Biolargo Inc

Good afternoon, ladies and gentlemen, and welcome to the BioLargo first quarter 2022 earnings results. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Brian Loper. Sir, the floor is yours.

Thank you, operator. Good afternoon, everyone, and welcome to BioLargo's Q1 2022 results conference call. By now, everyone should have had access to the earnings press release, which was issued on Tuesday prior to market open, and the 10Q report filed with the SEC. This call is being webcast and is available for replay. In our remarks today, we may include statements that are considered forward-looking within the meanings of securities laws, including forward-looking statements about future results of operations, business strategies and plans, our relationships with our customers, market and potential growth opportunities. In addition, Management may make additional forward-looking statements in response to your questions. Forward-looking statements are based on management's current knowledge and expectations as of today and are subject to certain risks and uncertainties and may cause the actual results to differ materially from the forward-looking statements. A detailed discussion of such risks and uncertainties are contained in our most recent Form 10-K, Form 10-Q, and other reports filed at the SEC. The company undertakes no obligation to update any forward-looking statements. And with that, I now hand the call over to BioLargo's Chief Executive Officer, Dennis Calvert.

Hey, thank you, Brian. This is Dennis Calvert. I appreciate everyone joining us today. We've got a lot to cover, and again, we appreciate you following the company. The quarter was an exceptional quarter. You know, as always, we have a big vision for BioLargo. In many ways, we feel like we've just scratched the surface, and yet at the same time, we're breaking records on a pretty consistent basis, so we're pretty excited about that. They also... We'll give the listener and reader some understanding of the trending that's going on, which is pretty dramatic, as we continue to march ahead towards increased revenue and ultimately profit, which we think we are now demonstrating a viable pathway for. So we want to talk about that a little bit. Recall that BioLargo's mission statement is we make life better, right? Sustainable solutions for some of the biggest problems that face our planet at cleaner air, cleaner water, cleaner earth. We have the environmental group. which embodies three of our operational subsidiaries, commercial. We have BioLargo Engineering, Science and Technologies, BioLargo Water, primarily focused on R&D, and O&M Environmental. And of course, we have Clear Medical that is in the development stage, first revenues, post-FDA clearance, and really positioned quite well for ramp-up and spin-out, which is very exciting. We're going to focus mostly today on the environmental group, the core competency of the company, and where we're have extreme excitement about the things that are happening and coming in our near future. The financial highlights are certainly worth highlighting, right? We broke all revenue records company-wide, pushing just under a million dollars. The trend is significant. Of course, we still feel like the opportunity has just been scratched the surface, as we mentioned before. And we have business that's in the pipeline of great significance. We want to talk quite a bit about that. And we believe that this is a time which the balance sheet has had such a great cleanup period. We've reduced our debt to a really negligible, almost immaterial level. We've got one operating subsidiary, O&M Environmental, that turned its first profit. The engineering group is just shy of profitability. Literally one or two orders would have taken the profitability. And so it's a very exciting time. So then that focuses on our R&D group, which is working on a commercial strategy to get its AOS commercial. And then CLIRA, as we mentioned, that has its first sales, really preparing to ramp up a commercial effort with proper funding. When we analyze the financial highlights, here we go. As we mentioned before, Company-wide revenues came in just under $1 million. That's a 69% increase over the same quarter in 2021, 69% increase. Owned and environmentalist revenue was $598,000, representing an 87% increase over the same period prior year. It's very small, but significant in its meaning, operating income at $13,000. It's important to know that that's fully accrued, so that's an accrued profit for the subsidiary. which means the corporate office is still incurring its expenses for public company reporting, legal accounting, all the things that it takes to operate that public entity. Engineering came in for third-party revenue. Remember, this is third-party. It's also important to note that they're heavily involved in R&D as well. So this revenue is a record revenue, 177% increase with a very small loss. And again, as I pointed out, a significant increase amount of their time is also committed to R&D with a heavy emphasis on our AEC PFAS solution.

Okay.

Take a minute to talk about those. Here we go. We have a number of catalysts that are under contract and underway. Under contract and underway. It's very critical that we properly categorize and talk about these briefly. Many consider the AEC, that's our PFAS solution for forever chemicals, as the most significant, the largest high-impact solution for the world, for the United States, North America, for biological and biological stockholders. That PFAS treatment situation is dramatic for us. We've spent about two years in development. We are preparing to go commercial. We just completed six months continuing testing to monitor the performance of the unit under a continuous operating environment for six months with no significance in its technical degradation. What that means is that we have high-level confidence this period of time plus we'll survive a market test and actual field use, meaning that it becomes scalable, functional, long-lasting, and a practical maintenance cycle to make it function in the marketplace. From a performance perspective, we've had significant results. We're gonna talk about those in a second. What's interesting to note is if you take a deep dive into the quarterly report, we talk about the marketing efforts, the business development efforts. They're really quite significant. As you know, we've recruited a number of professionals that have worked in the field of remediation and water treatment for 20 and 30 years, so with exceptional talent, and we've been building a distribution channel that we would call organic through reps and through our personal connections. And at the same time, we're negotiating three channel partner agreements to extend our reach into the world through relationships that have existing clients that need a PFAS solution. This is really critical, a very, very critical thing. It fits quite well with our business model, which is to invent, prove it up, get it through its development cycle, make sure it's commercially viable, get through at least initial early commercialization, and then leverage through what we call a channel partner. Channel partnerships can take on all different types of relationships, whether it's a distribution, a joint venture, a reselling opportunity, a referral network, or actually where there's projects where there's existing relationships with customers in which we tackle these challenges, potentially even as a subcontractor. Very dynamic business. In our queue, we referenced that we've accumulated a pipeline. I don't want to even use the words very carefully. A pipeline of prospective projects. That means projects where we're talking about the detail of execution, where we're doing water samples, we're talking about costing, timeframes, speccing in. And that pipeline, which means prospective customers not yet engaged, is a little over $90 million. Nine, zero, $90 million. Big deal. So what does it take? Well, in order to swallow that kind of business, there's a phasing-in process, right? First things first, get your first customer under contract, show that this is commercially viable, extend your reach through commercial partnerships, and then watch the business grow to meet the demand that we believe is coming. Now, remember, we've referenced this marketplace over and over many, many times. Many people consider it to be an $80 billion a year market. $80 billion a year. So how does a small company like BioLargo, rich in intellectual property, great talent, swallow? How do you do it? Well, you do it through channel partners. So what we've done is we've developed a system called the AEC. It's a remarkable technology that allows us to selectively extract and concentrate PFAS in this highly efficient way. It has a fraction of the environmental impact of the competition, one one-thousandth the waste stream, one one-thousandth the waste stream. Very important. We leverage it through relationships with channel partners who have clients that are looking for solutions and want to make decisions now. They want to make decisions now because they're under regulatory pressure, a lot of regulatory pressure, by the way. We have our team, primarily Tanya Chandler, 22 years in the water business, has really become, sought after as a speaking expert, someone who understands the regulatory pathway, understands the competitive analysis, and we're being asked on a continual, really continual basis to look at, explore opportunities as a presenter, speaker, and subject matter expert. It's particularly valuable to us, and we're investing a lot of time, energy, and money making sure that we're on the cutting edge of that knowledge. And the momentum with the federal government for regulatory stance on PFAS is expanding, not contracting. It's the simple version. It's a White House agenda item. It's an EPA item. It's being considered as potentially a hazardous material. Designation is potentially a Superfund site for remediation, which has a host of legal and practical implications for the long term. This is a situation that's going to be around for decades. We find ourselves in a very unique position to believe that our solution, we believe, And we believe the evidence shows that we present the economic and practical solution for highly concentrated, an effort to highly concentrate, selectively extract PFAS from water and from the environment. It's a very, very exciting opportunity, and we believe we're on the cusp of going commercial. So what we're hoping to do, we believe we can soon, is present some of these channel partnership agreements and the first execution in the commercial sense of working on specific projects. The AEC and PFAS is very exciting. Number two, POOF. This is a white label relationship with an extremely talented marketing group, 20 years experience launching global brands and billions of dollars of revenue. From a marketing perspective, they concentrated a team, put together a venture, selected our chemistry and our technical solution as a backbone on which to build a national and potentially international brand. Sales are exceeding expectations. We're intimately involved in the supply chain. We receive a royalty on sales, and we bargain for participation if and when they sell the brand to potentially a major consumer products company that will participate in the exit equal to 20%. This is a big deal. This is growing dynamically. Most recently, the commercials and advertising has appeared on the Jumbotron at Times Square. It's getting great penetration. Their ad spend is scheduled to go up four to five X over the next 40 to 60 days. Orders are flowing. We are producing, and we very much are thankful for this relationship with these professionals in this field, and we're gonna grow together. It's a very exciting business, and we think, again, to scratch the surface, They have lined up retail channels for distribution and in the process of organizing the first rollouts with major retail, they will be targeting some of the largest and most well-known retail distribution channels known to the market. It's a very, very good situation for both Ikigai and Violardo. Garrett Callahan. The Garrett Callahan relationship is about to go commercial. We had put out previous information contemplating a trial process that would validate and then secure clients. And in simple terms, what's happened is we have so much evidence to support the claim, a successful claim of excellent performance for its intended use on a minimum liquid discharge system. That means processing water for reuse with minimal discharge of a waste stream for industrial settings working with Garrett Callahan. Garrett Callahan is a 100 plus year old company, the largest privately held water company in North America, national sales force, national footprint, 100 years of history, tens if not 20,000 customers, right? Understand the magnitude we're talking about here. We've identified our first customer target and we're now working with that client and the sales organization to really ask ourselves how do we move from this stage of readiness into execution on a commercial scale. We're doing that now. So it's happening. We've identified our first customer. The first project will probably be around a million dollars, which is great. And we know it works. And so now we're working to go through the logistics of that bidding and scoping process to try and head into commercial sales. Now behind this, Derek Callahan has given us a comfortable projection of 50 to 100 units, ranging from 250 to maybe $500,000. If you translate that, that's probably a forecast in the seven to maybe 15 million over the next 12 or so months post-launch. It's a significant piece of business. It is perfectly situated for our wheelhouse of expertise. We have successfully designed and implemented our first commercial scale unit that can easily go into the field, and we're now positioned to begin commercializing and taking them in the first order. We hope to have new information on this very soon. uh the process is intense it's good no complaints uh and as as i would say it's all moving forward very nicely and of course we always want it faster but we also want it to be of the most excellent status the other thing i want to mention which i think is important uh we had put this is public information of course we did an announcement put it in the queue it's also hard for people to get their heads around it The thing I really want to point out is that we were given a contract for our first phase of a very comprehensive evaluation of a project that, if successful in executing through multi-phases, will total somewhere in excess of $500 million. So this is a landfill waste to energy conversion. That means that we're designing a system that will be a very large scale that will convert that waste stream into power. that will supply a grid in South America, the major metropolitan city. Our partner or our customer, however you want to frame it, is essentially the developer. So what's happened is the developer has access to significant capital. They have relationships to develop these opportunities, these business opportunities. And really, what do we bring? Well, we bring talent. We bring talent and knowledge. And so this is a significant validation of that talent. It will, over the design phase, which typically will take about two years, you estimate about 10% of that project will generate design fees, of which we will administer, be in charge of, build a team around, subcontract where necessary to make sure the client gets the most excellent design and efficiency for making very, very major decisions on, again, what will be a half a billion dollar construction project. So it's very exciting, right? So just think about what we just said. If the project moves forward as planned, it's probably, on the design alone, it's probably about $50 million worth of business over the next 24 months. So far, so good. It's moving forward. It's early in our relationship. We're working through our preliminary feasibility. Preliminary feasibility, we want to make sure. Feasibility is not a question of whether technology works. It's a comprehensive roadmap to all the pieces of the puzzle that will make a project of this magnitude successful. So that's budgeting, that's timeframes, that's permitting, it's technology integration. It's all the things that make that project happen, and we have the talent and expertise to do that, and we're being compensated to do that for the developer. It's a very nice situation, and it really represents a significant complement to the core competency of our group. and it also represents a move up in terms of vertical integration to substance in the marketplace. So we're very proud of this, and we'll have more information as it unfolds. And of course, the caveat to all that is, as we always say, you have to earn each phase. It's not free. You have to do the work and earn your way to the next step. We know that, but it is a very exciting situation, okay? PFAS. We touched on it briefly. I don't want to take too much time, but I do want to highlight this PFAS cycle is so interesting. And again, PFAS, per and polyfluoroalkyl substances. These are the fluorine byproduct of nonstick coatings that were used for 25 and 35 years all over the world in industrializations and things like carpets and food and cosmetics and industrial applications. And because the molecule is built to last forever, it's built to essentially withstand nature's degradation process, they're called forever chemicals for a reason. They last forever. And this is a huge issue. Again, most people estimate something like an $80 billion market. We just learned recently, not only with the regulatory encroachment that has happened and continued to expand, I'll comment on that in a second, we're also seeing that this is now showing up in landfills. It's showing up in organic farming. There's a high sensitivity. It's in air flow. PFAS is now being detected all around. Of course, it's been linked to adverse health effects like birth defects and cancer. We're just getting started. This is a situation, a problem, a circumstance that's going to last decades. And we believe we have arguably one of the most efficient systems for selectively extracting and concentrating this for disposal and removal from the environment. Bottom line, you've got to get it out of the environment. Okay. This speaks to the continuing regulatory encroachment. There's a subtlety to this. It's very important to understand. If this crisis is deemed to fall under CERCLA, That means that it will become a designation like a Superfund site, which mandates cleanup, allows for litigation to be pursued all the way down the supply chain, and it also mandates cleanup. It becomes a super heightened environmental attention getter for action. There's practical things already happening, right? If a municipal... drinking water supplier has PFAS in their water, whether legally or otherwise, they're induced to make action as soon as possible. No one wants to sell PFAS contaminated water to a citizen. What it shows, though, is the steady march forward at the federal and, by the way, international. PFAS is now becoming an international situation as well. Europe is a little behind the United States, but they're catching up quick.

Okay?

We highlighted this a minute ago. I'm just going to make it really simple. The environmental footprint, the last slide, we end up with a small container or barrel versus a truck when compared to ion exchange or carbon filtration technology. Our ability to selectively extract the PFAS is the key. We take a very small media like a membrane, we flow water across an electric field, we migrate it to the membrane, it attaches, it binds, it accumulates selectively. It's the selective extraction that makes it so special. And the rate at which it selectively extracts is extraordinary, highly efficient, long-lasting. It's got lots of capability for loading. We've now got a unit that's been running over six months. It's available across multiple types of water and ultimately, in the end, saves a bunch of money. This is a basic representation of testing results that we spoke about prior. I wanted to show the image. Basically, this is a graph that takes 25 PFAS different molecules. Again, this is important. There's over 700. There's a handful of five or six that are considered the real culprits of potential harm. This is a panel of 25. Where you see the blue spikes, that's a high concentration. through the yellow and the gray and the red and the blue, what we're showing is an achievement of a performance level to a non-detect status. It's super techy, but it's really pretty simple. We treat the water through our system and extract to a level which technology cannot find anymore. It's a great proof of claim. That proof of claim, which is really just a few months old, has equipped us to go into the marketplace and have confidence and conviction that we can install these systems to scale and begin a commercial journey that our company and our customers can rely upon. And we've done quite a bit of work. Everyone knows that we've got patents, patent pending, the innovation, the discoveries are continuing. Obviously, we'll continue to focus on optimizing the system, but the bottom line is it's workable. solution it's a huge problem we're at the the center of a storm the competition is going to have a hard time keeping up and we believe the way to expand that is to get your first commercial adoption which we're doing and then expand through channel partners which we're doing a very very exciting moment here at cali and we've spoken about this i can't emphasize enough If you just think about it for a minute, think through the relationship. This is a company with 100 years of history, very successful company, great people, very smart, love their customers. They know water like the back of their hand, right? Why were we selected? We were selected for a number of reasons. One is culturally we fit. We love our customers. When we step in front of a customer, we're by our very nature committed to the most excellent solution and we stand behind our work and they're going to get exactly what they bargained for. That's number one. Number two, we've shown an adeptness at sort of validating design and optimizing technology. Those two things have become very critical in the relationship with Gary Callahan. And as we've mentioned, we're heading into our first customer, and we'll hope to have some news soon on that. Okay. Again, we've talked about POOF. I'd urge you all to go to their website, pooph.com, pooph.com. Watch the infomercial. There's a number of videos on the Internet. What a wonderful example of preparation meets opportunity, right? Preparation meets opportunity. It's years of work. We became expert in the space. We've got the number one technical performer in the world. We believe that to be true. We have yet to see someone show us any differently today. safe, environmentally sensitive product, highly effective, and then combined with the right marketing and distribution opportunity, ding, ding, ding, we have a winner. So we're very excited about the work that they're doing, and we think that we'll continue to have a steady flow of increased success with that product, and the financial implications will be readily seen to our marketplace. In summary, as we said in our queue, right, This is the best time in the history of the company. So why is that? Well, the hardest work is done. The hardest work. What is the hardest? Well, it's innovating and proving up and finding first commercial adoption. That adoption cycle puts many companies out of business. We've been fortunate to survive it. We've also been fortunate to have the resources to invest in so many one-of-a-kind technologies. It's very important, one-of-a-kind technologies. You know, we believe each is number one in its category. If we didn't think so, we wouldn't be investing so heavily. We believe they have a chance to disrupt the markets. We're seeing the first signs of that, right, as you watch this happen, for example, with Iggy Guy. You know, they're a market disruptor. They're armed with sophisticated, very talented, great storytelling and a channel to build momentum and brand. And now they're equipped with one of the highest and most successful performing products in the history of the category. That would be ours. The combination makes for a winner. Our relationship in South Korea is advancing. Great relationship, great people. Still, COVID's a tough issue there, but they are expanding. They spent about a year and a half in advanced testing, and opportunities are expanding in that market as well. So we believe that that strategic partnership will profit and pay money for both partners, and it's only a matter of time. In the meantime, we continue to advance through strategic partnerships. We referenced in our queue a couple things I just want to highlight. We talked about the pipeline of potential candidates for the AEC for PFAS. It's real. Three-channel partnerships and negotiation. We're also finding real interest from a number of new markets for our cupridine cleaning. New markets. I can't... It's hard to put your head around it, but what we're discovering is that the chemistry, its redox reaction, some oxidation reaction, has efficacy in a number of chemical constituents that create problematic volatile organic compounds for airflow. Well, those industries, we're plowing through all of them. And why is that important? Well, some of them are quite large. In fact, in many ways, they might dwarf the business that make the other business that we have dwarf in comparison. It could be so big. So it's early, but we do have new customers and new markets doing new things. And we have new distributors that are quite significant size. coming on to secure rights, take the product to market, and that is also on an international basis. So, stand by for more intelligence on that. So, I think for now, that's our sort of highlights, and I'll put it back to Brian and say, Brian, what kind of questions can we answer?

Excellent. Thank you, Dennis. Excellent update on what's going on. um very positive direction with the revenues as well you had mentioned record revenues so obviously we're very happy to see that and look forward to a continued hockey growth stick right sure absolutely yeah i mean we think yeah i mean to that end maybe that deserves a comment um what we're witnessing primarily is organic growth what we believe will happen

is leverage exponential growth. And we say believe because it's not done until it's done. I don't know how else to say it, right? But if you think about the relationships that we've just covered, Garrett Cowan being a prime example, and Icky Guy with the Poof product, you know, our partners are carrying a heavy load. And they have existing tools that we don't have, and we're leveraging those tools to create exponential growth. And we believe that will happen with both of them. And then when we take that same concept and look back to the PFAS situation, we've got three channel partnerships in negotiation. And, you know, I can characterize them. One's a major engineering group with a huge footprint already established in PFAS and a significant backlog. Notice the difference. Backlog is clients already doing projects. Okay, and then another group that's highly skilled, more entrepreneurial, but highly focused in the mining field, and another group doing significant environmental remediation with a 20-plus year history of water treatment all over the country. So these are well-established partners, strategic partners, who have relationships to see large-scale rollout occur. And as we continue to refine our modeling, our systems, we will have scalable design efficiency, a highly valuable value proposition to offer, the technical knowledge to support a national and global rollout through partnerships. And I believe that's what's going to happen. So we're very excited about it.

Excellent. Good to hear. A lot of irons in the fire, right? And just a matter of time before those come in. And as we see revenue grow, we're seeing that come true. So several questions from audience members today. So the first one here is from Mr. Davis Ryan asking about staffing. So we've seen a headcount increase by four in the filing. Can you elaborate a little bit more on who you brought on and what types of roles the company expects to bring on moving forward? Sure.

So the nature of a lot of the business that we do has the ability to bring in also subcontractors, right? So while we see four employees addition, mostly that's in either business development or an engineering role. That's where we've got clients that demand significant attention and expertise, right? Development role in science, engineering. We also have a cadre of 1099 contractors. which is kind of common in the engineering field. So our engineers have been practicing their skill for 20, 30 years. They have relationships that span decades. And so initially, we supplement our workload with subcontractors. And then over time, as the demand fills and the pace quickens, we add additional staff. So I would say in the engineering and business development side, you'll see the most growth in staffing. That's what I would anticipate for the future.

Great. Another question here is about the feasibility study contract with waste to energy. Can you talk about the size or duration or potential estimate on that?

Well, the preliminary feasibility is generally just a few months, okay? So figure, you know, two, three months' worth of work. And what we do is we circle the wagons with extraordinary talent, right? So highly skilled people get involved, some subcontractors, some direct with the company. And we bring all that knowledge to bear to be able to go back to the developer and present a comprehensive outline of timelines, first things first, right? So the stepwise progression of a major project, including permitting, capital allocation, cost estimates, yields, technology choices and present to the developer the magnitude of the project that has already been secured under contract. So it's important you know that, right? This is a contract where our customer, the developer, is spending real money. This is not, I hope I get it. This is, okay, I got to gear up and get this done. That's why they hire us. So, yeah, so it'll be a few months. we'll see that revenue flow through. It's already started, right? And in these projects, typically you're working on a cost plus type arrangement and you get paid hourly. Really, it's the first step in the long step of the project in which we're being compensated to develop a roadmap for the customer. It's that simple.

Excellent. So on to the Garrett Callahan relationship. um, MLD unit. Um, can you say when the unit is expected to be shipped or timeline for future units to be assembled and shipped?

Yeah, that's a good question. No, it's not ready to be shipped yet. So originally we were going to, we were going to do a pilot scale unit, put on a truck, take it around the country. And what happened is we, we really, um, You know, that's a very conservative approach. So let's just say what it is, right? So you do that because you're not sure. You're not sure. Until you get through the development phase and where you're at with the customer, that's what you do. That would be normal. What we'd like to do and what we think we have a good potential to do is sort of short-circuit some of that, go faster. And you say, well, why? Why can't we go faster? Well, because the design of the minimum liquid discharge is an elegant combination of know-how and resources in a rather straightforward way that allows for performance to be achieved that the market's not seeing. So once it's done, as you study it and look at it, we believe the risk of failure is extraordinarily low. If there's failure, it's because someone missed something, not because the system or the technology is not functioning properly. Well, if that's the case, we can make it work anywhere in the world. So what happens is you kind of get to that spot where you say, you know, why are we doing trials to give us data that we don't need to prove that a machine works that we already know works? There's no need for that. Now, our test will be can we sell that, right? Can we get through that relationship with customers and bring that to bear? We think we can. You know, when we do work for a customer, we have to stand behind it, and we always do. This is no different. We stand behind it. We assure performance. We assure the result it's bargained for. And we have to deliver. That's the nature of the beast in our field. It's operational excellence, okay? Well, yeah, of course we do that. So that's what we're doing. It's that simple. So we're in the process now of working through that with the customer, right? And so stand by. We think we can. We're going to give it a shot. We're going to do everything in our power. We'd like to skip the protracted and costly process pilot process for a system that we believe doesn't need it. That's the punchline to the story. And again, to be clear, I just want to make sure we're clear, because when are we going to ship it? It's not like that. The question is, when are we going to get the order? And when's the order going to translate to a build, a construction, installation, turnover? So start to finish with that first customer, you're probably talking, and again, I don't want to pin it down exactly, but you're probably talking at least three, four, five months. I mean, that's a lot of work. That system will go into the field, but we'll have a purchase order in hand before we start. Go ahead.

Yeah, and there's a second question here kind of along the same line regarding the AEC. In particular, do we have an approximate timeline moving on site, generating revenue with that?

Well, it's hard to pin down the exact timeline for a couple of reasons. The first is that we now have a number of trial opportunities. We should speak about that briefly. As everyone knows, we've been working with one of the major water districts in Southern California, and they've agreed to move forward with trials, which is great. We like that a lot. We also have customers who want units. So it's an interesting situation, again, where the proof of claim is so substantial in our ability to stand behind its performance. We believe it will lead us into commercial activity while we continue to do pilot work. It's not commercial after the pilot. It's at the same time. So we believe that that's feasible. It's capable of happening. Now we have to prove that. We have to prove that. How do you prove that? Well, you get orders. That's the answer. So between the strategic partnerships, which I think is a huge, huge breakthrough, with the combination of new customers who will go through a process of designing and building for them, It all requires that we stand behind the work to make sure that it performs exactly as the customer has bargained for. Well, we know it will. So we're not afraid at all. We have no fear. We're at a spot now where we know the system is scalable. We know it works. We've got data to back it up. We've got six months of operating history with no significant implications to the degradation or supply of the unit on a continuing basis in the field. So it's a great time. We do believe that on the trial basis, there are certain segments of the market that are very demanding and will not move forward without those trials. So that would be namely municipal. Those are public agencies. They're risk adverse at the highest level. And so if we want to penetrate the drinking water market, which is largely municipal, we will be required to do commercial pilots that take time and money. That's just the way it works. However, there's a number of markets that don't have the same requirement. So while we've achieved this extraordinary proof of claim, and we've had enough comfort and knowledge and confidence to know that we can sit down in front of the marketplace and provide assurance of performance, we believe that we can pursue a dual track, commercial on the one hand, piloting and development on the other for the other much higher uh bar to entry which would be those commercial pilots which can be very expensive and time consuming we're not afraid of them they're just expensive so we're figuring that out that's the truth we're balancing that that balancing act between those two clients and we're making the decisions we actually have significant energy you know internal time energy and money going into the process of planning out what a pilot would look like at the commercial scale that we're talking about. It's very feasible. It's doable. We just want to make sure that we also get it perfectly right to advance our commercial plans into that market. So we actually have team meetings coming up in the next two weeks. We'll be meeting with the client, really solidifying those options. And so we're excited about both.

Yeah. Excellent. All right. Moving on here, we have a question about Ikigai. And besides poof and cat spray products, are there any other products in a pipeline with them, maybe a clear cleanse or something for distribution?

There's always that discussion. If you look at their marketing strategy, they're certainly bundling some insulated products alongside of the pet odor control product, which we think is great. From a technical perspective, we have a license agreement that gives them the right to cat odor control. There are additional products in discussion about launching into the marketplace with them, and I suspect it will happen. And we're working through the business terms of those as we speak.

Okay, great. Another question here is, if you can shed some light on the developments in the automotive painting sector, as well as in paper pulp industry for O&M. Yeah, so again.

Go ahead. Yep, that's it, Brian. Yeah, so we've got a couple of customers, which is good, and it's so interesting how it happens. You know, you hear about a complaint, you find a relationship, you have a door open, and next thing you know there's a trial and people are discovering potential in a market that perhaps we just haven't gotten to yet, right? And so that's very interesting. And then what happened in this case is that led to then the referral by one of the automobile manufacturers to a distributor that is an international scale to take in the line and begin a delivery, you know, a system of delivery and support for an existing client. Perfect. That's how it starts. That's it. That's all it is for now. We believe it will expand because the distributor, who is an international significant company, looks at it and says, I've got 100 customers for this. Again, I say that rhetorically, not literally, but it might be 1,000. We don't know. This is a situation where we found a new market. We were pulled into it. It's working. It's working well, and now we're in business with some major companies. companies that have the horsepower to do this on the international scale. So, you know, all I can really say is stay tuned. I think it's very exciting because it shows the power of the, of the chemistry. And I think there's many more markets we're going to find along the way as well. So this will just have, this is an example of, you know, as they say, getting some legs, this is getting some legs and it's going to keep going. So standby, we'll keep you posted. I don't think there's a really material financial implication yet. I just think it's a door open that's pretty remarkable, and there's more coming.

Okay? Yeah, excellent. Yeah, there's just two questions left here, but we can kind of combine them. So folks are kind of interested in how you decide where to prioritize, right? Like AEC, for example... can we focus more energy and effort on business development with that? Or are we distributing resources? Yeah.

That's a great question. So, and I think, I think it's the right question actually. So I think the answer is pretty simple. The, the, what is a company you go where the, where they're getting is good, right? I mean, that's what happens. And so we believe that the PFAS situation will continue to rise up as one of the lead priorities in the portfolio. And as that occurs, and you study barriers to entry, margin contribution, and the ramping up, you essentially reallocate. And because you're going to focus where you've got the most to win to drive value for your shareholders. So that's a natural occurrence. Part of our journey of history has made that difficult because, as everyone knows, it took a long time to find the breakthrough. As the breakthrough started occurring, it got attention, and our portfolio continued to expand. So I believe the PFAS will rise up in that way, which is a great situation. And as it does, it doesn't mean the other opportunities are not real. It doesn't mean that they're not worthy of attention. It just means that in terms of allocation of time, energy, and money, they become the priority. So the AOS is a good example. The AOS is an incredible invention. We're finding a very difficult time getting commercial traction. It doesn't mean it won't. We're just having a hard time. Why? Well, because we're ahead of the curve. We're ahead of the curve. If you go, just read. Read about micropollutants, where regulatory enforcement's occurring, what people are doing, how they're doing it. We represent a technical breakthrough. So in Europe, micro pollutants is a hot topic. In America, not so much. PFAS is a bigger deal. There's other challenges. The stock market's in chaos. Inflation is rising. I mean, there's all this stuff going on. So what happens is we know that that asset, the significant investment behind it, will find a commercial home. I also think that as the prizes rise up in the portfolio, I think that it creates a real opportunity to potentially spin out or sell off some of the other assets. which has really always been part of the design of the business. So that's not scary. That's great. That's great. And some of these assets would be great in the hands of someone with the resources and attention to really take them through that cycle of adoption. Remember that the design of every asset in the portfolio leverages the assets of partners. It's the entire design of the business. Why? Why do you do it that way? Well, because the barrier to entry is so hard, the capital requirements to do that breakthrough is really demanding. So in our case, right, in our case, we're looking for the contribution margin of high margin, low risk. And that's what we're doing. And by the way, it is working, right? Contribution margin of low risk with a diversified portfolio. It makes for a great value proposition, and of course, As they rise up, you're going to focus increasingly on the big winners, and that's happening naturally. So I think it's going to continue. I think on occasion it presents operational challenges, but nothing that stopped the business at all. And I also think it's critical, even think about PFAS. You know, what's the next big move? Well, get a customer. It's not that complicated. And so that's what we're going to do, get a customer, and it will be a good one. And then we'll work on number two. and then we'll work on number three. And naturally, what will happen is two will become four, and four will become eight, and eight will become 20, and it'll be 100, and I think it could be 1,000. I mean, this is a significant commercial opportunity. The other thing we've mentioned in our filings, which I think is really important, is the size and scope of these projects is far bigger than we ever imagined. I mean, we're looking at projects that can be five and 10 million a year for 20 years. Okay, these are like super fun cleanup sites Right. And I've said in interviews a number of times, but it's real, right? So how long did it take to get that, that pollution in the water system? Well, 20, 30 years. What makes you think you can get it out faster than 20 or 30 years? I mean, these are going to go on for decades. We're going to see, we're going to be hearing about PFAS, you know, with our kids and our grandkids. This is not just going to go away. And so we think it's a big opportunity. And of course we have a significant impact to make. So, you know, we're knocking on the door. And so, um, I think we'll have really good news soon. I hope it's very soon, but rest assured that it's a top priority in the company and we're pressing along and here's the good news that I've referenced already. We've got over $90 million in projects. We're looking at three commercial partnerships and works. Okay. Cause we'll get them done and we'll come back and share the information as we, as we knock them off.

Yeah. Excellent. And actually on the topic of the AOS, are you guys looking at the residential market, home water, pool water cleaning?

That's a good question. You know, the conceptual design of the AOS would be great for home, for the home treatment, but the regulatory pathway would be probably exhaustingly painful at this stage of the business. So early on when we first started down this path, you know, I have a chance to meet leaders from around the world, and I met with one of the leaders. you know, top leaders in the EPA. And the comment to me was, whatever you do, don't do drinking water first. Okay? And what they're really saying is that the regulatory scheme is so difficult to navigate. Now, we experienced this with the 510K with CLIRA. You know, that 510K cost us like $3.8 million. It was a significant investment, and it was about three and a half years, delay after delay after delay, beyond our control. and each step costs more money. It's going to be the same way with drinking water. So I would say yes, we could see this technology in the future for drinking water, but not as a priority today for us given the other mix of opportunities that we're focused on. So we'll come back to that one when we're with the right partner or with the right resource and when the timing is more appropriate to deliver something that the market's yearning for. Again, micro pollutants are not Not the hot topic in the United States of America. You know what's hot topic? PFAS. PFAS is the big outcry for industry and the public. So we think we're in the sweet spot there. And by the way, there's also a significant role for the AEC and the AOS together. I don't know if you picked up on that in the queue, but we've received a significant grant to continue to work with the municipal client at the wastewater treatment facility in Montreal. And now we're doing a combination unit treating wastewater and PFAS in the same pass. Well, there's a little glimpse of the future. So, yeah, hope that helps.

Yeah, very good. Appreciate that. All right, so last question of the day, and we can wrap up here. But can you give us a brief update on the South Korea joint venture, Aquaco and Mineral Extraction Ventures?

Yes. Okay, sure. That's a lot. Okay, so the South Korean venture we mentioned in our presentation, great relationship, great people, super smart, very, very dynamic business in Korea. One of the leading companies there doing wastewater treatment. They've exported that technology to America in a company called Tomorrow Water. Extraordinarily talented, smart people who are now building the business here. And so that relationship is continuing. We actually have meetings with them probably every six weeks, something like that, uh, very collaborative in, in the, in the nature of it. Uh, very methodical, uh, not, not fast. Um, we believe in law. We're going to be good, not material financially yet. Uh, but again, we think we're, we're really connected with excellent people to expand the market. I will also say just can't underestimate the role of COVID in Asia. You know, there's people that are still on lockdown. Okay. So it's just, it's just a little bit of a different time there. Um, And so what I would say is great relationships, stay tuned. Remember that the venture does not require continued financial support. So we're here to help them as we can. It's up to them and they're finding their way. So we're encouraged. On the AquaCo, we've had a couple of projects come through the system. It's really nice. We focus primarily on specific projects. We're now in cycle on working through bids and potential wins. And all I can say is I'll keep you posted, but we're highly encouraged by the work that we've done there. And so we think the fruit is in the making. It's not done yet. It's in the making. The other was, let's see. Oh, on the mineral extraction. Yeah, on the mineral extraction, again, we put this in the queue. This is public information. Our role in that venture as a technology and services supplier. So we're a vendor. We're a supply chain partner to the project. We're not the developers. We're not the owner. It's very important. So what we've done is said, how can we help the owner secure the financing, secure the resources, make a good plan. And that's our role. So as a result, uh, we're working with the, with the partner, the customer in this case, who also eventually become our partner to facilitate their securing of the financing. And, um, there's activity slow. I believe one day it's going to wake up with some financing in place. I can't predict the timing. but we're definitely engaged and we're definitely continuing to help our client move forward. So there's no estimate of timing yet. No estimate of timing yet, but certainly a significant financial opportunity for both the owner, the developer, and us. Okay, go ahead. Thanks, Brian.

Very good. Yeah, no, those are all the questions. Really appreciate you and the thorough responses here. Clearly a lot of moving parts, a lot going on, but Positive direction is kind of the main takeaway. Record revenues, irons in the fire, right, looking forward to the future.

I think, yeah, if I may, in summary, I think the way to think about it is we've got two strategic, you know, partnerships in place. They're channel partner agreements with Garrett Callahan. both of which are executed contracts and executing business. So both of those are underway. We think the next phase of partnerships will come into the PFAS solution on our AEC. And at the same time, we're organically growing in a very dynamic way. So, yeah, I would say this is probably the most confident, intense, wonderful, exciting opportunity in the history of the company because we're watching it all come true. And it's a great time to be involved. So, again, take a deep dive. Reach out to management. We do have our annual stockholders meeting on June 2nd at 10 a.m. in Westminster at our corporate office. Anybody local or distant wants to come, we would love to see you and shake hands and connect. And we've got good news to share. All right? Thank you very much.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may now disconnect your phone lines and have a wonderful day. Thank you for your participation.