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Water Is The New Gold: Why Are We On M&A Expert Radars?

Jun 28, 2020 12:28:05 AM

Insider Briefing of 25 June 2020

Helping You Thrive in the World's ONLY Vital, Scarce and Recession-Proof Market

This week a major M&A publication with 300 journalists worldwide covered our water marketplace story. This is an exclusive publication that you must pay for, who reports circulation of 43,000! Why would they cover us? Find out in this briefing!



Transcript from recording


WITNG Title slide



Riggs Eckelberry

Well, hello everyone, and welcome to the webinar of the 25th of June, and we're having fun times here as we're moving. Tomorrow, my moving van arrives, and well I just threw on this shirt because, well, I had a Bitcoin T-shirt on until just moments ago.


20200625 Mergermarket image 


MergerMarket’s Take

Anyway, Water Is The New Gold™, and we've got some exciting things going on. First of all, I wanted to jump right into the news that we have, which is that…Mergermarket. Mergermarket is a elite organization, which has about 300 dedicated journalists, which is a lot in this day and age, and something like 30 countries, and they published this very interesting story. Now, we were not talking acquisition interests, that was really their take after they interviewed me. What this story is about is it talks about our platform, “called Investor Water™. It would allow anyone to help crowd fund small water projects by individuals, organizations, smaller cities,” et cetera, and of course we would get a fee. Now, I want to hasten to say that at this time we're not taking a fee because we're not making the investment offering. What we're doing is we're bringing parties together.

And just today, we were working on finalizing the package involving that Troy, Alabama trailer park that I'll be able to talk about some more. We have the investor, we have the renter, we have the full system, and we're finalizing the numbers for the rental on behalf of the parties who will then do a deal directly between each other. So again, we're not soliciting investors for this. These are people who we were already talking to in other business, and they got very interested.


Why Mergers & Acquisitions?

Why did this show up on mergers and acquisitions? Well, in part because we've tried to do acquisitions as the story tells here, but we found it difficult to acquire well-managed companies because there's frankly the way water companies grow is by acquisition, so there's a lot of demand for a good water company. The point I'm making is if a water company is weak it's hard to tell until after you get it. We just could not find water companies that worked for us.

This story is really interesting because Mergermarkets got it. When you have a trillion-dollar industry, water services, which is literally only treating one fifth of the water in the world, and the rest is just going untreated, which is a scandal in my opinion, how do you wrap it up? Well, you can't do it as one company. It's not going to happen, right?


Put A Market In Place

So what you do is you put in place a platform that others can use freely, and then it ramps up. Airbnb, they started with their own apartment, air mattresses in the apartment, that's why it's called Airbnb, and very quickly that was it. They were done very quickly, and as soon as possible they got other people to start renting out their spaces, right? And now, there are $35 billion company.


Let Others Do Things

So scale is key here by letting others do things, and enabling others to do things, versus trying to do it yourself. There's a temptation. We had somebody onboard who was working on the project, and they kept trying to make a business out of all these things ourselves. I'm like, no, no, no. Don't try to make a business out of the businesses. We have that in Texas. We have 20 plus people working on a variety of projects all the time in Texas, but we're not trying to do that with Investor Water.

We're trying to spark a marketplace where investors like you and me could go in and invest in a water equipment financing structure with good returns, 100% ownership of the equipment yourself, so we have the ability to repossess, and you can't repossess something that's in the ground, right? So that machinery has to be “roll-in, roll-out,” and that's another feature of why there's a big barrier to others coming in.


20200625 Democratizing Water Investment slide


Democratizing Water Investment

Without further ado then I will get into the PowerPoint. “Democratizing Water Investment, OriginClear Develops a Water Investment Marketplace”. Great quote from the World Health Organization, "Access to clean drinking water and sanitation alone could save nearly 2 million lives each year and prevent half a billion diseases annually."


20200625 WHO quote slide


Eliminating Disease

Now, years and years ago, I was listening to Andy Young, who was then the mayor of Atlanta, and he was very excited about a project called the Trans-Sahara Pipeline, it's a water pipeline. And he said that that single pipeline alone would eliminate forever 50 major diseases in Africa. The point I'm making is that sanitation is key to public health, and we've just become incredibly aware of public health.

We no longer take it for granted. I submit to you that we will not only no longer even take the flu for granted now, but we have much higher standards, and businesses, and homes, and so forth are going to be much cleaner, a lot more attention to contagion, and with that has got to go better water sanitation. So, if we're going to do something about it this task is an impossible task in my lifetime if I'm going to do it by myself, or with a team of capable people, it's just not going to happen.


A Place Where It Can Happen

But if we bring about a place where it can happen, a method by which it can happen. It's kind of like inventing the internet, right? Vint Cerf, really, who invented the browser, because that was the real breakthrough on the internet. When he invented the browser, boom, he made something happen that was a shared environment, so we want to create this shared environment, and it's relatively simple.


The Key

Why? We know that investors are interested. We know that water companies obviously are interested, because hey it's money, and the only thing that's left in the middle is the financial side. Now, what about the financial side? We believe that we have found the key, and it's a company that I can't discuss the specifics, but they are on the Inc. 500 list, a strong company, and what they do is they provide direct financing from an investor of a home to a homeowner. Right? And that's kind of how it works. Bypassing the mortgage holder and that's the key. Right? The mortgage company is not required.

Now, they have some very interesting things they can do because they have that direct relationship. They can take, for example, a foreclosed house or a house that needs a lot of work and make it a condition of the person buying it, maybe they don't have that great of a credit score or they don't have that much money, but they've got to put sweat into it. Right? And so, with that, it makes it possible to do a deal. So, what they are doing is they're doing deals that mortgage companies would never do.


Low Default Rate Due To Direct Relationship

Now, they've worked out the legal part of it, so that it's possible for, again, somebody like you and me to go ahead and put together a house project, maybe I've got good credit so I acquire a house and then I sell it. And the default rates on this program are very, very low because there's a direct relationship with the investor and the buyer. Similarly here, we've got an investor and a renter. And the investor knows that he or she owns that piece of property, that piece of equipment. He can take it back any time. And the water company is there to make sure that there's no muss, no fuss, that all the details are taken care of, there's a support fee, et cetera. I went through that last week. I'm not going to go through it again.


Important Notices - Forward Looking Statements

Forward Looking Statements

Okay. The usual safe harbor statements that we use, forward-looking statements, they are the best we know at this time, but we can't guarantee their future. And if it comes out differently then we'll adjust as we always do. There's also a disclaimer about the offerings that we discuss. Currently, the Regulation A offering is paused. The Regulation D offering, however, is going on and the Securities and Exchange Commission does not guarantee or say that they've reviewed it in any way.


20200625 Origins slide


Origins Count

Okay. So let's take a look at the origins of the company, because this is a corporate presentation. Back in the day, 2007, we founded OriginOil, the original oil algae. And it was all about algae to biofuels. Right? So we then went ahead and traded on the OTC by April, 2008, so 12 years ago, over 12 years ago. And we had the technology to enable efficient algae harvesting through basically zapping the algae very, very lightly and it would cause it to clump up. Got all kinds of mainstream press coverage. Stuart Varney at Fox Business was like, "I will call you Algae Man." The original business model was licensing technology. And we still have some of that right now.


20200625 Pivot to Water


Pivot To Water

2014, as you recall, oil prices crashed and the biofuels was no longer feasible at that price. Had to be around $120. Algae became a science experiment. Major companies closed. We managed to pivot into the water space with that same zapping technology, which became Electro Water Separation™ and Advanced Oxidation™. And we set up a Chinese subsidiary, which we've since determined that we are not into, but we'll talk about that in a second.


20200625 Water is not Algae


Water Is Taken For Granted

Now here's what we learned was that I was on all kinds of TV shows with algae, that stopped the day we were in water because water is taken for granted. Water's taken for granted. And yet we know that we have got to have clean water. Everybody understands that, right? We got to do something about water. But the problem is that people take water for granted. I open the tap, water comes out, and I flush the toilet, it goes out. But there's problems in water. Even the quality of that water in the tap is not that great. It also takes a long time to get people to adopt new technology in the water industry. The figure that comes from the water industry is 12 to 15 years. And in 2014, we did not feel that we had that kind of time.


20200625 Transistion to Holding Company


Name Of The Game: Acquisition

We also learned that the licensing process was slow because the early adopters are few and far between. We didn't find them. And what happens is acquisition is the name of the game, so we went ahead and acquired. We went ahead and became a holding company, changed our name to OriginClear, acquired Progressive Water Treatment™, a very solid player, great reputation, roughly million dollars of revenue per quarter, and now it is our manufacturing and innovation center.


20200625 Creating New Businesses


Funding Small Onsite Systems

December 2017, we've began incubating a cryptocurrency called WaterChain™. And that was to address the problem we're addressing today which is, even back then we knew there was a problem to get funding of the future wave, which is these small onsite systems. The future wave is not the big central systems. There's no money for them, and it takes decades to build them.

So, you build onsite systems and there was no funding. That was our first attempt to address that. And that was more than two years ago. The problem was of course, a lot of you know, that there was something called a crypto winter that occurred. By mid-2018, we were like, "You know what? The space is not mature enough. Lots of promise but let’s put it on the back burner.” And today we have an excellent board. We're ready to launch it any time, but it's not our priority because the crypto market itself needs to continue to mature.


Modular Water Systems


Acquisition of Modular Water Systems

Now, about this time two years ago, we acquired Dan Early. He became a member of the team and he licensed his patents to us. And we launched a division called Modular Water Systems™ that is now rolling very nicely, fully integrated with Progressive Water. And now we've been incubating Investor Water marketplace in response to pandemic-driven lack of capital for commercial water systems. Because there was lack of money before, but then when recessions happen, you have this big problem of huge amounts of money flowing into the banks and the banks going, "Nope. Not lending it out." And of course, we need, for better public health, a global need for improved sanitation.


20200625 Alternative Investments Are Popular


Why No Alternative Investments In Water?

All right. Now what this is about is the alternative investment marketplace. Why are they popular? Because they're not the stock market. And I personally think the stock market's kind of wacky, but it is what it is. People are looking elsewhere where they can have an asset and make cash money from it. But safety, and I submit to you that real estate has not been very safe. It's crashed twice in this century. Oil and gas has crashed twice now in this decade. Solar industry has been set back five years, according to the industry itself. Why is there no alternative investment in water? Very simple. Until recently, only big systems were being built. But now the trend is to the edge, small enough for everyday investors.


20200625 Investor Water - New Focus


Investor Water – New Focus

Now investing in water is popular. How do I know this? Because we have more than 10,000 investors who are like, "I'm investing in OriginClear." Some of them were since OriginOil, but mostly OriginClear. Because "Yeah. I want to make money, but I also want to do something about the planet." And so make money, help the planet is very, very strong purpose in people. Water is recession resistant. Veolia, the market leader internationally, was founded in 1858. And there's not a lot of leverage in water assets. By that, I mean, there hasn't been a lot of borrowing. It's not in danger of being over-indebted. Right? Which means it's time for a global water investment marketplace.


20200625 Investor Water - How It Works slide


How Investor Water Works

Now how does Investor Water work? Water companies upload their projects, investor water signs off on the technology. We have an excellent Chief Engineer, Dan Early. We supply the roll-in, roll-out technology that's required to make this work if needed. And we know companies that already have that kind of thing, but many don't. Investors shop the projects and bang, the projects are funded, we take a cut. Now, big red letters here. No current investment offering is available. So let's remember that it is the way it is.


20200625 Investor Water Roadmap


The Roadmap -Phase 1

So roadmap, phase one is the laboratory, and we completed, some of you remember, the launch of the Pool Preserver™, first trailer-based system. We financed the deal that went very well, and the person who is now renting this system is making out really, really well with it. Booked 20 jobs first month. Each job is $600-$800, and what does that mean? That means, it's many times what the person's paying for that trailer built - based system. So, we've enabled somebody to get into the business who was not in, because of COVID-19 was looking for an opportunity. In fact, right here, “The pilot rental program was ideal for Ryan Kooistra. He's booked more than 20 contracts,” et cetera. “Like millions of others, I found myself without a job.” His timing was perfect and lots and lots and lots of opportunities.


20200625 Investor Water Next Phases


Next Phases

Okay. So, phase one laboratory, next phase is pilots number two and three are in process to be funded within 60 days. I'm quite sure of it. I'm personally sure, something could happen, but these deals are ready to be done. And we also want to complete the regulatory requirements so that we can step out of the laboratory and into the marketplace. The first phase of the marketplace will be a trusted market. By that I mean, there's only going to be one water company. You can always trust yourself. So OriginClear will be the water company that is servicing the parties, right? And it's limited to previously known investors, people we know only because again, you work with the people you know, initially. Now that is just so that we can get all moving parts and make sure that things work and deal with the risk issues, and how much do you put aside as a reserve for downtime? All those things are key. Phase three is important because right now we have one investor, one project. Well, number one, that limits the size of the project. Number two, a lot of people don't have $120,000 to invest. So, you cluster them up into syndicates. Syndicates, partnerships, groups, whatever.

Finally, in phase four, we want to open it fully to all US water companies and all US investors. And finally, we want to roll-out internationally. Perhaps at some point we will come back to WaterChain. We'll see about that. So that's the phases of the roadmap, and I'm not going to venture or guess as to how long this is going to be, but I do plan to be out of the laboratory. I hope by Labor Day, that's my hope. And that we'll have the trusted market as early as Q4 of this year, if not Q1 of next.


20200625 Financial Model is Key


26% Internal Rate Of Return

Financial model, I've gone through that before, which is basically, the key thing here is at the bottom left, you see 26% internal rate of return over five years, which is an outstanding rate of return. And if you factor in the tax benefits, it's 41%, huge rate of return. So, that is something that is just an amazing return for the investor. Essentially, the investor doubles his money. You can see right here that the investment total was 86,700 and the investor received 164,000 over the life of the rental. There's also some buyouts that can happen and so forth. We won't go through that model today.


20200625 Why Wont Others Steal It


Will Others Steal It?

Again, we had that story, which was great, and why won't others steal it? This is a really good question. People are going to ask us more and more. The first thing I can tell you is that, I've had the experience of trying to develop something with big worries about competitors. Back in 1995, I was in charge of a product that was Uninstaller designed to uninstall products, cleanly from a computer. It was called CleanSweep. And the product I was working on was called CleanSweep 95, the new Windows 95 version of CleanSweep. And there was already a leading product in the space that was called Uninstaller. The entire summer of 1995, I remember being freaked out that Uninstaller was going to do something and blow us out of the water.

Do you realize that they spent the entire summer freaked out about us? Because sure enough after we launched and just before the end of the third quarter, we started generating a million dollars a month in revenue for CleanSweep, which is a lot for something that was costing $35, and we dominated the marketplace. We took over the marketplace. It was fantastic. So why was it good? Because I started in May and we launched in September. That was fast. So, moving fast is key. But the other thing is, remember that the way to make this work, we're convinced of it, is not to put systems in the ground, because now it's part of the whole assets of the property. And I believe that commercial and residential real estate are in for a world of hurt, as defaults continue to roll through the economy.


A Rental Model?

It's easy to be an expert, but I can tell you right now that I believe that commercial real estate is going to have a major crash by Q4 at the latest, and that it will get bailed out by the federal government and something like $40 trillion. This is going to be ridiculous. The point I'm making is you don't want to be part of a real estate picture. You want to be well clear of that. So that's why we chose the rental model. That requires you to be able to say, Oh, I'll take that back. Thank you very much. And you can take it back. We have patented technology that enables roll-in, roll-out and it's available for this marketplace. So that is the commanding technology advantage for us.


20200625 Conclusion slide



Conclusion, the new OriginClear is positioned to roll-out a water investor marketplace to dramatically accelerate water purification in the world. We're pioneering a new alternative investments segment called water, who knew? And we're manufacturing these Modular Systems internally, licensing them for the market and continuing to build product lines with this core technology of ours, which I'll talk about in a second. We believe this is our long-term structure and mission.

For OriginClear investing, if you're interested in being part of this and sometimes I like to show the Airbnb rounds, which I won't today. And you see Ashton Kutcher invested in 2009 and he, and a bunch of other venture capitalists invested $7.2 million, got 10% of Airbnb. And what they invested has now grown 50000%, over nine years now. Ashton Kutcher cannot sell his shares, well, he can, but it's a private market. We have a public market.

So I'm not saying we're going to be a $35 billion company, who knows? But I do believe that executing on this plan will dramatically improve, will make us, I think, a hot commodity. That's my personal opinion. You can invest to help make this happen, but also to benefit from this. This is a very well-engineered offering, which I think you should look at if you're either accredited, meaning that you made $200,000 per year for the last two years as an individual, or $300,000 as a joint filer, or you have a million dollars net worth, or you can be a foreign investor, non-US citizen, must be outside of the US at the time of the investment. And if you are that, then you don't have to show that you're accredited.


20200625 Discuss Investing


Discuss Investing

Dial 323-939-6645. Ken Berenger is my co-inventor. He's the wild man with me, and we've been doing this, he's truly been key to developing this concept. Devin Angus is my longtime assistant, many of you know him. You can also just go ahead and schedule a call with Ken by typing oc.gold/ken in your browser. And that is that. So that's the presentation, I'm now going to quickly go over the news of the day. And with that, I will go over to our announcements.


20200625 Almansoori Appointment


OriginClear’s New MENA Regional Agent

And sure enough, we have here, we've now appointed AlMansoori Specialized Engineering as our regional agent.

Now, why is that? First of all, AlMansoori is a major presence in the Middle East, they're the leading provider of oil field services in the Middle East with over 3000 employees. It took forever to do this deal by the way. Now, why is it a big deal? Because we have a licensee in Oman, we've been working in Oman since before the oil crash, and our licensee Special Oilfield Services has a proposal with the Omani petroleum company, and Special Oilfield Services, SOS, is affiliated in a joint venture with AlMansoori.

And so, basically, AlMansoori is looking to create synergy with SOS in the Middle East, and North Africa, MENA, using our technology. And they are very, very optimistic, they consider that it's been proven at the pilot level and so they're ready to move ahead. And they are looking for chemical free water treatment, that's key.


It's Good When It Becomes Easy

So, I'm not going to make it much longer, it's been an amazing period of excitement. Here's why we know this thing is so good, and I'm just going to harp on it just a little bit, because I'm so blown away. You know something is good when it becomes easy. Now, we're working hard, no question about it, but all of a sudden we found that it was easy to get investors to say, "Yeah, sounds like a good idea, a hospitality water treatment system, or a real estate housing development," or any number of things.

The one in that trailer park in Troy, Alabama, that desperately needs to have a better system in order to be able to, the people who own it, needs to sell their system, these are people I know personally. They're not poor people, they're pretty well off, you could say they're in the 1%. So why don't they do it themselves? Well, I'm sorry, that's not what you do, they don't want to do that.

And this is the fact about capital, even people who have money, don't spend it easily, they'd rather do a deal that just gets things going. How many times have you, instead of buying something, you just got a subscription to it. And you're like, "Fine, I'll pay you $12 a month, big deal." Or buy a TV on a settlement plan, and you had the cash to buy the TV. Why did you do that? Because you try and hold onto your cash.

Well, everybody does that. So, this is what slows down water treatment systems, we live with this. And down in Texas, we're living constantly with this, months, and months, and months of preparation for these deals, it goes back and forth, and back and forth, and the number one issue is the money.

And like I say, some of these companies are big companies, multinational, but they have investing committees and this and that. But the minute you say, "You know what, pay first, last, and a security deposit." You got it. And just make sure you're not on the terrorist watch list, we know where you live.


End-Users Are Delighted

And first of all, the end users are delighted, the water companies that are trying to get those deals done, are like, "This is great." And investors love it too. Why? Because they still own that piece of equipment, they get full depreciation and they have repossess-ability. So, we think this is a golden formula. Stay tuned, we're going to be going through it over the next months as we exit the lab and enter this marketplace, the closed market, the club you might call it.

It is not a condition, you don't have to invest in our company in order to have these water deals, that's actually not kosher, we wouldn't do that. But initially we do want to work with people we know, and that's just a matter of managing risk. So, one way or another, we want to know who you are if we're going to allow you to invest, if only to keep the chaos to a minimum, and that's just a matter of scope./p>


2020611 WITNG Contact Us slide


Contact The Team

So please contact the team. You had the numbers earlier, 323-939-6645, extension 116 for Devin, extension 201 for Ken, or just type oc.gold/biz, sorry, oc.gold/ken in your browser and you'll instantly have an appointment with Ken that works for your schedule and his, we're off and running.

Thank you again. Over the weekend I'll be moving to Florida as I was saying and I'll be happy to maybe give you a tour of the place once I get there. Ken wants to tell us, "The water project investors tend to be a different class of investors than those who invest in OriginClear, but we know from the last decade that marketplaces can become extremely hot commodities on Wall Street." From your lips to God's ears Ken, thank you very much. And thank you everyone, it's been a pleasure. Good night.

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