Transcription from recording:
Riggs: All right, let's set the stage here because we've been going on about this $1 trillion to $5 trillion number and what the heck does that mean for OriginClear? Now, an additional thing that I want to comment on,
because I had my people responding to comments on Facebook, is about people who were being very, very free with their opinion, shall we say, and not very factual. Some people claim that this morning's release was an old story. The people for whom we installed the system don't think so since they just recently got it this summer! So, the fact is that we have had a big win in this part of the Mid-Atlantic region.
Riggs: What this installation demonstrates is several things: Number one, the problem of businesses having to treat their own water is real. This particular dealership was going to expand into this location, but had no way to connect to sewage and had no way to have a substantial water treatment system and so they had to do something compact and treat the blackwater. By black water we mean poop water just so everybody knows, treat the blackwater, do so in an environmentally safe way. The positive side of the story is, it enabled them to then invest in a property that was quite cheap and end up with something that had much, much more value.
So, businesses are being confronted with this problem every day and they are also getting a beneficial solution out of it by putting in their own systems that are not very expensive. To give another example that was not done by us, it's a case study that was done in a brewery for another water company, and this brewery was trying to double their size and the local city said, "Sorry, you can't do that. We don't have the infrastructure." They had no choice, had to meet growth demands and so they went ahead and invested in their own in-house water treatment system and doubled their capacity as a result.
Of course, you get all these benefits, like even if you don't use the water to make beer with, which a lot of people might have an issue with, you still are going to reuse about 50% of your water to wash down vessels and steam clean and so forth. So, it's a useful thing to do and we're seeing these occur all over the place, these off the grid water treatment solutions. So, that was a big win, and it was recent, and it was an example of the modular water treatment philosophy of “the business needs a solution and it just wants a black box”. That can be trucked onsite, plugged in, and they can focus on their core business. In this case, they wanted to sell cars.
In fact, they didn't want to be mentioned by name because they didn't want a bunch of looky-loos to come over and see their poop water treatment system. They really just wanted to sell cars and that's what we find with these businesses is that it's kind of like you get a headache, you take your aspirin and you move on, you don't want to keep worrying about the darn headache. If that takes care of the headache, then that's the last you think of it. So, we're very happy with how this model is playing out. This connects directly to the idea of $1 trillion to $5 trillion.
Where did I get this concept? So, we know for a fact that only 20% of all dirty water in the world is treated. That's a stat that can easily be proven, and in fact, it's in recent articles that we've published. It's better in developed countries. It's worse in undeveloped countries. So, it comes out to an average of 20%. 1 out of 5 gallons of water are treated and the rest are thrown away. So, really the water industry should be five times as large as it is now. It's a $1 trillion industry in 2020, whereas it was a half a trillion-dollar industry 10 years ago. So, that means that it doubled in 10 years. Good. Is it going to double again in another 10 years? Probably, but it needs to do it even faster if we're going to do something about all that dirty water that makes people sick, that pollutes the rivers, that creates all the red tide and green algae and you name it.
The untreated water is not out of sight, out of mind. Just looking at the problem of contamination by home septic systems: 200,000 bacterial illnesses and 100,000 viral illnesses come out of the contamination from leaky or broken septic systems each year. So, that's an important stat just for the 26 million septic systems in this country. So, we need to realize that this is a real problem, public health.
Not the same, but related to that, is the problem of recycling.So A, we don't treat four fifths of the water, and B, we only recycle 1% of the water that we use. So, think about that. Not only do we need to dramatically increase how much water we treat, but we need to recycle much more of the water that we use. That's very conveniently combined in a self-treatment model because if you treat your own water, you can reuse your own water. If you send it down to the city, it isn't coming back. It's going to be disposed of one way or the other. So, the key to both dramatically increasing the amount of treatment and dramatically increasing the amount of reuse is all in this off the grid or self-reliant water treatment. By doing that, we can dramatically speed up the growth of water treatment.
Why? Well, it's a fact that large public works do not get done anymore in this world. Nobody is doing them. In fact, India has terrible, terrible, terrible problems, and yet they're spending 90 Billion dollars on a water equalization program up in the Highlands and meanwhile 28,000 Indians a year die who have the lovely job of cleaning sewers. So, it's just so pathetically primitive that it's hard to encompass. And in the US, we're not building infrastructure and there's permitting issues and nobody wants the streets torn up and all that stuff.
There's plenty of money being spent, but it's not being spent on infrastructure, few countries do. Israel, which is very, very disciplined and manages to recycle almost 90% of their water, therefore treats 90% of the water. The next one down is Spain with 20% recycling. So, Israel really stands out. Most of the countries in the world are not very disciplined in that respect. So, you have a problem that central infrastructure and the billions and trillions that have to be spent, are not going to be spent. And so then you go, "Okay, what's going to happen?" Well, small is beautiful. Individual water treatment systems can be built and it works out well. It solves the problem at the margin and doesn’t overload the central systems.
So the municipalities can pretty much stay the way they are, they don't have to expand dramatically. We just keep adding capacity at the edge. The best example that I can think of is when mainframes became PCs, and along the way they became mini computers. So, mainframes were at one time, the only way that you could process data and everybody had what were called timesharing systems and there were queues and you had to book your time. And these stupid telex machines that were literally the terminals for these things. Then businesses got into mini computers, like the old Digital Equipment and HP machines, which they had on their premises and they were still expensive. Finally they got even smaller to the PCs. Now I do a lot of my work literally on my iPhone. So, it gets smaller and smaller, and more and more remote, and more and more individualized.
Right now for water, we are at the stage of the minicomputer. We've moved away from the mainframes, and by the way mainframes, even today, are quite busy. Lots of mainframes out there. There's just an even greater quantity of PCs. So the mainframes are the water districts, they're going to continue, and then the mini computers are these remote things. Then we're going to get into consumer systems, which are these PCs and on and on. So it can get smaller and smaller, more and more remote.
How does this relate to OriginClear? Very simple. We have the idea of short-term rentals. Well Airbnb is the leader in short term rentals, but guess what? There are other players like VRBO and a couple of others. So Airbnb is not the only one by any means, but it is the dominant player. It's the one that has the branding. People say, "I'm going to Airbnb or I'm going to go Uber." You don't say, "I'm going to Lyft." You say, "I'm going to Uber to you." So when you occupy that first position, you have mindshare. We have an opportunity as an early pioneer to be a mindshare leader for this new off the grid water treatment situation, which is such an important trend. And other people are playing it, but you know, I've been talking about this since 2016, wrote an article about it back then, and was having a hard time getting people to realize it. But now the trend is with us, we have a product line and we're expanding it. I'm in talks, for example, right now to expand the Modular Water Treatment line to Asia and that's exciting.
Okay, the reason I brought Ken on board is that he's our VP of business development and he has two, three major hats. He is working with Michael Mann on our corporate sales group and he's been responsible for launching that. He also talks to our investors, it's one of those activities that he's very good at. And the third thing is, that he comes up with brilliant new outside the box ideas. Like for example, just today we were discussing, Ken, your idea for setting up structures, financing structures funded by investors, that would allow them to finance the water systems directly. The same way that an oil well is financed with a limited partnership. So again, those are the three major things that we rely on you and I'm sure there'll be much more to come. I'd like you to just briefly, Ken, welcome, and tell me your thoughts about this $1 to $5 trillion concept.
Ken: Well thanks again Riggs, and good evening everybody. I've given a lot of thought to it. So you made a statement earlier, and by the way, I think that the brand most associated with a single brand is Google. You don't search for anything on the internet, you Google it, right? Because they were the first. So, we want it to be OriginCleared, Right? How do you get the rest of the world to do what you want? We want everyone to treat water, because it's a really good thing to happen for the planet. Now environmentally and socially conscious people have wanted that all along, and will that win out in the long run? Maybe it will. I just think doing it that way organically, will take longer than we want it to. So how do you make the world do something you want right away? You don't.
But if you have an innovation that makes property values immediately more valued by virtue of installing that innovation, makes it less expensive and more practical and increases asset values, there's your want. So, the auto dealer that Riggs mentioned, this is not in the boonies, this is in Mars, PA, it's in the Pittsburgh suburbs. So, the areas of the United States that this is going to be very well received in, are just a handful of miles outside the city. Why did they want a closed-loop system? Because it was the most economic, practical way to take property that was going to be inexpensive and develop it very inexpensively. How do we do that on a large scale? We just did it. We delivered the ability for countless locations to drop Instant Infrastructure™ on their door, take inexpensive real estate, and make it much more valuable in just one step.
So if the motivation is coming from the environmentally and socially conscious people, we've already got that covered. We've had that covered for years. But if the motivation is simply an economic decision, then that includes everybody else who's considering this, and by getting in front of this now, I really think we can have a shorter trail here, on making Drop and Go Water Treatment™, than PCs had. Water is a heck of a lot more important than information and I think that we have the ability right now to transform the way water is dealt with in the next five years.
Riggs: That's a beautiful thing. And the other important thing to remember is that if you think of OriginClear as being on that scale, then everything that we've been up till now, and Lord knows I've had my learning experiences, we all know that, and we've had our pivots because the industry's changed. But all that, was a tiny preamble to what is to come. If we're right, because these things are indications of a huge, huge, huge tidal wave of adoption of these remote systems, then OriginClear has the potential to be vastly larger than maybe even I have thought in my wildest dreams. One thing that people tend to get all caught up in right now, because the reverse split and, "Oh my God, the stock's up 20% down 20%, sideways this way, that way."
This is something that is a premise, it kind of proves itself, because we will be, if we can just continue to execute, and I believe we are, we're going to dramatically exceed many, many multiples. And I point you guys to a stock named Monster - Monster Beverage the stock grew 20,000%, and then people sold and it still kept on going up. And if you're able to hold that thing, most people were not disciplined enough to hold onto it the whole time, but it ended up multiple, many thousands of percent of the original investment, and it's a classic.
I'm not making any representations here except pointing to the logic. And here's something that is very important to think about. For those of you who are able to invest in the company directly, as accredited investors. The more you invest in OriginClear, the more resources we have on hand to deploy and become the leader. So your willingness to not be shy and to make the move in a very protected investment is going to directly make this a self-fulfilling prophecy that we will get these edge systems rolled out faster. What really it comes down to is execution and we cannot execute with just 30 employees. It's going to be about acquisition and that's really exciting, what's going on with the acquisitions for us.
I've “cried wolf” before and that was really because we got ourselves stuck with a financing partner that was very puzzling. They couldn't get out of their own way in terms of analysis paralysis, but they did manage to charge us a bunch of money. So, they were good enough for that.
We have managed to get well clear of that and we now have really, really, good financing opportunities and, we're very, very confident about next year. This will create the momentum built through a bunch of accretive acquisitions. It's going to really make this company able to finally grow at the rate it needs to. But I think what you and I are talking about is the fundamental trend that if we can execute on, we are no longer just a pioneer but a leader of something new. And that's super exciting.
Ken: And I would just add one thing, Riggs, when people say, "Okay, why now? Why OriginClear? Why now?" Well, the biggest challenge, especially a water company can encounter is, with an innovation, if they get that innovation accepted, used, proven it works, and then get paid for it. We finally accomplished all of those in both areas of our business. With our original inventions, and now this Instant Infrastructure aspect, we can now point to two separate areas that we're operating successfully in. This is what most of our investors have been waiting a decade for, and we've delivered.
Riggs: Yes, and in fact, later this month, Bill Charneski and my brother Steven who's our video guy, are traveling to Spain to document the use of our own in-house technology. And when you think about it, Ken, this is another application of the “small is beautiful” concept because, Spain, as I've said before, is the third-largest producer of pork in the world. Number one is China, number two, the U.S., number three is Spain.
And they have these huge manure lagoons, and one of the leading companies in this space, Montajes Longares, created a venture called Depuporc to have mobile systems trucked into each of the producers all over the country and pump out the lagoons and then treat them, and then go to the next one and the next one, because they realize you don't have to have a full time treatment system for each one of these. It's sort of a batch process.
Well that's, again, self-help, because these pork producers cannot dump their manure effluent on the municipality. It's too much. It's too toxic. Not only that, the Euro value of all that manure as fertilizer is huge. I understand that certain kinds of manure are really, really good for gardening, for sure they're great fertilizer, organic fertilizer.
So, you don't want to try and send it down to the sewage plant, even if you could. So, I think that really, it's yet another way that we're doing it. It's a variation of what we do. Like, Uber does the Shared Uber and the Uber Black. We have our product line, the modular systems, but also the Electro Water Separation™ and the Advanced Oxidation™, which have much more going on, which I can't even get into in this call. Ken, any additional thoughts?
Ken: Just that, again, I think it goes back to the monetizing of land by creating instant infrastructure. Really what Depuporc did, is they're allowing these pork farms to monetize what used to be a major ecological and financial liability. So, if we just keep innovating in these spaces, we're basically creating markets that didn't exist prior. That's how disruptions are really made.
I got to tell you, with everything that's happened in the last six months, it's like it's a new company. Now, is right now the perfect time? I don't know, but are we in the best place we've ever been as a company, as of this moment? Absolutely. No doubt about it. So, I'm just really excited about what tomorrow brings because we're really executing.
Riggs: Well, one thing that's going to make this the right time of course, as you and I know, is that the board is becoming interested in tightening up the offering. It's never going to be as generous as it has been. 2018 into 2019 has been a transitional period for us where we cleaned up a lot. We've been cleaning up our cap table, getting rid of a lot of the liabilities that we acquired through our learning through experimentation process and we're now going to start tightening up some of the conditions.
For example, we're planning to not have a mandatory redemption of the principal. That's going to be a major change. Still, we're going to make small changes, but I think that it's very, very important that if you're looking at investing in Origin Clear as an accredited investor, that you do it now rather than later, because when we make the change we will not be able to advertise it but they will come. So, I think that if you want to be promised a secured repayment of your principal, plus dividends, plus a price-protected grant of quote unquote free stock, then you should act now.
Ken: If you want to discuss this further, I'm going to be available in the office all day tomorrow or you can drop me a line tonight. It's 323-939-6645. I'm extension 201. If I'm on the other line, you can dial extension 116. You'll speak with Devin. We'll get you on my calendar for a follow-up call right away.
Riggs: And please call even if you're not quite sure because we want your questions, we want your concerns, we want to know what you think is an issue. This is important to us. We think we're doing a wonderful job, but of course we want your input.
Ken: Feedback's important. Super important.
Riggs: Well thank you, Ken, for coming on. It was very helpful and we'll do this again for sure.
Ken: My pleasure.
Riggs: Thank you and everyone have a great weekend. Goodnight.
Ken: Have a great evening. Thanks again. Goodnight, folks.
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