CEO

With the Crunchbase announcement of water startup Gradiant's $Billion valuation, both investors and market makers are finally catching on to what we've been evangelizing now for years. The steadily rising demand for clean water solutions and the shift from Government to private operators is rapidly turning water into the hottest space… Is there a way to build Water On Demand's network to leverage that trend? Actually, there are multiple aspects to it that you REALLY want to find out about! Get the full scoop in the replay!

Transcript from recording

Opening

Ken: We're old enough to remember when GM sold cars for 15 years, never made any money on a car. What kept them going? GM Finance. So, the ability to finance a commodity, in this case cars, not only kept them alive, but really thriving. A $40,000 car, if you look at what you pay out over time is what, 60, 70, $80,000? Now, with these eight year financing is even more, right? The financial end of it allows you the ability to really sell a car to anyone. How many people would buy cars for cash? Not many. Car salesmen would all go bankrupt.

We had the same issue with Modular Water. Modular Water Systems was crushing it, tripling its revenue each year. And that's literally just selling to the people that have the cash. But you're only addressing 10% or so of the market. The truth is, a small business is not going to deploy $1 million of capital if it doesn't have to. He doesn't want to be in the water business.

Water On Demand™ is the GM Finance, while Modular Water Systems is the GM. We can help every single business theoretically in the world that wants it. So what happens when you combine world class technology with finance and end to end service in $1 trillion asset class that has not yet been funded? Well, you can find out by booking a one on one call with me. I will walk you through it. I will answer your questions.

David Lynch has already identified this water as the investment that will create the world's first trillionaire. Speak with me one on one to find out why he feels that way and why I agree. I hope to speak to you soon.

Introduction

Riggs: That's an excellent clip by the amazing Ken Berenger. People are arriving fast, Bob Roos, "Cool intro." For sure. For sure. All right. We have an action packed briefing tonight. I think you're going to love it. I would say we're on fire, but you already know that. So I'm not going to say it. I'm just not going to say it. That's just as simple as that.

All right, Water — The Blue Gold™. All right. Today is May 25th and briefing number 212. I'd like to say it's basically we've had these briefings since Zoom started. Right? Because it's been like four years. Before we were doing the Zoom briefings I was doing Thursday afternoon briefings to brokers. I remember doing that very well in the mid 2010s, and that was great. Except the broker is kind of the whole broker network kind of went away. And that's how we ended up doing these direct briefings, which have proven to be so productive. And Tom says, "Nice job." Thank you, sir.

All right. Let's continue the action here. Obviously safe harbor statement.

Disclaimer on our regulation D offering. That's the one which is Water Like an Oil Well™. You know, where you get annuities on the water equipment. That is our current offering.

The newest unicorn is a water tech company. You know, we got used to like, hearing about unicorns being tech companies or medical companies, Pharma or whatever. Well, they've all kind of taken a dive. They've been overpriced. Think about Apple. The valuation of Apple is equal to the entirety of the standard and poor, the S&P 500. All the companies in the S&P, all 500 companies in the S&P 500 are equal to the valuation of Apple. Well, it's great. Apple is doing wonderfully. It's a great company, but it's not, it doesn't have a 40,000% upside. It has, you know, 8 or 10% a year, maybe that kind of thing. And that's great.

But if you really want to go where the action is, go find where the new unicorns are. In fact, we talk about AI a lot. AI is already over-invested. It's already a popped bubble. Can you believe it? That's how crazy it is. With OpenAI worth $36 billion and a bunch of others already, investments in AI started to trail off. So water tech. Let's talk about that.

Crunchbase this week announced that it was a big week, a big explosion. It was kind of spread out between a bunch of sectors. But the number one was Gradiant. Gradiant is a water tech startup. They focus on water heavy companies, pharma, chip food and beverage and other water demanding industries. And that's smart because obviously, for example, it takes 7 to 8l of water to make a liter of beer. So it makes sense to focus on wastewater treatment for these heavy usage users.

Funding and Acquisitions

We happen to be doing the same thing, just not with the gigantic customers. And the other difference is that unless you're BoltRock Holdings and Centaurus Capital, you are not able to invest in this series D, You had to be one of them. In fact, we're going to review the Gradiant rounds and so forth. But the point I'm making is the only people that you can invest in are Water On Demand who offer a way to invest directly in water tech systems.

So let's take a look here at Gradiant, shall we? So right here click on Gradiant and let's take a look here. There in Woburn, Mass. They're not Series D and let's take a look. Their financials, six funding rounds to date. Investors are a bunch. Warburg Pincus, SLB, basically a bunch of high end funds. They've made five acquisitions: Muscat Water Park, Environment, Sonata, CRS and Sigma.

Seed Round

And so they started with their seed round, their seed round. Let's take a look at what that was. It was with Cranberry and they raised $1.4 million. That's about right. So that was the seed round. And then of course, it went on from there. In fact, we can zero in on the people. Here are the co-founder, CEO, board members, etcetera. And technology is misleading because the technology they show here is that how their website is run. It's got nothing to do with their water technology.

Signals and News

Okay. So let's take a look here. Sure enough, we have all the funding rounds and they started with this 1.4 mil, then 6 million from wave, then 28, another 27. And then they started making the acquisitions. They raised a little 105, bada bing bada boom. So it helps to be an MIT startup and it helps to be working with top, top funds.

But what's great about this is that while these people are working at the high end, we're working in the middle class of organizations that need five, ten, 20,000 gallons per day kind of throughput. You know, microbreweries, that kind of thing. Whereas Gradiant might perhaps work with Coors. I don't know that they do, but that's the kind of comparison that I would make.

Okay. So with that, I'm going to jump back to the news here. And this is a tremendous validation because there has not been a funding this large in wastewater treatment since more than a year. So this is very meaningful. Okay. So we've done the Crunchbase review. Let's take a look at what we what we've known for some time, and that is that Water On Demand is primarily a network and I'll show you the network. But basically it all flow has to flow well to make a network flow, you've got to have network management system.

MOU

And this week we announced that in fact we signed a memorandum of understanding regarding acquiring a software as a service developer. Now this is an interesting company because they've been in business more than, well, almost 20 years. They are profitable with their existing business and what they do is a network management type product and they work with some very nice technology companies. And the acquisition that you see at the bottom here is anticipated to be accretive. What does accretive mean? It means it adds profits.

Now I don't want to set expectations here. It's going to be a little while before this deal is done. You notice that it did not mention the name of the company, primarily because we have not arrived at a price and we don't want to, we kind of want to keep our options open. We're still, we're still dating. We're still speed dating, shall we say. But anyway, we love this company. And as I said here, talks are at an early stage and may not succeed. So it's a framework for that. And the plan is to again acquire the stable SaaS business and then build on that to build our water service network.

Operation and Management

Well, let's take a look at what this is. If you look here, total water management, this is from our third quarter presentation, which you can access on the Internet through our press release that announced this particular presentation. All right. So an investor is on the right, put money into the Water On Demand subsidiary and a deal is done with a customer, with an operating contract, with price indexing, meaning that there's a way that it automatically goes up with inflation. The good news is probably not as fast as water rates are rising currently in the market.

Looking down at the left, you see that Modular Water Systems, which is now part of Water On Demand, goes ahead and builds the system. And now it's commissioned, its potential reuse, treated water and to the right you see a sensor array and here is that planned network management acquisition. So everything to the right here, the sensors, the database performance, operation maintenance, the billings and all that, that has to be done in order to get money flowing back to Water On Demand.

Comparison

And there's a good comparison here, which is another company called KLIR. Here it is. And what clear does is they do the same thing, but for central utilities, because think about it, a utility delivers you water fine, and they also take away your dirty water.

And so you pay for the water and you pay for the sewage. In some places it's a flat fee. Like where I live, it's a flat fee per month. The location in other places is based on how much is being treated, but they have to track all that.

And then if you stop paying, they have to cut you off and there has to be a service center and they have to go, okay, let's take a look. Oh, I see your account, sir. You're using more water than you used to, etcetera.

All this stuff is water management. KLIR does it at the utility level. All right. And then they do a fine company. Nothing wrong with it. Here's all the utilities they work with. But as I pointed out last week, utility space, while it has a large number of mergers and acquisitions deals, M&A deals, the actual dollar value is in services and equipment, not the utilities themselves.

So this space is not growing. And so KLIR is a leader in this space that is basically, the analogy of being, you know, as a pond gets smaller and smaller, then that you end up with one huge fish. It just keeps getting bigger and bigger, right? You don't have 10,000 small fish, you have one big fish. And that's what happens with a single space that's been consolidated like that.

So having said that, I just wanted to cover the second thing, which is here's that same thing, but with the actual numbered stages, number one — investing. Number two — the inflation indexed contract, number three — building, number four — the cloud connected network, that's what we're investing in. Managing and billing and again, investment.

And finally, shares to investors and partners. The investors and partners need to know what the heck they're getting in terms of profit shares. And that's part of the system. So, yes, it's about delivering machines to clients, but if you don't have that framework in which data flows, then you've got nothing. And that's why it's so important. Okay.

And by the way, Dan Early built very good software for quoting systems, and that is right at the bottom there. And that will hopefully eventually dovetail to that.

Audience Commentary

And Skye Logan, who is the CEO of PhilanthroInvestors, our great partner, says, "I love the plan re the SaaS (software as a service). Whoever it will end up being will be a great acquire for the WOD network." Thank you very much. James Wright says, "Greeting everyone this last week." Okay, so let's continue here. Now. You know why this is important.

Well, let's play the interview that I did this week on New To The Street. And as you know, they end up running on Newsmax, Bloomberg and Fox Business as sponsored interviews. So we get a lot of exposure and we usually grab the Newsmax one and we put that out. But meanwhile, here is what it will look like.

Start of presentation

Jane King: Originclear is doing some innovative things with water and trying to position the company and Society for the Future of Water. And with me is the CEO Riggs Eckelberry to talk about what's going on. And Riggs it was so interesting to see how hot water tech is. There's a new unicorn, basically $1 billion valuation of a private company that is in this space. So tell me about that and just the whole industry in general where it's at right now.

Riggs: Well, first of all, I'm so sorry that I'm not with you physically because A, I love being with you, but also the amazing food in New York and hanging out with Vince and the team. But at least we'll get the news across. You're right, that water tech is heating up. In fact, Gradiant, which was incubated at MIT, became a unicorn this week. It was the biggest deal on Crunchbase. And what's interesting is, is that they're not doing... What they've chosen is to really focus on water heavy industries: pharmaceutical chip companies, food and beverage. When you make beer, you know it takes 7 or 8l of water to make one liter of beer, for example. Right?

So they've really chosen to focus in on that. But in fact, so are we. We have business in the same space. And I think everybody's realizing that they've got to start treating the water so as to reuse it, reduce water usage overall. We've heard about these terrible droughts and so forth. Kansas right now, in fact, is going through such a drought that they're literally liquidating entire wheat fields with Roundup because they don't think they can get the wheat. So we've got to do something about the water. And that's why Gradiant became a unicorn this this last week.

What's also special is that we created something called water on demand, which is the only way that people, regular people can invest in these, this exciting new space. Because you and me, we can't invest in Gradiant, you and me. We can't invest in Seven Seas, that's Morgan Stanley Infrastructure Partners. We can't invest in Cambrian, which is also VC. But you and I can invest in Water On Demand, kind of like the same way people invest in an oil well. So all people have to do is go to Water On Demand dot net, click on Invest now and then they'll be talking to somebody you know very, very well, which is Ken Berenger, the co-creator of Water On Demand.

Jane King: Yeah, well, it's interesting because we've talked before about how you've got this huge industry water that is changing dramatically, but people can't and mostly can't take advantage of that when buying a stock or something like that. But this is a way they can have exposure to that is with OriginClear being investor in there and they just go to the website and look into it. They can get some information there.

Riggs: Water now is becoming an investable asset with the standard share of gross profits and so forth. The same way you might think of a oil well partnership, pretty much the same model. And what's happening is anytime you have a government monopoly that breaks up, you have tremendous opportunity. Remember, the AT&T breakup resulted in MCI, the Baby Bells, but eventually the Internet. We're seeing the same thing happen in water and as many, many more unicorn deals to come.

Jane King: Okay. And let's talk about water tech and how you have acquired a tech system. So explain that acquisition and how that is strategically important to the company.

Riggs: Well, it's an initial letter of intent, so it's non-binding. Imagine your municipal utility that deliver water and they take your dirty water and they bill you. And if you don't pay, then they cut you off and they have to meet certain standards. Well, imagine that all that scaled down to a business like a brewery, right? Well, you need to have the same functionality, an operating system that it needs to happen for the private businesses that have the same problem.

So we signed an initial letter of intent with a fine, fine developer that has their own Fortune 500 customers. They've been around for almost 20 years. They're a great company and we intend to let that business continue because it's not a bad business and then use their expertise to build this operating system. But I caution that this deal may not happen because it's at the early stage and it's certainly not going to happen for a few months, but we will be building this is our stake in the ground. We have to have a software or high tech or digital element to this network, just not just hardware.

Jane King: Okay. So even if this deal doesn't come to fruition, you're still looking at that software part of the business to execute what you want to do. Basically, you just released your 10Q, your quarterly report, So let's talk a little business. Give me a summary of what that said.

Riggs: I'm going to give you just the top line. First of all, revenue for the company. OriginClear continued to grow. We nearly doubled Q1 of 2022 to Q1 of 2023 of this year. Revenue for the three months ending March 31st was 163% of the same. Quarter last year went from 1.2 million to roughly 2 million. So we're very happy about that. But what's even more important is the Modular Water Systems business, which is these Water Systems in a Box™ that we've incubated since 2018, they contributed 58% of that. So it's actually contributing a bigger and bigger piece of that. And they're right on their forecast and the remaining profitable as a business center.

Now here's what's cool. Subsequently, we transferred Modular Water to Water On Demand. The basic concept is if you're going to sell cars, how many $100,000 cars are sold for cash? Basically none, right? So you have a GM, you have a GM Financial, and then you have an extended warranty network. What we're replicating the same thing in water where GM is Modular Water Systems, they build these assembly line water systems. GM financial, quote unquote, would be the Water On Demand component of like, oh, you're a brewer, Jane. You need water treated here. Just sign here. We'll take care of it. No cash upfront or minimal cash up front.

And then finally continuous service contracts to make sure that it's up and running. We're replicating the same auto industry model in water. We published a presentation, an updated presentation in which we made forecasts for Water On Demand, including Modular Water Systems, and I covered it in my last CEO briefing. I strongly encourage interested people to join my weekly briefing. We're now up to 212 and basically we've done it since Zoom started and all the people have to do is go to oc.gold/ceo. So Oc.gold/ceo slash CEO or just go to originclear.com and we'll invite you there. Join me. We love to tell you the latest that's happening.

Jane King: Yeah, well, that's a great idea for people that are thinking about investing in water and don't know the space and want to learn more about the company and make sure it's what they want to do. They can go and get it straight from you. What's going on.

Riggs: So not only that, they can get it from New To The Street from Jane King.

Jane King: That's right. Yes. Well, I just, you know, provide the platform for you to tell your story. Always so interesting. Riggs to to hear about what OriginClear is doing. Thank you for joining us.

End of presentation

Riggs: Well, I do love Jane King. She is super cool. And I think that was a great segment that covered what was going on. And now I'm going to go ahead and review what I brought up in the interview, which is our quarterly filing. So let's take a look at that, shall we?

Revenue Growth

All right. We continue to our substantial revenue growth. And as I mentioned in the interview, that revenue for the three months ending March 31st of this year was 163% of revenue in the same quarter last year. So it went from 1.2 to roughly 2.2 million. So I like to say it's almost double, but it's not really I mean, but it's it's a nice jump, isn't it? Actually, last year's first quarter was a loss, which was made up later in the year. But this year we had a very nice gross profit.

Typically the early part of the year is fairly slow as people's budgets are not yet kicked in. And later in the year things start to really happen as people get into use it or lose it kind of budget modality. So the summer and the fall start to get really cranking, but we actually had a nice little profit and meanwhile cost of sales was somewhat increased, you know, roughly in line more or less with the revenue increase. I didn't actually do the numbers there. We continue to have loss from operations primarily because we are aggressively investing in our operations, but most importantly in our Water On Demand subsidiary. And that is been a major focus of the team led by Ken Berenger.

58%

All right. So here, Modular Water Systems, which at the time up until April. So remember this, this is January, February, March contributed 58% of the total revenue. And that, I'll show you in a second how that works with the graphs. The gross profit was close to the forecast and the subsequently we transferred Modular Water Systems to Water On Demand, which gave us a bunch of shares for that. Remember, it's kind of circular thing because we continue to own, biggest owner of Water On Demand, and so we have a major stake anyway.

We are very happy with the dedication of the team led by Tom Marchesello, the CEO, and Dan Early is just an amazing leader in continuing to make Modular Water Systems happen and he's being backed up by a growing team and they're doing a great job with managing costs, cash flow and growing.

Revenue Increase

All right, so let's take a look at what the graphs look like. Sure enough, here you go. We had forecast and I just want to mention that the 2022 there is shown as a forecast. It actually roughly came through at that number. We didn't publish it as separate numbers, which is why I have not made it an exact number. But we were within, you know, a few hundred dollars less than $100,000 of that number. So we made 20. 21 was good, 2022 was good. Now 2023 we are we forecast about 4 million and we're well ahead of that with our first quarter revenue. So that's a beautiful thing.

So Modular Water is really helping the Water On Demand revenue because you see how this works is that we believe Water On Demand is going to, the GM Financial side, right? And the extended warranty side, is going to generate a lot more revenue than Modular Water just because it's easier to spend money than to build water systems. And it's not easier. It's just happens faster typically. So we see that revving up while Modular Water continues to grow. That's number one.

Gross Profits

Now let's take a look at gross profits. And you see this happening here. 1,000,346 divided by four is 336,500 and we came in at 314,000. So that's fine. Look at the gross margins, almost 30%. That's amazing. That's the beauty of a standardized product line that you're able to replicate. And, you know, whereas Progressive Water Systems does some huge contracts and they are doing amazing work, they do everything, Oh, you want a $5 million system, you want a $200,000 system, etcetera.

Well, Modular Water has, you know. 3 or 4 sizes for each product line. 3 or 4 sizes of pump station 3 or 4 sizes of wastewater treatment system, etcetera. And so they've standardized and this is Dan Early mantra is to keep things standardized so we can get into assembly line. And it reflects in that gross margin, a beautiful number for water. I mean, believe me, that's a good number. All right. And with that, I am going to flip into the freewheeling discussion.

Freewheeling Discussion

Ken: Yeah. So great. Great briefing. The interview with Jane is always, she's makes you look good because she asks really smart questions, you know, which is which is terrific.

First Trillionaire and Gradiant

A couple of things that, you know, kind of going back to David Lynch's comment from KLIR, yes, he's an interested party in saying that, you know, the first trillionaire will be an investor in water. But he's also a learned party, right? He's not just not just a spitballing out there. Right.

Riggs: Well, he's providing utility software to major utilities, so that's great.

Ken: And it's going to be big, big business. But he's in a shrinking market, right?

Riggs: Well, it's a market that's consolidating is a better term for it. Right? Because the same way that mainframes became the cloud. The cloud is.

Ken: Yeah, that's true.

Riggs: Right.

Ken: It didn't go away. It transformed. Okay, fair enough. When you saw the institutional participation in gradient, it's interesting to note that, you know, Lynch's statement with, you know, the first the first trillionaire will be a water investor. I don't know who it'll be. I know who it won't be. It won't be a late stage investor, right? It will have to. Well, you just can't create that kind of a wealth as an investor, as a late stage kind of play it safe player. It's going to be somebody early. It'll be because that can only be, you know, that can only be attained through the leverage of being a very early player, right?

So venture capital firms, you know, there's really two decisions to make. Those investors have to make two decisions. Do they go the VC route, which, look, venture capital is great, but when before a company has even sold anything, I couldn't find anything in Gradiant's, on Crunchbase to cite that Gradiant is actually... When you look up at their financials, it's just the money they raised. I don't know that, I know money's coming in. I don't know that anything is going out yet.

Riggs: That's a really good point.

Ken: I had a few I had a few minutes to look at it, so I didn't want to be distracted because I was wrapped by your presentation. I needed to I needed to pay attention. But. And I was writing and I was writing notes.

Not Water Companies

Riggs: Here's the other problem that they have, similar companies. These are not water companies. Right? So the AI, clean energy — clean tech, clean energy, clean tech, environmental.

Ken: Right.

Riggs: There's no water companies. In other words, Gradiant is a unicorn, but it's also kind of a black swan, right? It's sort of sitting out there being like, hey, this is us. The space, it's so early in the space that I like, again, we've talked a lot about Apple 1984; well back in 1984, you had very early stage IBM pc. You were still at the eight bit — chip Because I was there. We were just on the verge of the 286 processor. But then the big news was the Macintosh and Lisa and so forth, and there was no way to compare Apple with anything else. Right?

Ken: Right.

Riggs: We're in a similar situation here.

Ken: Right. It was a, it was an entity unto itself at the time. And maybe that's the case with Gradiant. But here's the thing. That Trillionaire won't be a late stage investor. That is a certainty. So early, early investment will be key. So an early investor has a decision to make. And when I say early, I mean it's probably going to be someone institutional size.

When you invest in VC, there really is tremendous principal risk. These deals could just evaporate. There is no market to liquidate your holdings at a warning sign or something like that, if you know what I mean, right? So they can go VC route or they can go to an already public company potentially. So and you know, when a company has sales and business and is trying to really disrupt something, I think the risk is a little bit less. So the idea is this a company.

Riggs: Gene Tully. Oh boy, Gene Tully is getting a little sassy. "Ken's laying it on thick. Ken — dazzling with your brilliance, baffling with your bullshit." Gene, we love you so much. That's a beautiful thing. You're a wacko dude. Actually, it's very interesting because I don't think it's possible to lay it on too thick.

Segment About Gradiant

Let's take a look, for example, at the spaces that Gradiant is in.

They are in microelectronics, right? So chip fabrication requires, they often say that a single hair in the water for a chip factory shuts down the entire chip factory.

Pharmaceuticals, similar problem. Lots of different kinds of water.

Mining not only needs clean water, but it has to detox the water, right? It is extremely messed up.

Food and beverage, large quantities are used.

And then they're in refining and chemicals. Again, very, very dirty business.

Then we get into renewables like solar voltaic, panel production requires, it's like a chip factory, basically. And you're talking about conventional power generation, which we have a major client on Progressive Water side, so we know very, very well. This is exactly what we're doing for that client. So that's a beautiful thing.

And finally, textiles, if you're in the rag industry, you know, it's a lot of water. Our friend in Mexico tells us that.

So lots of interesting things going on. But these are spaces that they're not the only ones in there. We're competing very, very well in them. But what we've learned is that the action is in the mid range five, ten, 20, 25,000 gallons per day, not, you know, 500,000 gallons per day. Exactly.

End of segment

Get in Early

Ken: There are far more, there are an infinitely greater number of those end users, right, also. And what's also, that has to be stated, is that the maintenance, the operations and maintenance on a thousand systems is an order of magnitude more profitable than the operations and maintenance on $100 Million system. Like I remember I used to say, you know, if you're Anheuser-Busch, if you're Pepsi. Gradiant is building, a company like Gradiant is building your system, right? It's that big $100 million company, million dollar system. They're going to pay for it and there's going to be an O and M attached to it. But it's the, you know, the hundreds of or thousands of companies.

So, again, getting back to the you know, how the street views this, I think the company that is extraordinarily disruptive ,right? But I think also a company that, you know, is public also actually bears less risk to that early, because look, early investment, early investors have to weigh risk. Right? I think the public company that's actually got a base business becomes less risky. So I think that if you can be a company that will have the combination of the two, I think will be very, very attractive.

Riggs: Well, that's very well put.

Ken: To a future potential trillionaire. Right.

Riggs: You know, there's that famous story that that I read the, you know, about the early Airbnb people who they literally had like two pennies to rub together and they were touring all the VCs in the San Francisco area. And they, and somehow somebody had convinced them to create a cereal box branded Airbnb. And they were handing these out to each VC.

Ken: Yeah.

Riggs: One VC turned them down. And to this day he has that cereal box on his desk to remind him of the perils of not investing early. But here's the problem for those VCs. It's a win lose. In other words, they invest in it. And out of ten investments, they might clear one. Actually around, it takes about 30 investments to get a real hitter. And as you say, the rest just go away. The money gets mean...

Ken: It's literally gone. It's gone. Right. It's 100% downside. No, we're not we're not going to address that last comment.

Base Business and Risk

Riggs: No, no. But but I want to talk about the HOA thing. But let me just get back to you for a second here. You made a really great point about Modular Water. You know, our base business being on plan, right? More than $1 million in the Q1 with regular sales. This is not Water On Demand sales. This is regular sales. So we've got a base business that is profitable.

Ken: Foundation, a foundation. In other words, yes, what we're doing, what we're doing is massive in its potential scale as far as aspiration goes. But you're starting with a foundation of the business that Modular Water Systems in without... Listen, without the operations and maintenance attachment, which is infinitely more profitable and without the finance attachment, which is also infinitely more profitable. You have a base that I think is going to be 26, $26 billion by 2030, Riggs. Right? That's the small scaled down systems. Who is that selling to? It's selling to the guys who have the money.

So therefore, if we know 80% or 90% of the business can't afford it, it's not unreasonable to say that that market could be expanded by. 5 or 7 fold. If you can apply the finance piece and then the operations and maintenance piece. Of course, this this look this like you said, BMW says that it's a finance company that also happens to sell cars. They don't make their money selling cars. They make their money on the on the long term, the maintenance contracts or what do they call them? Warranties, Right. The warranties. The warranties, of course, the finance. Right. That's where their profits are.

Riggs: Services have that huge margin, right?

Ken: 80 to 100%. I think it was.

Riggs: It's not 100%. There's never 100%. There's no such thing as 100% margin.

Ken: That's true. That's true. 80%. I think it was 80% margins or something like that.

Riggs: Well, our friend in Mexico, who's our dear friend there, operates a services business, which he's trucking away wastewater and treating it at a central facility. He's got 80% margins.

Ken: Okay 80 Percent. Okay.

Riggs: He's got a very simple business. I'm not saying that. But for sure, look at look at Modular Water is achieving 27% margins that is huge for hardware.

Ken: That's what, almost double the industry?

Riggs: Well, no, because now you're getting into net profits or gross profits. I don't want to get the gross margin at 27% is excellent, but they're not going to get 50 or 60 or 80. Doesn't happen.

Ken: Right. You can't do it. You can't do it.

Riggs: Services side adds that layer of quote unquote fat.

Ken: But operations and maintenance is a simple business.

Riggs: No, I agree.

Ken: You know, it is a simple business.

Riggs: Yes. For the guy doing the delivery, people coordinating it. That's why we have to have software. Right?

Ken: Right.

Riggs: You know, I was one of those old white guys who bought a Tesla. And so I, you know.

Ken: At least it wasn't a Corvette. And you were having a midlife crisis, right?

Riggs: No, I got the three rows so that my wife could always have it as a backup for the school bus. But anyway, and it's happened more than once. But the point is that Tesla has a whole environment that supports it. There's an app and there's a whole software environment. Tracks, you know, this, that and the other thing. So the point I'm making is they have that service layer on top of the hardware. They, that is the modern model. And that's actually critical because as Musk has pointed out, you don't have a business if you can't scale it. Right?

Ken: You saw the news with Ford. So Ford is bleeding red ink on their electric vehicle. Now they're relying on their gas vehicles to kind of carry them through the electric vehicle portion. They just got an agreement to be able to share their supercharger network with Tesla. So he who builds the network first.

HOAs and Development

Riggs: And so that's why having that network on the ground with the maintainers that we're doing, we're starting with Envirogen®, which is our first partner, is so powerful. I wanted to address Brian Carter's comment, "Economically feasible for a large HOA, homeowners association, to purchase gray water or reclaimed and use WOD as a supplier to their doors." Well, that's a good question, actually. What we are doing for housing developments right now and Modular Water has a more than one housing development project. But we have, we've been documenting one as a case study that's going to come out. And that is where we treat all their black water and help them recycle their gray water, complete end to end. And they don't have to be connected to the sewage.

Now, this is super important in North Texas, which is growing far faster than infrastructure. And so we had that video a few weeks ago in Denison, Texas, just shy of the Oklahoma border that discussed how the northern Texas market is just going insane and they don't have time to put in sewage. And so we drop in these self-sufficient black water recirculation systems that churn out the gray water. And that's your answer, Brian. So we will be you'll be hearing much more about this.

Ken: So, yeah, so the housing market, I think it's going to be extraordinarily appealing to guys like us, guys like me, that wants to develop residential real estate. I myself am eyeing a very large lot that, by the way, it's still for sale. You know why?

Riggs: No sewage.

Ken: Elephant. they can't develop it. They can't develop it.

Riggs: But I thought you were doing, I thought we were doing crypto, Ken.

Ken: I, I retired from crypto. I decided to just donate my money to what is it? I think it was a prince from Kenya. I think it was, was it Kenya or was it...

Riggs: Or it was Russia.

Ken: I think he was from Kenya. He was a prince. And I was just going to give him the money and he's going to get, he's going to hit me back. I'm going to make a lot on on that. And it was actually, I calculated my chances were better with the Kenyan prince than they were with crypto. No, look, crypto will have its day. The reality is, is that I believe there have to be practical applications that tokens as gimmicks and stuff like that. Um, you know, it is what it is.

But that corridor that's being built faster than the infrastructure ever could. Okay. Think about that on a global scale. How about, how about building homes where infrastructure just is never going to go? It's just never going to go right. So we talk about overpopulation, globally, Riggs because we talk about people being concentrated. Why are they concentrated there? Because that's where the vital services are the electric, the gas, the water and stuff like that.

The ability to, look there's plenty of surface area for mankind to spread out. We just didn't build a system that would accommodate for that. But essentially by doing what we're doing, by decentralizing infrastructure, we can actually spread humanity over a much larger surface area on Earth and not strain those pinch points. Does that make sense?

Reshoring

Not only that, we've been discussing for the past few weeks the ongoing reshoring of industry from China. I personally know at least two friends who are actively doing that, and we've been told that the entire frontier area south of Tijuana and Mexicali and...

Ken: Peninsula. Is it, what did he say, 110% employment. And they're 1,000,000ft² short of manufacturing floor space.

Riggs: Now, that's only the beginning.

Ken: I know. I know.

Riggs: Now we're not investing in those factories. But what's, there's no infrastructure there for it, but those factories, if they want to comply with the treaty, the North American treaty, which is called whatever it's called, it was NAFTA and it's called something else.

Ken: It's the America, Canada and Mexico Alliance, I think, or something along those lines. Right. Something pretty literal.

Riggs: If they want to comply with that, then they're going to have to have water treatment and there won't be time for the utilities. So we are going to be looking at a boom for the next 20, 25 years of integrated factories coming in state of the art AI, robotics, etcetera, with attached water systems. I'm so excited about that. I believe, and it's already begun. Nobody's waiting. You know, we were supposed, you know, Peter Zeihan was saying, "Oh, there's going to be five years of turbulence and then it kicks in." No, no, no. It's happening right.

Ken: No, it's already happening. I agree. I mean, there may be turbulence, but there's going to be tremendous growth. Look, the thing is, they'll be able to slap these big warehouse style steel buildings, you know, 300ft by three. I mean, you could put those together in weeks, right? So that's a –

Riggs: A Modular system attached.

Ken: Right? Like a Boxabl type, you know. You know, I'm not pitching another guy's deal here, but, you know, that sort of kind of drop in place, unfold it and then put in infrastructure.

Call Ken

Riggs: So I'm going to start wrapping things up. It's been really interesting reviewing all this. You should talk to Ken to get what's going on. If you're interested in what's happening, believe me, there is a lot happening. Oc.gold/Ken that will get you to Charles, the appointment setter, who will coordinate. Because right now, Ken is like a one armed paper hanger. Oh, my gosh. He is a busy guy. And never mind his fluttering background.

Ken: I know. New computer this weekend I already promised.

Riggs: But please contact him. And the other thing we want to say is fill out your Zoom survey at the end because we love the data that we get. All right, everyone, thank you. It's been wonderful talking. And let's stay in close touch. Do come back to the briefing because there's amazing things happening. Stay in close touch if you're interested in what's happening and you want to be part of it, then schedule with oc.gold/ken and do come back. We love having you guys and gals in the briefing. Thank you all and have a great night. Peace — kindness, joy, love and happiness, as they used to say.