

Netflix-what it took


 

Join our investing team


Get Paid to Wait

So we have an offering that enables us to fund this rollout, and I'm not going to get too deeply into it, but you get paid to wait, it converts to stock. And then of course you can then ride the stock on up from there after you've been repaid or cash out.

 

Triple warrant coverage


Warrants

And then what's great is you've got triple warrant coverage. Three warrants that stack on top of each other. If you wonder what a warrant is, it's very simply a right to buy stock at a predetermined low price.

Series U Offering

 

Self-Explanatory

You must be accredited or offshore. And it is a hundred thousand dollar unit, which we do reduce as needed. There's an excellent spreadsheet that Ken will show you that I won't get into today. I might on another future date. It's very self-explanatory.

 

For the Water Industry

 

White Knights

But basically the way this is important is the wider industry sees this as, if the first real global water treatment market, they will not have to be salesmen as much as White Knights, reduce the one year or more cycle to down to weeks, and potentially huge margins over the full life cycle up to 50 years of the product.

 

How its done

 

How it's Done

Very simple. Sign a water purchase agreement, remote monitoring, simple subscription model, focus on service, not selling. Now, capability initially delivered through a partner network. You will be hearing about that next week. One of my big concerns when I started getting into Water on Demand is, how the heck do we make sure we deliver to contract? It's something called a service level agreement, SLA. Well, I was in high-tech, I knew how that worked. Well, how do we make that happen? And in fact, we have a partner who was very much up to speed on that and I'll be covering that next week.

Subscription Water


Anyway, so subscription water really means that people we know are willing to pay more just to make sure that you take care of the problem. And that's really what people in business feel about water.



Tying it together

 


So double digit yield, the 10% dividends, and then when you convert, you get these four distinct what we call liquidity events. 



The series U playbook

 


Convert to common stock, warrant A, warrant B, warrant C, to build the internet of water.


 

Build internet of water

 

Ultimate Plan

And we've now done the analysis that shows that a $10 million investment in water subscription systems can generate $110 million plus, over 25 years, and we'll show you that if you're interested. And here's what's important, all this equipment will not be sold, it will be put out to work, stay under our name, which helps create assets for us in our ultimate plan to NASDAQ up-list.

 

End game

 

ESG Player

So it is what Ken likes to call a global micro utility network because these are in a way micro utilities, these water companies. And we're also plan to acquire companies to scale up ourselves. And we will be one of those cool sustainable ESG players, which of course is a real thing.

 

America needs us

 


America needs us, there're violations of the clean water act all over the country.


 

Reg D disclaimer

 

Offering

So the regulation that we're offering to send is Regulation D, just so you know, and there is the disclaimer.

 

Ken Berenger Joins Us

Riggs: So Ken, this is a pretty decent PowerPoint that I just went through here.

Ken: Well, thank you. I'm just trying to unmute my microphone. Yeah, thank you. This came as a result of what? Lots of late nights you and I talking about how we position and also how we try to explain it in a way where people don't go, "Excuse me?"

CapEx becomes OpEx

I had a very interesting conversation today with Brendan Fitzgerald, a long time investor. His brother had come on, who I don't think I've ever spoken with. A very savvy business guy. And I was kind of laying out our plan. I don't think he ever spoke to me before, it was basically because dad had passed and we were kind of getting things squared away.

And Sean had some very... He was finishing my sentences for me on the subscription model. He basically said, "So you basically will be removing all the CapEx turning into OpEx."

 

Total Accessible Market

I said, "Oh God, I wish Riggs was on the phone." He also said, "So you're telling me that your TAM, Total Accessible Market" is... He used the term TAM repeatedly. It took me a second to remember what it was, but he said it a couple of times. He goes, "So your TAM is $5 trillion?" I said, "Yes."

Riggs: Four. Four really. I mean, if you deduct what's being done already.

Ken: Right. But the total accessible market is $5 trillion, right?

Riggs: Yes, a hundred percent.

Ken: So the remaining TAM is $4 trillion. And I said, yes. I said, did we get there? No. I said, but my goodness, if we can access half that market. And again, he finished one of my sentences, which was odd because the man had never spoken to me before.

 

The World Needs to Know

So when people who have never even thought about this before, if you're explaining it in simple enough terms where they're able to kind of calculate where are you going with it, I think we finally kind of harmonized on how we describe this to the world. We know what we're talking about, our investors know what we're talking about, the rest of the world needs to know what you're talking about.

 

Transforming Legacy Industries

You mentioned earlier doing what cell phones did to telecom, what Netflix did to entertainment. Now hindsight being 20/20, what do both of these models have in common? Very modest monthly subscriptions, which triggered a worldwide adoption. Right?

So that very, very modest, whether it's $14.95 for Netflix, or $179 for your cell phone, those very modest, accessible fees for anybody in the world, triggered a worldwide complete transformation of two underlying legacy industries. Okay?

We now have a third legacy industry that can be transformed in the identical fashion. And the fact that these trillion dollar giants have already paved the path for us, leaves the guesswork out of it. It's such a gift having these guys go in the mine ahead of us.

 

The Right Business Model

Riggs: You do not want to be the pioneer with the arrow in his back. And it's a wonderful thing that AquaVentures did that, Autodesk and so forth. So in fact, really it was the story of what we'd done the last three years was really being to find the lowest common denominator business model and adopt that, which makes it the most universal, right?

 

Opening the Door for Change

Ken: Right. When I often describe AquaVentures kind of first foray into this, the real gift here was what they did in a... I think what AquaVentures did a year or so ago, it was Netflix 10 years ago. The idea was phenomenal, but before they had the delivery, in other words, we couldn't really stream movies on Netflix on our laptops 10 years ago, because the bandwidth wasn't there and the computer computing speed wasn't there.

But the idea if it could survive the technological advancements in delivery was going to be phenomenal, right? So what they did was they opened the door in a limited way to changing what was wrong with water, taking it from this a hundred year old kind of infrastructure utility model into something a little bit more nimble. You know what I mean? It had more of a privatized utility model. Now we just kind of picked up from there.

 

Significant Next Generation

Riggs: Because it's very important to know that AquaVentures, even though they were doing water as a service, they were massive desal plants for islands. This is not all the way down to the decentralized business as we are doing. This is, I think, the significant next generation empowered by these modular systems.

Ken: Right. Exactly. To know that they were what you'd call private utilities, right?

Riggs: Yes.

Ken: They were semi-permanent systems that had to be very, very credit worthy partners because if these guys didn't pay, they had a huge problem. They weren't going to be able to show up with a truck and just scale it away. So what we've added  is that unlimited scalability factor, which we'll bring it there, if they don't pay, we take it away.

We don't think that's going to be a problem, but having a plan B, having the ability to take it away is huge. And what I got was a really positive comment today, I spoke to about, as you know, 13 or 14 investors in a row, 45 minutes intervals back to back from 8:00 in the morning till 6:00 at night, so I got a lot of really, really good feedback.

 

Annuitizing Equipment

And what really resonated with a lot of folks is I said, we finally cracked the code on a way to simply put, not speaking water speak, we found the ability to fully annuitize every piece of water treatment equipment we make for the next five decades. And that resonates, the ability to annuitize this stuff.

Another comparison I made was you can't sell a 16-year-old girl in a third world country a $1,500 phone. You can't do it. What you can do is, here, take this plan and the phone's free. Of course, it's not. But here you are with a $1,500 phone in your hand that you purchased from the manufacturer and you're selling the service, not the machine, right? Which we're doing on a much larger scaling.

And I think those two ways of describing and it has helped me identify a way to take a person who has no idea what we're doing, and they can clearly kind of finish my sentences for me, which is always a good thing.

 

Offering Details and Features

Riggs: It's a beautiful thing. Well, Thomas says it was a very nice presentation. James Burton wants to know, in what way are these Reg D shares and warrants different from the common stock shares we already own. First of all, James, if you're accredited, then you can participate.

But essentially the Reg D shares are preferred, meaning that they are off to the side dividend bearing, and then you convert to common shares when you're ready. Warrants obviously generate common shares. So in the end, it's all common shares. It's simply a more efficient way to invest. And James, if you do have the ability to come in as some credit investor, then I do invite you to do that.

 

Stqay tuned for following

 

Reg A is Closed

I have also an update  because the Regulation A offering is closed, it reached its one year anniversary a few days ago, but we have a follow-up. So stay tuned for that. I think it's going to be much more exciting and for everyone. So as I said, stay tuned.

 

About Warrants

Ken: Can I just make one quick comment to James? What I described many times today, again, about a hundred, in my discussions on our offering, being able to convert this all into common stock is great, and we believe the common stock does very well.

What we tend to do when we own a position in a company is if it moves dramatically, what do we do? We sell half. Why do you sell half? Well, because you don't want to miss out on any further growth.

Well, what a warrant would allow you to do essentially is liquidate your entire position at a profit at some point in the future and getting your time machine six months later, and literally come back in the market at $0.05 a share or $0.10 a share. And by OriginClear shares all over again, no matter where the price is, whether it's $0.50, $1, or $1.50. So it's enabling you to kind of re-enter the market at a fixed discount after you're already right?

 

Call Ken

 

Call Ken

Riggs: Amen. Well, James, feel free to connect with Ken by putting oc.gold/Ken in your browser and he is booking up fast so I suggest that you jump in.

 

Thank You


Fulfilment

And I wanted to also mention that next week, we will be discussing our fulfillment partner. Thomas, speak up!

 

Energy Generation

Thomas: Yes, good day, sir. Wonderful presentation. I'm a Floridian and I've been following what's going on down there in the Sarasota region. I was wondering, this appears to be an investor call. I was wondering, does any of your processes that you guys use involve massive amounts of energy generation that you either need, or you purchase through electric utilities?

Riggs: Well, Tom, you could certainly answer that. I can tell you this that the Water on Demand model can include energy generation from the waste as a way to generate energy.  We have a sister company in the industry called Cambrian Innovation that does it very well with what's called a water energy purchase agreement.

 

Modern Technology

Tom: Yeah, I mean, it gets into energy recovery. So if you're actually, like the Florida situation with the phosphate industry,  if you were to recover the materials that when you separate the water from the contaminants, some of those are recoverable. They then can go off to be used by the energy industry actually.

So that's one thing that they look for is a by-product they can make profit on. But when it comes to actually running machines like reverse osmosis, yes, you do use a lot of energy. And so part of that is about where and who's deploying it and how they're set up.

But the systems that we run are fairly efficient. They're very modern. The one thing about 2021 technology versus the stuff from the 1990s is it really runs well. And it's not that intensive. So that's just one of the wonders of modern technology now.

Riggs: I'm going to buy a new home and save money. Thomas, thank you very much for piping up.

Thomas: Thank you very much.

Riggs: All right. With that, we've come to our magical moment. Thank you Tom for jumping in and Ken, it's been a pleasure discussing this new pitch, I like it a lot. It's very straightforward.

Tom: Cool.

Questions From the Audience

Riggs: Value Tax Finance says, "A few questions: I understand the draw to the investor. What is the value proposition of the end-user?" Well, the end user is stuck treating water. Let's say you're a brewery. You're growing. And what people don't realize is the local municipality increasingly won't take your water. They just said, no. Send us treated water only. This is a big problem.

That is really, really kind of like an iceberg. It's way underwater. And so, the value proposition to the end user is lower expense, an actual,  as opposed to trucking all that waste into the other county. I mean, that's how bad it gets.

"Using the $1,500 phone analogy, the carriers subsidizing the cost of the device. Is this such a format here or is the cost supported totally by the end user, or is there a possible intermediary that supplements the cost?"

That is a fascinating thought and we will be exploring that for sure. And I think a lot of big players in the water industry have the efficiency of large numbers that would allow them to do something like that. Apple can do deals with telcos, where the telcos,  they have this monthly rip and they can make it all work. So it's a question of who sponsors what.

 

Ability to Scale

Now, final question is, "What is OCLN's core competency, i.e., what separates OCLN from the AquaVentures of the world? Well, it is scale. Businesses and again, Tom, we had that pre-COVID meeting with our friend in Hollywood, where he gave us a great meal and he said, "I want clean water in my hotel".

He would have been too small for an AquaVenture deal. Those AquaVenture deals are like an entire island being desalinated, for example. So we're able to go down in scale and that is a challenge because it's the hardest thing to do is to miniaturize.

But we have that capability with the Dan Early product line, the Modular Systems that we have. So thank you for that. And I appreciate your really interesting questions. Thank you.

 

About Dividends

And Sadiq, our good friend Sadiq says, "How much do you see the market size to keep raising funds and the funds by giving 10% returns to investors? Is it like a hundred billion or so?"

Well, that's highly speculative. I don't know that it ultimately is going to be a 10% proposition for places like Wall Street, if it's a secured position. Right now, we're being very, very generous because people are entering these funds as pioneers and if you have a million dollars to invest, this is a very good place to invest it right now.

Eventually though, we know what the cost of money is. I'm busy negotiating a mortgage right now. If it's secured assets, then it's very close to mortgage rates. And so that is where we're going to get the cost of money way, way down. I'm looking forward to making Tom do all the sausage making and I get to play on the finance side. Run around and shovel money in.


Carbon Taxation Tariffs

Tom: I actually like his question because there's  a bunch of interesting things coming up in the finance market where they're talking about doing these carbon taxation tariffs. Have you read about those?

So now all these big companies are being forced into an ESG mode where they're going to have to look at their capital, their cost of capital and their growth being hammered. If they don't take into account, something that's ESG sustainable. So actually our water systems become a possible savior for all these corporations out there that need something like what we do.

Riggs: I like that. And Sadiq says, "So it's a good opportunity to join early now then it'll be mortgage rate later." Yes. I would say definitely if you're interested in investing in water at a larger scale than I'd showed in the presentation, do connect with Ken. And it's a good time to do that.

Well, we've gone way over. It's been very, very fun. We've had a huge audience. Thank you all for being here. Remember join us next week. It's going to be fascinating, discussing how we do fulfillment. Thank you very much everyone. We'll cover it all on the backside. Have a good weekend.

Tom: Bye-bye.

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