It's our strategy to decentralize water...But can it be just like energy? We answer that and how investment in water not only becomes possible, but essential... So HOW is Water on Demand like the popular oil and gas limited partnerships? Will $H20™ be the first inflation-indexed stable coin? Find out in this briefing!
Transcript from recording
Show Host — Riggs: Welcome to our webinar, the Water is the New Gold CEO briefing. Our mission is to transform the water industry.
OriginClear Chief Engineer: Decentralization offers us this opportunity.
Major Financier: The plan that you've built here is super impressive.
Investor: The world is seeing a crisis in regards to water. It's a great opportunity that you're giving us investors.
Investor: Not too many CEOs do a weekly briefing and are willing to talk to individual investors.
Good evening, everyone, and welcome to Water is the New Gold. And as people are streaming in, I'm going to set up the. The usual stuff.
Water is the New Gold, "Helping you thrive in the world's ONLY vital, scarce and recession-proof market." As we know, inflation is rising, but water rates are rising faster, which is a problem for people, and it's causing business users to look at ways that they can control their own fate, their own, you know, business interests by treating their own water at often a much lower rate than the local water district, recycling the water and also being able to potentially do good, as you'll see shortly in the show. So welcome aboard.
And let's just see we have a little chat Bob Roos, "Some time please update us on non-accredited investor offering." Well, Bob, here's the situation. We have a, the current administration has an SEC chairman, Mr. Gensler, who thinks that crypto is a scam and will soon disappear and will be no more. That's wishful thinking, but it also means that any time you do a registered offering and you're doing a crypto, you're going to be put out to dry. And that's just how it is right now. That's the state of it. It's unfortunate.
But our legal counsel has advised us that doing an S-1, which is an IPO type raise or a Regulation A, which is an accredited investor raise, both of which require registration, we'll give the SEC a chance to go. I don't think so. So that's unfortunately the way it is. We're going to work on it. But first, we really, really believe in the usefulness of these coins for reasons I'll discuss further.
So moving on right along, we have the usual Spanish. Heather is speaking right now and doing a wonderful job. Just go ahead and click to watch and listen in Spanish.
Safe Harbor statement. Of course, we have the usual qualifiers and what we say, but we really try very hard to be exact. And if we say something incorrect, we correct it. We try to be as transparent as possible, and I think we do a pretty good job too.
So now Newsweek article The second in a row, we had one on the fourth and then now we have this one on the 11th and it's really interesting the way it was done. We. This is an opinion piece by me helped by a very good team in the UK, and they felt and I agreed that you start with energy to establish decentralization because people understand the need to decentralize energy and then move to water.
And sure enough, literally what's happening in energy is that the world's richest countries are in danger of what would normally be seen as developing world conditions. And this is also true in water.
Let's take a look at the right here. "What's true for energy is also true for water pumping water through," and there was interim stuff. I'm just doing extracts here, "pumping water through hundreds of miles," et cetera.
And we did a case study that showed how local treatment would be great for the environment with a decentralized or modular solution that was myself and Dan Early writing, we can reduce both the water and the nutrient footprints in a single package.
So. Also, of course, if contamination happens centrally, as we saw in Flint, it travels everywhere. Whereas if you have individual points of treatment, it's like your PC going down doesn't mean the entire city's PCs are going to go down. That's a really, really big benefit these days.
So new technology, of course, and we need to think about how we got to think about limits of space, increase environmental regulations, "These centralized systems design in the 80s and long before are exactly that, a thing of the past. We need to future proof and therefore decentralize our public service structures today."
Brexit for Water
So the British public voted to take back control by leaving the European Union, and we should start with taking back control of energy and water. So we're going to do a lot of brexiting, a "wexit," water exit anyway. And that was really, really good.
Unaccredited Offering and Coins
All right, let's see what we've got. J.R.W. "So as far as an unaccredited offering goes, that sounds like a big no, at least until there's an administration change." Yes, that's true. Now we have a commissioner, Peirce, who is very much pro this, and she has proposed a two year development period. Unfortunately, she's not having a lot of success getting the others in the commission to go along with it.
So at the moment, we just we just need to execute. Now, having said that, you know, the first coin we're executing on is $H2O™, which I'll talk about in a bit. And that is very conventional. It's like the JPMorgan coin. It streamlines payments, and I haven't seen JPMorgan not able to do stock offerings, so I think there's ways to handle it. So stay tuned.
All right now we have a problem because I don't think Tom is here and he is supposed to be joining us. Let's see if I can bring him in. And if let's see if I can find Tom Marchesello. Ok, I have a hand up. Now, somebody raised a hand, so. Hmm. I do not have time. So I'm going to be Tom. All right, so let me just share a screen again and discuss.
So again, Tom, is I'll tell you what he's doing, which is fantastic work, and I think that the Zoom invitation went to spam or whatever. So unfortunately he wasn't able to join as a panelist yet anyway. So what's going on? Let me give you an update.
First Funds Received
Well, first of all, we made a press release earlier this week where we achieved first funding and preparing for a pilot program. And we included this graphic about how what Americans pay for water and sewer service has increased much faster than inflation or the price of food.
It's really dramatic since two thousand nine. It's a 60 percent, almost 70 percent increase, with other items being much less. Now think about what's happening now when those items, you know, 2019 to 2020, that's taking off and that's going to continue with water rates as well.
So OriginClear wanted to manage these for as funding prepares for a pilot program and uses to potentially treat water without major capital expense. So what does that mean? OriginClear received first investor funds. I'll tell you more about that.
And last week you heard Ken Berenger replay his Money Show interview, and you can actually watch that any time it's on our YouTube, and it's also on this press release. And so also, we began talks for commercial pilot program, which you've been hearing Dan Early talk about these various ones, but one of them actually on the 29th of October.
As I said in the bottom, here is a red letter day for us because we received the first six figure investment and began talks for commercial pilot. All right. Now. Ok. Just one second here, I'm going to I'm going to help out. I'm going to help Tom join. And his I'm having him join as a regular listener.
Timothy Melton's has raised his hand. Well, Timothy, normally we only take chats, but since we've we're waiting for Tom to show up, so let me just see if I can get Timothy. Here he is. So a lot of time. Timothy, hi, you're able to talk.
Timothy: How are you doing, boss?
Riggs: We are doing all right, getting good grades, future's so bright, got to wear shades.
Timothy: Good one man. Thanks for having me. Thank you for having me.
Riggs: So what's what's the good word?
Timothy: God alone, God alone the good word.
Riggs: Amen. Amen to that.
Timothy: Ok, I'm going to let you get back to work. I'll be here listening. I don't not know how I got here, But hey, man, I love it.
Riggs: Timothy, I appreciate you coming on board. I'm going to mute you now, and I believe that Tom is in the house, one second. Thank you, Tom. All right. Let's see what we got and we got Tom. There he is.
More on Press Release
Well, thanks for making it happen. I'm just reviewing the press release that we had. So just going back a bit. This is you. I was being you and I was not doing a great job. And then I did not have your famous laissez faire debonair attitude.
So then we talked about the press release about the water rates and about October 29th and about this, this first deal that one of the deals that Dan has been talking about. Ok, so one of the main customers.
This is what's special, "They avoid the burden of capital expense, and the outsourced maintenance helps them eliminate that expense." And really, what it means is it's hands off and business people these days want to focus on their core business. It's always been true, but it's even more true these days. It's a tough, tough market out there. And we, of course, have prefabricated systems which are also important.
Water on Demand
Ok, so let's talk a little bit about the current status and we have commitments here. We've banked one hundred and fifty k. That's well, excuse me, that's my bad. That's three three investors, I believe. And then we have two hundred k, in subscription agreements. Do not know why this keeps flipping. That's two people 100k each and then 250 K firm commitment from a single person. So six hundred total. So that's great.
Now, one of these people, I'm not going to say who, has also agreed to advise us, to advise OriginClear as Water on Demand as sort of an investor proxy. This person will help, you met Manuel Vianna a couple of weeks ago, he's the GM, and we've decided to add the voice of the investors in Water on Demand so that they can say they can look at things and things go on and we're able to have that representation.
This person does not have a governance role, but definitely is that extra pair of eyes that you've got to have. So now let's briefly talk about the kind of I know what's going on. First project, so tell us in general terms, Tom, how that's going along and what's the plan?
Orders are Stacked!
Tom: Well, as you know, we've been very busy with stuff in the shop, so I think we talked about how much backlog we had, which was continuing to stack, and so we had quite, many, many, dozens.
Riggs: Thirty two,
Tom: Thirty two. It was a lot, you know, it's like, Wow, that's pretty cool. Of course, the guys are like, Oh my God, that's a lot of work. We're like, It's all good. It's all good. So what we were trying to do there is look at a couple of different things. One is as we we bring up this Water on Demand capital opportunity, we were trying to locate easier, simpler things to do with this capital in the first couple of turns so that we work our way through the process properly and have a quicker turn as well.
Choosing the Right Project
So we're picking some of the projects that were a little simpler and easier to get into the supply chain, organize for and then out the door. Because, as you know, we don't want to be on a very highly engineered process that could have outside impacts from market. So we were picking things that were very much in our control.
Riggs: How to eat an elephant, one bite at a time, for sure.
Tom: Right. So that was the first step. And you know, a lot of that stuff has to do with our water filtration and purification type systems. Those are bread and butter. We've been doing it for 20, 30 years. And so systems like those are pretty standardized. There's a lot of stuff that's easy for us to do quickly.
And in particular, we also get to basically buy and sell inventory on that. So for example, if we buy a membrane or filter, you know, really, we're just wasting time on something like that. It's like had to place an order order 10 of them. They come in, we install them, we manufacture and get it out the door. So the dollars are easily applied against something that's easier for me to estimate. And I have a long track record of years of knowing kind of the cycle time on all that. And so that makes it.
Riggs: Very, oh yeah, this is totally makes sense. I mean, this first project was one that then was moving along with. In fact, it was the mobile home park in Pennsylvania. And what I think, I think is very wise of you because that there's potentially regulatory issues that we've come across and also it is a complex project. So we're like, OK, so how about we start with some stamp them out kind of things, and I think that's where you're going with that.
Tom: Yeah. This way, it like gives everybody a chance to to see the entire process and make sure we do it the right way. On the mobile home park, you know, or any kind of real estate development project, we love those and the clients are excellent as far as having real operating needs.
And the equipment that we're deploying for those is important on those types of projects, though sometimes the equipment comes in at one hundred and fifty to two hundred thousand. But then there's 60 to 80 thousand worth of integration, installation, digging holes in the ground, all sorts of fun stuff.
And as we tell people, when you got to dig a hole in the ground, you know it, it creates a complication because it's a wild card. You don't know what happens when you dig a hole in the ground. It's a weird. Lots of stuff can go wrong, and the cost could flex a lot like there's 10 to 20 grand in there.
That's the, "Well, I don't know. I hit a boulder." It's like, OK, well, so you know, on something like that, we just, we just need to get a little bit more clear cut on that. So I had to send it back out for quote, actually for one of the consulting engineers to make sure I get a better ground estimate.
Riggs: Good. Well, in fact, what we're doing is we're buying time to do it right. Basically, the last week, what we decided really was let's let the first project, first of all, choose an easy one, comparatively easy one, as you say, but also add time. So we're not rushed and we set things up properly.
Cash Flow and Future Revenue
And while these funds are idle, we're going to address this issue: $11 million through October four combined Progressive Water and Modular Water Systems booked sales. And that's, you know, did you know full disclosure here? That is not revenue, it's not cash as so, even though so normally we do four million dollars a year, but that's revenue this maybe we'll end up at twelve point thirteen dollars million in booked sales where we're going to, I think, do more than four, but we're not going to do the full 12 or 13. So just FYI. Anyway, this is the...
Tom: Let me move the chip off my shoulder. But look, the point is, we're proud of it. So it's it's good stuff. It's beautiful thing.
Riggs: No, I was busy disclaiming like crazy, but we're super, super proud of it. And because I don't want people to come back to me in April and say, God damn it Riggs. It wasn't 13 million. So but we're amazed.
And but what it creates of course is a need for cash flow, especially since we have supply chain issues going on, we want to snap up stuff quickly. So here's what, what we're able to do. We take the 600k and while the funds are idle, we put them to work and we do.
We will be Water on Demand, managed by Manuel, with this investor watching, is going to put out money on a secured agreement to Progressive Water and with factoring rates, which I won't get into those rates. But they're healthy rates. And then the investors in Water on Demand will see proceeds right away, which is going to be great.
So it's a win win. The word Water on Demand investors will see money a lot sooner than they would have gotten it. With these full, these full pay as you go type, pay per gallon type programs and we get to execute on this, which is going to do wonders for cash flow and so forth. So go ahead.
Tom: Prasad and I were doing the numbers, like always actually, but you know, it's interesting what happens to us when we get ourselves into, you know, twenty-twenty two, especially in that first quarter, like things get really very positive for us because of the way the projects turn, and it gives us a lot of new opportunities. So we're we're pretty excited.
Types of Water Treated
Riggs: Right on. I have a couple of chats here. First of all, Ivan, "Is this basically just purifying municipal water or what is the source of water?" Generally speaking, actually, ah, we do both. We we purify wastewater so that it so that the because people don't realize is you don't pay in your home, you don't pay for the stuff you flushed down the toilet. But businesses do. And so and in fact, those rates get very high.
You know, I've mentioned that, for example, breweries in places like Sonoma County, that famous story about Sonoma County, California, which has the Russian River Brewery, a company very similar to ours, that's a private company, got that contract. The pay per gallon contract because Sonoma County was just, the rates were skyrocketing and the Russian River Brewery could afford because of such a savings.
Now, once you purifying your own wastewater, you're able to reuse it and get another turn at least one more turn. And that's why... "I grew up in Sonoma," Right on. So, you know, probably the Russian River Brewery where it is anyway.
Ultra Pure Water
And then but we're also now in the business of purifying incoming water, and that's an exciting project that I'll be announcing. We're getting some coverage on that in the days and weeks to come. That high end premium project that you and I, Tom, remember Jesus was that twenty eighteen. We went and saw Frank.
Tom: It was two thousand nineteen I think.
Riggs: Early nineteen, I think. Yeah, yeah, yeah.
Tom: It was all good. But you know, we went on to one of their beautiful properties, which I was like, Oh man, this is a nice, nice hotel. I was like, we had some good food that they had there, that their premium restaurant. That was nice. I liked it.
Riggs: Yeah, that's that's the kind of sales I like. So then they, the thing made its way through, and now we have an actual ultra pure water installation at a major high end hotel. It's that they broke ground, that it's built, it's going to be commissioned soon. So expect coverage on that. So this will put us into treating the incoming water as well. Because guess what? Municipal water is not great. And in addition, the wastewater.
Ok, so and also the third thing that we do a lot of is conveyance. In other words, transporting water. In fact, we're talking about breaking out the pump station business as a separate division because pump stations are really simple. They're a tube with a pump in the bottom, and we're very good at those because our tube is very durable.
"Desalinization?" Ivan we don't do desalinization. That's just not our trip, although we have bid. We did a bid to Kuwait for, I think, three $200,000 containers for desal, but that got tied up. And I want to talk to what Brad just brought up about grant opportunities and wastewater innovations. "Has OC used state or federal funds for demonstration solutions?" Here's the issue We are not the fat cats. We're not Veolia, we're not American water works. We haven't bought people with all kinds of favors, so we tend to be the also ran on grants.
Also, our space is the decentralization. In other words, these local treatment and those aren't getting grants yet, that is the government's way behind on that. They're still funding the centralized stuff, whereas and that's a big reason for Water on Demand.
Timothy, "We'll need trucks and trailers, safe drivers to haul - transport aqua. I drive a truck now." Right on. Well trucking water, do you know? I think you know, Timothy, this is a huge business. Oh my gosh, there's so much water trucking going on, and it's insane.
And a good friend of mine and in Mexico has $16 million business trucking wastewater to his central plant to for treatment. So it's crazy and it's so wasteful. But anyway. And that's again, decentralization helps. You don't have to truck the water, you know, to or from if you're treating it at the at the location.
No Water MLPs
Anyway, I'm going to continue here because we want to talk a little bit about how is Water on Demand like oil and gas? Now, pay per gallon is steady revenue like an oil well. Well, how come investors until Water on Demand could not invest in a quote unquote water well, water oil well, right? And that's because there's a couple of reasons.
One of them is that by law, only energy companies can have MLPs. What's an MLP? Master Limited Partnership, that combines multiple programs, multiple oil and gas wells into one. And then so it's basically bundled oil and gas, and it's a fantastic business. The last thirty years, it's been very, very busy. And but it gets these MLPs get special tax treatment. So everybody jumped in and the government decided not to do that. So long story short, MLPs can only be for energy. And so but we like the idea.
A Lot Like Oil and Gas
And so what we figured out was, well, why don't we do something similar? But it can't be a limited partnership. And so after a lot of work and working with lawyers and so forth, it's been nonstop.
Now, if you invested Water on Demand, you get a huge stock package, you get your warrants up to two times 200 percent multiplication of your investment. And then, of course, a profit share from the pay per gallon programs. A lot like oil and gas production, which is super.
So that is an analogy that I think is very powerful because people understand that oil and gas is continuing revenue. The oil is coming out of the ground. Well, water should be continuing revenue as opposed to just selling somebody a water equipment. You should be able to operate it continuously. So I like the analogy, Tom. I do.
Tom: Well, remember, we talked about this a long time ago, because if you can start forming these, these concepts like the MLP concepts in oil and gas, they correlate also well to even how the mining industry does royalty based finance.
And you know, what happens is once you do this stuff, then you have the ability to create synthetics and derivatives, which basically let you bundle things up, sell them back to offset agreements. There's all sorts a wonderful things you can do with the revenue streams where you can break them into fractionalization, and that's what that industry was so good at doing.
Riggs: Amen. And in fact, this is where that water coin comes in. I'm going to cover that right now. So there's this concept of the $5 million club, and that is what has unleashed investment in the the Water on Demand program. Ok, so Timothy, "Can I invest with you guys?" You're about to see how you can, how you can contact us.
Ok, so here's the offering now because. We created this $5 million club. We were able to take this from high net worth investors, meaning a million dollars each to regular accredited investors.
Now when you invest in this program, you get one hundred and fifty percent redemption, meaning that you get your your public stock multiplied by 50 percent at the time. You're ready. Stock goes up because stock goes down. It's all good now.
Over time, the one hundred fifty percent is going to go down. Not for people invest in this, but the people who come along later. And here's a cool thing. Maximum twenty five cent conversion price.
That means you can let the stock run to a dollar or two and stay in your preferred shares. You don't have to convert to catch that price rise. You're guaranteed twenty five cents and you get your five year warrants. Twenty five cent warrants 200 percent and you have security in the subsidiary so that if the subsidiary fails to operate properly, defaults whatever you as an investor can get your get the shares of the subsidiary and the investors get 25 percent of the profits before taxes for up to twenty five years, actually for as long as the thing goes.
Digital Bearer Bond
Now it could go ten years, it could go fifty years. But when it's wound up, of course, you get a piece of whatever's in the pot. But here's the problem many investors are not too interested in sticking around for twenty five years for their money, which is why we came up with that $H2O coin. And this, in a way, Tom, is that kind of derivative product we were talking about.
We call it a digital bearer bond where it takes your money that you're receiving that flow and it packages it in a coin. And that coin has the intelligence of saying, Oh, I'm going to keep paying this money all the way down the road to this address, whatever address you give me. And now it's just like that NFL player who took his contract and created a coin around it, and then people were able to buy pieces of his contract. He got the money now and they got future revenue and everybody won.
Well, this is very similar. So this is a chance to potentially extract money now from future revenue streams. And there's also in the background, an idea of maybe doing a marketplace best down the road.
Ok. If the coin doesn't happen, we'll just reuse regular payments, cash payments. But here's what is great about it. It's very conservative. The $H2O coin is nothing speculative about it because every single coin, every single gallon of water is being paid for. There's money attached to it. This is actually a a money coin, right? And that's very rare.
You could almost call it a stablecoin, except that here's what's interesting it's going to go faster than the dollar. A stablecoin typically is something priced at the dollar. Well, this is an inflation adjusted coin. That's what's really interesting because the underlying contracts are water indexed.
Ok. Linda Roeten, Hi Linda. "Decentralization makes more more sense each day." Amen to that! That's, I'm just looking at the chats here. Ken's in the house talking to the people in the chat room, so feel free to chat with him.
Ok, so what I'm getting at here is that there is a secret sauce that makes it possible for investors to come in. And that first sweet spot is five million dollars on this offering. There's actually a premium if you come up with a $5 million investment. So how can we get in who don't have the $5 million? Talk to Ken.
And here's how you contact Ken. oc.gold/Ken is connects you up with the team or firstname.lastname@example.org or this phone number, and Ken is a co-designer of this thing, so he really knows what the heck he's talking about. Ken says, "A stablecoin on steroids." Right on, right on. But it's true, it's inflation, It's an inflation-indexed, inflation-indexed stablecoin. Boom. There you go.
So. "Are we going to ship out of Africa and Pakistan?" No, actually, Africa and Pakistan have plenty of water, they're just wasting a lot of it and the water is never in the right place.
So but. Here's part of the problem with water is that you can't just treat it as something you can just drain out, but I'm not going to go down that road. It's already thirty six past. Thomas needs to put his kid to bed.
"Is there another mechanism making the H20 Coin water indexed other than the price of the contracts connected to the water treatment projects?" Very good question. Ok, so what I'm going to do is I'm going to quickly run through the flow chart. You asked for it. You know, you thought you were going to get away with a short briefing. But this is a very interesting flowchart that kind of tells it like it is and it'll tell you what's going on. One second here. There we go.
Water on Demand Evolution
All right. Now. The normal business that Tom has been running here is ordinary design and build customer pays the designer builder in this case Progressive Water or Modular Water Systems, who then builds a system and then done paid walk away.
If you add water as a managed service with H2O, then what you've got is:
you've got investors funding the Water on Demand subsidiary, which is what's been happening.
Then an operating contract is drawn up with price indexing and the customer has payments on that contract.
Water on Demand issues a purchase order to the designer builder, who then builds a system, but notice that there's a sensor array on the right.
That's very important because the data is going to go up to the Operation and Maintenance Center showing how many gallons have been treated to what quality, which enables billings. You notice how operation makes this also operating the system. And so the customer gets an operating system, clean water and makes payments.
And here's where it goes into $H2O. We go, Oh, we're going to issue a coin that embeds the profit shares and those profit shares go in the form of this coin to the investors.
Now. There's an opportunity to resell that H2O with a built in payment stream. Would say it's a bond and is a potential marketplace, and that Ivan is where there's potential appreciation from people swapping this inflation indexed coin.
And then, of course, in the back end is an opportunity to reinvest the coin for new projects or to use it for beneficial use, like with a charity and so forth, so that, you know, you really asked for it. But that is the the vision, and it's pretty workable.
Ok. "Smart contract..." And Ivan, if you're interested in hearing more, of course, feel free to reach out to Ken. He's very he's actually the co-inventor on the dollar H2O.
Ok, so Chris Wirth, "Working on "Opportunity Zone" (outside of muni) eco-smart real estate developmentS, which will be staged in...need strategy consult with Riggs, and Ken! [and Tom!] Real estate manager I work with needs reverse osmosis and chiller tech in a box for HVAC system in Las Vegas, NV. Cash deal for equipment, so don't know if this is in your scope."
Yeah, we can deal with cash deals. Not a problem. It's totally doable. We're happy to, you know, we may. We may do these, you know, avoid the capital expense things. But you can pay cash. It's totally OK.
So with that, I'm just going to go back to the wrap up and. Tom has already left us to take care of his baby. Be sure to register for next week. It's getting as I say, this hotel coverage is about to come in and I'm excited about that. I should share the screen and also so you can see this wonderful piece of graphic.
There we go. And that's it. So thank you very much, everyone. It's been great having you. We, we we went a little bit into this interesting stuff. Hopefully, hopefully it wasn't too complicated.
But the idea is this oil and gas analogy is very powerful. We're literally creating the equivalent of what Apollo [Apache] did back in nineteen eighty one for the oil industry. We're creating that for the water industry. That's literally what's happening right now. And it's very, very exciting.
So that's the story tonight. And just. Look forward to hearing from you guys and talking to Ken. And with that, I'm going to wrap up. Have a great evening, everyone, and I'll see you guys next week. It's been very, very a great pleasure hanging out with you. Good night.
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