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Malaysia: breaking down the numbers

May 22, 2017 12:34:23 AM

Good morning!

Earlier this month, we received our first commercial-scale order!

What does this mean? Simple: For the first time, our revolutionary water technology is going in BIG.

“Prior to committing to this project, we conducted extensive lab testing. The consistent results and ability to comply with discharge regulations convinced us to employ this breakthrough technology.”

So I wanted to walk you through what this means, on the money side.

The first thing to understand is that we LICENSE our technology. This is a great advantage, since it gets us into countries all over the world, without huge investments of capital and labor.

So... How do we make money? 

Let's take this specific deal.

The job here is to clarify the "black water" that runs off landfills. Very nasty stuff. We can help clear up this black water, efficiently and without major chemical use.

As landfills go, this one is on the smaller side (there are huge ones out there, especially in China). Still, a brand-new system might cost $5-6 million to build from scratch.

Good news: we can retrofit those systems! 

This saves money and leads to faster deals being done.

This retrofit should be a bit less than half a million dollars US, by the time it's fully built out.

Who's doing the work? A joint venture that we created last year with the dynamic owners of Osmocell Malaysia, a fast-expanding company in South East Asian markets.

Our share of the business

As these systems get built, we plan to supply the cores. These are the parts that need to be replaced every couple of years or so.

In a complete system, it would be about 15% of the total. But, in a retrofit, it’s closer to 35-40%!

Later, we expect a royalty from sales. We don't disclose a specific number, but most royalties are roughly in the 10% range.

And that's just one landfill. Malaysia has some 300 more!

That could be $150 million in sales, of which we might see a third or more of the total. That percentage may well go down over time, but it is still a huge number.

And, then there's our small (but important) share of the joint venture.

And that's just landfills... in one country... out of a total of 196 in the world.

This stuff adds up. And there's much more coming. We are quite proud of our team in Malaysia.

Have a great week!

 

Riggs and Team

Riggs Eckelberry
President & CEO
OriginClear, Inc. (OCLN)

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