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Transcript from recording:
Riggs: Hi everyone. This is Riggs Eckelberry. It is the last recording of the year, and so I thought I would take the opportunity to talk a little bit about what's in store, both at the highest levels, the largest scale and specifically resulting for our company.
Now, same with the stats. We have a report from an investment firm called RobecoSAM, and it's called Water: the market of the future. It asserts that market opportunities related to the water sector are expected to reach $1 trillion by 2025. Now I used to think 2025 was a long way away, but that's really only five years. Now this report says it's because of five key challenges that are facing us.
The first is population growth, can't stop that factor, mainly in developing countries. The second is aging infrastructure and that's something that is forcing businesses to do their own treatment. I've told you about, for example, breweries that are being forced to put in their own systems, because the local municipality just won't accommodate them as they grow. The third major element is that many, many places need to have much better water quality improvement.
If you go to the Environmental Working Group, EWG, you can look up on your zip code, the contaminants in your local area. The problem is really not just with the individual contaminants, which actually, the cities are meeting by and large in places like America and Europe, but it's the combination of them that's not been studied. So how chlorine and nitrogen might interact in a negative way, that is just not understood.
So we need to have ultra-pure water, and that means water quality improvements. It's not going to happen at the city level, nobody's investing in that. So, it's going to happen downstream at the level of the home and the business. Now I'll talk more about home versus business in a second.
The final point is that climate change is altering the availability of water resources. Now there's lots of debate about water climate change, but it's clear that weather patterns are changing and that we're seeing droughts in some places, excess water in others, excess heat, et cetera. So weather patterns are becoming unpredictable and that is forcing water to be recycled, and so on.
We can't grow massive centralized water treatment systems fast enough to deal with these challenges, especially since those we have are aging fast. The big centralized water systems, which are paid for by citizens, should be growing to meet the population demands and all this stuff I just talked about, but they are basically just trying to keep up with the degradation of their systems. So again, it's on us at the point of need. These are decentralized systems, which is exactly what we're doing.
Let me talk a little bit more about what's happening in potable water, and this is where the home to industrial comparison is very important. So Grand View Research has said that the global market for systems to make portable water, drinkable water, is growing at a rate of about 7% a year. But the report says that the non-residential segment of commercial establishments, healthcare facilities, industrial units, sports facilities, educational institutions and transportation facilities—so really, mainly it's industrial units and commercial establishments—is estimated to register the fastest growth, in terms of both volume and revenue.
When I'm asked what I do, I tell people that I'm in water and they always think I mean home systems. But as the research indicates, the greatest opportunities are outside the home. Now I've talked about the fact that a 2,500 cow dairy farm pollutes as much as the city of Miami, which is about 400,000 people. Of course, 2500 cows is only a fraction, a tiny fraction, there's many millions of animals being bred and making manure. That manure is generally going untreated, sitting in lagoons. It's generating environmental ammonia in the air and of course in the ground. Also, it's creating those nitrates which feed those toxic algae blooms.
So, there's a lot of harm being done to the groundwater. But really thinking about it from an industrial point of view, that's where the impact is. You and I care about the water we drink in our home and also the waste that we create. But if we really want to change the planet, we need to look at what's being done with the industrial, agricultural and commercial wastewater.
It's a really interesting situation, and I've been writing a lot about this lately. Today you saw the article I wrote about Blue Gold. Again, what's that about? It's about decentralized water systems and that's really becoming a major trend. In fact, the Medium site which receives 20,000 articles a day, actually spotlighted this article and elevated it to the paid business section, because I guess it considers this stuff important.
So, this is really more and more becoming a topic that people care about, and I remember clearly that I was a voice in the wilderness for a long time. 2016, I was already writing about decentralized water treatment and people were like, "Huh? What?" I mean, I even had backers that were saying, "What's the issue? I flush my toilet just fine." But it's becoming clear that there's a problem and that we are part of the solution with our Modular Water Systems™.
That's kind of the big picture. I didn't want to bore you too much, but it really emphasizes that we have a really important mission, that it's been hard to move the needle until now, for both external and internal reasons. External reasons are really that it's an industry that has been slow to change, and we finally found this decentralization method. Then internally, we really needed much, much better systems. We needed to become more competent, frankly.
So this comes down to the amazing appointment of Tom Marchesello. I was with him this morning on MoneyTV, and that is the holiday MoneyTV episode that will be broadcast to all. You'll see it on our website probably sometime tomorrow. Anyway, Tom has background in operating companies. He's tough as nails and he's been knocking heads and making sure that everybody works together.
I would say that OriginClear, up till now, has tolerated a lot of individualism in its operating units, and that's been really as a way to let people do their thing. The problem is that it created a lot of redundancy and inefficiency. So, what he's done is he's integrated operating units. For example, now we have Modular Water Systems and Progressive Water [located in Dallas, Texas] fully integrated as one within the Progressive Water division, which we own 100%, of course.
That creates a seamless interface and much less outsourcing by Modular Water, because they are relying more and more on Dallas fabrication. So, that's a major accomplishment that we've now completed and the accounting team worked very closely with Tom to do this.
Now, in addition, we have put in, across the company, the project management system called Insightly, so that somebody in any one of our divisions can create a quote in Insightly. Then a quote, once approved, becomes the project tracker and the invoicing machine and so forth. It's all integrated with financial systems. That's being used both in Modular Water and Progressive Water right now.
Our licensing division has been treated as a special projects area and really the reason was that we were not happy with our Chinese operation. We think it's just not profitably commercializing our intellectual property and so we have moved on. I expect to be able to announce in the days ahead, not between now and the end of the year, because that would be a waste of a good announcement, but we have a whole new partnership structure and new players and we've really sorted out how our international network is going to help us.
And the particular partner that we've created this major relationship with has been very good to us. They've given us a lot of businesses themselves, which is always nice, in addition to doing a great job out there in the field. Much more to come from that, and that’s Bill Charneski’s work. Of course, he recently went with me to Spain and we announced last week that we were doing the re-marketing of these manure effluent systems, and that's going to be happening rather quickly as we gear up.
We have another licensee in the same space called Aqua D&P, they're in Romania. And actually, Romania does do a lot of livestock production and we'll be talking more about their role in the network. So good things happening on the technology network licensing side.
We also have a project that we are close to completing that takes advantage of our AOxPlus technology. AOxPlus is, of course, how to do super disinfection of water, way beyond what is expected, by generating large amounts of the hydroxyl radical—and hydroxyl radical is the most potent disinfectant. It dissipates in nanoseconds without leaving any trace.
You have to generate it on the fly, and of course it instantly sucks up any kind of carbon elements, organic elements, and can even reduce other things like heavy metals and so forth. On top of what people already do to purify water, AOxPlus creates super pure water, which we are now in negotiations to roll out for use in cosmetics. Potentially, an important space for use is dog water, because people actually care so much about their dogs that they don't want them to die of cancer and so forth, it's a key concern for them.
Roundup, which is in the water (Ken [Berenger] wanted me to talk about Roundup® -- which is called glyphosate) is actually a terrible contaminant. It probably is responsible for a lot of the gluten intolerance and it's very hard to take out because it's measured in fractions. You can't measure it through ordinary means, you have to use a spectrometer, which is what we invested in at our downtown site.
That's a fascinating area which we are actually going to be launching and we've already got the co-inventor of AOxPlus working on, and I'm super excited to have, potentially, a paid project for that. So that's the whole technology area, it's really being positioned more and more as what people call a skunkworks. What is a skunkworks? A skunkworks is the term used long ago for the Lockheed development area and it developed amazing products.
The rule for skunkworks was: maximum freedom and minimum budget. So, Tom has really positioned our best technology division as the skunkworks and that continues. You'll be seeing a lot about this hitting in January and I think that some of our later technology developments such as AOxPlus are going to get a chance to shine. Some of you who were around in 2017 remember how we were doing a lot around micro-toxins. Well, that didn't die.
In fact, it's something that is increasingly interesting to us and not just in cleaning up water but also in this cool area of oil and gas water treatment. You recall that I was discussing that project in the Permian working with the salt water disposal wells, which normally just dump all the water and they're realizing instead that's a huge asset in the Permian. That is continuing in the background as well. All that is under Bill's management.
Now, before I move on to the other thing that he's doing, which is acquisitions, I'm just going to talk about productivity and the rest of the divisions. We have a really astonishing backlog of business, Michael Mann who came on as VP Sales in the current quarter, generated well over $2 million in quotes that are now being worked on for completion. That's entirely outside of the many millions of dollars of business being generated, potential business being generated by both Modular Water, with Dan Early, and also Progressive Water.
Now, for me it's been very frustrating because you see these things percolate through, it's like, "Well, we got this deal, it's happening. It's really important." And these are huge deals. We can't say no to them, but they also tend to percolate, you might say. So I tend to be, me and Tom are very much about the, let's-get-it-now motif, and so we have been very, very busy cranking things up.
But it is a fact that large capital investment, brick and mortar systems, take a while to do. Now, what are we doing about it? As I said, Michael Mann has been working in sales and he's also helping me finalize the last bit of this fundraising we're doing. But more importantly, we're also going after completely new customers such as this high-end hotel group that Tom's been working with. We believe we're close to a major agreement with them and I think that's going to be an announcement as well.
We're starting to fire on all cylinders. and that's really Tom's strength. This enables me to become more strategic. What does that mean? What does strategic mean? Well, because it takes a while for water systems to get sold and this brick and mortar and so forth. I came from a very, very high-speed disruptive space during the dotcom. How do we speed things up? That's really done through what I've been touting as acquisition.
We've done two major acquisitions. We acquired Progressive Water and that really became a fact in 2016, and then we acquired Modular Water, created Modular Water with the talents of Dan Early, which became a reality in 2018, actually really truthfully this year, as we completed the integration and ramped up the sales. Now we're ready for the next one, actually a series of them, and what I've realized is that it all comes down to finance.
We have a set of potential acquisitions, we call them targets, and they are excited about going ahead with us. They've been excited for some time. They believe in the mission of OriginClear, Let me give you an example. One of these companies is doing extremely well. They are expected to do about $25 million in 2019 but they are hampered by the lack of capital, being a private company.
This company has operations everywhere, but they happen to have operations in India through a joint venture. The problem there is that every time you bid on a water job, you have to put up a 5% bond in cash. How many half a million dollar or $1 million water jobs are you going to bid on if you have to come up with 5% each time? They've recognized that the limitation is capital, and the main benefit of a public company is liquidity and capital.
We've narrowed down exactly what is a sweet spot for these acquisitions, we know who we want to acquire, they are generally in agreement. We have signed letters of intent, but I must again tell you very clearly that these are not done deals, they're non-binding letters of intent, but nonetheless it's a good sign.
Now, the other side of it is the finance. What we've realized is that we waste a lot of time going after getting investment banks involved with us and generally they are what we call time wasters. And so we've narrowed down to some resources, which again, I can't get into, but I believe that through deploying one or more of these parallel resources, we will get acquisitions done in 2020, I believe in the first half.
Again, I can't emphasize enough that these are not done deals, but I'm more confident than I have been, ever really, that we are going to get some momentum going, has a lot to do with our business development team, I want to really acknowledge Ken Berenger's brilliance. He just knows how to put together offerings and think strategically, and he's helped me a lot with putting together these financial structures that we're going to be moving ahead with.
Of course, Devin Angus has been amazing in terms of taking care of our investors. He's the go-to guy for what any investor needs. And then Michael Mann has been pinch-hitting, I promised him it wouldn't be for long because he loves to sell the product, but he's been pinch-hitting over in the investment area and doing an amazing job. So really our business development team is, I'm very blessed, and this how I can be so confident that we're going to get somewhere.
Looking ahead to 2020, what I see is continued improvement in the business units as Tom Marchesello drives them and makes them more efficient, and we do less hand counting of labor hours and all that crap that happens when you don't have good software, and makes things as flawless as possible.
Meanwhile, we pursue the technology game with some of these new applications, which I intend for these to be funded opportunities, every single one of them. I'm done with the blue sky technology development, we're about monetizing what we have and of course the licensing partners with the reorganization I mentioned.
And then finally, the major effort to get acquisitions done, which I am personally working on very closely. It's really probably the thing I'm going to spend most of my time on in the weeks and months to come.
So that's a summary of what it's been. I think you're going to get some surprises in the first and second quarter. I can't get into them obviously, but I am extremely satisfied with the team we've got, all hard-working.
We are understaffed, which to a certain extent is good because it makes people really stay on top of things. There's certainly no fat. Everybody's working incredibly hard, including weekends, all of us. I couldn't be happier with the team and their dedicatedness to the cause.
I really tried to run through these things as fast as possible, and if you have questions, always feel free to reach out to us, invest@originclear.com is a good email address to use. It goes directly to Devin. Or you can call Devin. The phone number is (323) 939-6645 and his extension is 116.
If you want to know about some of the strategic stuff we're doing, I would say that Ken is your guy. Ken's forgotten more than a lot of us would ever know about financing and his background is unbelievable and his network in the financing industry is amazing. His extension is 201. So again, (323) 939-6645 extension 201 and if you're an accredited investor you should bend his ear because he will be very happy to tell you more about that.
If you're an existing investor and you have not yet taken advantage of the incredibly powerful offering to help you out with some of your stock price, you need to reach out to Michael. Michael Mann who's at extension 206. He's working on helping us out with these offerings for a short time and he's a (323) 939-6645 extension 206.
I want to warn those of you who are existing investors that time is very short to take advantage of what's going on. I'm pleased with the stability of the company in the financial markets and I think it's a good time to increase your position in the company. And, of course, I'm always available to be part of a conversation about that. Devin knows how to arrange that.
We've been doing this for a long time. We first were listed on the stock market in April 2008 and here we are almost 12 years later. So, we've been around. One thing we have proven is that we're tough as nails, we know how to survive. But now is the time to really light it up and become a force to be reckoned with in this amazing space called Water. I think that it's the best thing that I could be doing with my life. I hope you agree that it's worth your participation. And again, my time is yours, so don't hesitate to contact me. You can always email me directly at ceo@originclear.com, or just do that by replying to one of my newsletters.
(If you're not seeing newsletters then probably they've gone to spam and you need to whitelist the ceo@originclear and newsletter@originclear addresses.)
So—exciting times. We think we're going to be the most exciting story in 2020. Now's our time. I love it. And as we look into the final days of the year, I wish you all a very happy holiday to enjoy in your respective faith, or no faith, as you wish. But certainly, to enjoy family and friends and to take a break because it's going to be a big year ahead.
So thanks again. I appreciate you more than you know, and let's have a great year. Thank you and good night.
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