BioLargo, Inc. (OTC:BLGO) Q3 2022 Earnings Call Transcript November 16, 2022
Operator: Good afternoon, ladies and gentlemen. And welcome to the BioLargo Third Quarter 2022 Earnings Results Call. At this time, all participants have been placed on a listen-only mode. It is now my pleasure to turn the floor over to your host, Brian Loper. Sir, the floor is yours.
Brian Loper: Great. Thank you, operator. Yes, so this is Q3 2022 earnings results conference call. By now, everyone should have had access to the earnings press release, which was issued yesterday before market open. And the quarterly report filed with the SEC. And 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.
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A detailed discussion of such risks and uncertainties are contained in our most recent Form 10-K, 10-Q and in other reports filed with the SEC. The company undertakes no obligation to update any forward-looking statements. And with that, I’ll now hand the call over to BioLargo’s, Chief Executive Officer, Dennis Calvert.
Dennis Calvert: Hey, Brian, thank you very much for that introduction and covering the preliminaries. I want to thank everyone for joining us. We’re going to cover a lot of information as usual. And there’s a lot going on at BioLargo. So this would be pack full of Intel, and we look forward to the question-and-answer as well. This is a great quarter for a number of reasons, it’s probably one of the best quarters and the best period of time in the history of the company as we watch our technology spine market adoption, we see the fruits of these planting seeds for almost a decade, bearing out fruit of significance. And we think that, that trend will continue. And it’s a great time to do a deep dive in the company, and we’re going to highlight the key revenue generators and some ideas about where we think this is going in the near-term future.
So we got a little bit of information for new people that are just learning about the company. We’re going to try to cover a high level. And again, we love a deep dive at another time. There’s really — there’s a number of subsidiaries. BioLargo started as a technology developer, and evolve to become a whole service solution provider. And within the portfolio of innovations, there’s really two major groups; there’s three subsidiaries, BioLargo Engineering, BioLargo Water, Millennium Environmental, all of which are focused on environmental that we internally call it, the Environmental Group. They very much work hand-in-hand, where one leaves off another picks up, they complement each other quite well. And then we have a medical subsidiary, Clyra Medical, that’s been an incubation and development for a number of years.
It’s just finding its first customer base. It’s got a clearance through 510(k) clearance to the FDA. A significant investment has gone into making those assets ready for market, and we think the future for Clyra is quite bright. And we’ll speak a little bit about that at the end of the presentation. We’re often asked, what does BioLargo do? Before we head into the financial results, the best way to describe the company really is this innovator solution provider, focused on clean air, clean water, cleaner earth, bringing technology-based solutions to bear in the marketplace with this attitude of service and the solution providers, a mentality to work with clients to bring the best-of-class solution. And many times, in many cases, that represents our technology.
And in some others, it does not. And I think what’s unusual about the business is that we have the ability to serve well, served with excellent results at fair pricing, and we’re finding incredible traction with that type of service offering in the marketplace. This last quarter marks another significant revenue turtle, about $1.5 million came in as reported. Note that we’ve seen a steady increase. Those numbers are becoming more and more meaningful. And I think what’s really exciting about this curve is the steepness of, by which revenues continue to climb. And we think that they can continue that way. We’re going to talk about why we think that? Some of the assumptions and some of the things that we know inside the company, we’d like to share with you to get a glimpse of how we see the future unfolding.
But we do think that trend is, as we say, scratching the surface and it will continue. And the other is debt. We just almost have such a minimal amount of data, SBA loan and a line of credit with Clyra, small fixed price convertible at $50,000, I mean, in a PPP, right? It’s such a negligible amount, it’s almost meaningless, and we intend to keep it that way. We relied on equity financing to get us through the last few years, and we intend to continue so. And we just think it’s just a wonderful time to focus on really driving revenues, driving value and driving enterprise value for the performance of our stock. Okay. A lot of this information is also in the press release, but let’s talk about it a little bit. It’s insightful. It will help, right?
So, top line revenue is $1.5 million year-to-date, $3.786 billion. That’s about 13% quarter-over-quarter and 111% year-over-year, top line revenue growth. That’s exciting. Again, as we say, we’re proud and not satisfied. We think there’s a lot more to come, especially as some of the innovations that we’ve created to find marketplace and channel partner adoption in the marketplace. We’re going to see those revenues continue. But it’s not bad. We’re pleased to report, I think the adoption cycle is demonstrating that the technologies have a home, and with the addition of channel partners, which is quite extensive, we think the future bodes well. The Engineering Group, for the third quarter, had a decrease in top line revenue. Let’s talk about that for a minute.
That demonstrates the lumpiness, if you will, of the cycle at which they provide services to customers. As they get more of the technology-based assets like equipment heated in the market that will even out, we also think that given the new contracts that are coming for services and the significance of the financial numbers that will also even out that lumpiness. But in Q2, we completed Phase 1 of two projects. One is the Waste Energy project in South America, and the second is the Ultra Safe Nuclear project for Phase 1 design. Both of those concluded, and then there’s a gap, which is kind of normal. After that gap occurs, we then head into the negotiation, the pricing, the scoping of Phase 2, and we expect in both those cases, the revenues to rise significantly as we enter into Phase 2.
The odds are those Phase 2 contracts will execute in Q1 2023. It’s what we expect. It’s not guaranteed, of course, but that’s what we’ve been told by our clients. We’re preparing for that. We’re in the process of pricing, scoping and planning the workload, because it will be quite a bit of work to deliver those services. The thing to note about that is that we still have yet to see some of the significant assets deployed in the marketplace, which create recurring revenue and margin, namely the AEC, the AOS, the Garratt-Callahan minimum liquid discharge system. And so at the baseline of 283 to 300, that represents services, that’s consulting only working with clients. In addition, the engineering group also does quite a bit of work to support the national office for innovation, support our old legacy technologies signing in the way to market and scale up and then, of course, they’re innovating themselves on things like the AEC.
So, there’s quite a bit of R&D going on as well. O&M, absolutely breaking records. I think the biggest highlight is that true-up a net operating income of $400,000. The way I think about that as CEO of the company, as I look at that and I say that business unit to carry the whole company. That’s the way I think about it. As it continues to thrive and expand with the great production what’s going on with POOPH and that expansion, which we’re going to talk about in detail, that operating unit has a chance really to generate such meaningful revenues and margin that it could put us in a cash flow positive scenario in a relatively short period of time. Now, there’s a lot of work to do there. So, we’re going to talk about what that means to get to that spot, but we can see it coming, and that’s the beauty of having — watching this performance happen.
The other thing about this performance with POOPH that I think is really critical is to note that it’s an example of the business model that we set forth at the inception of the company. And of course, it took a lot of money, a lot of time to get to the spot. But to now watch and see and experience technology adoption at a mass scale and what it can do financially for the company is what we planned and envisioned since inception. And so as I say, all the things that we said we’re doing are coming through, and that’s great news. That is absolutely great news. So, again, year-over-year, 185% — excuse me, 130 — yes. You look at that real quick. One second here. I’ll make sure you got it right. Yes, here we go. Little technical — yes 136% year-over-year $2.49 million.
So, this is going to put us in a run rate that should come in the end of the year over $5 million, which we’re very excited about. That will represent a 100% increase year-over-year for the entity. And that seems to be in line with what we’d expect given the growth curve. And Q4 is out to a great start as well. Nothing is occurring that gives us any fear. It’s just a lot of work, and it’s got our team really maxed to the gills to support our customers. Let me go to the next slide. When you look at the key catalysts for the company, we’ve been talking about this for the last year and now we’re watching it happen. So, POOPH, of course, in many ways, is considered the largest, the Ikigai relationship that launched POOPH is bearing fruit extraordinary, a great relationship.
And then, of course, Garratt-Callahan is preparing to launch — we do have customers in the queue that are not signed yet. We’ll talk about the detail on those assets. But those three drivers represent a significant massive opportunity across all three and we believe that they will continue to expand and grow and generate kind of revenue and potential cash flow that we’re looking for. The AEC, again, it’s a little bit of history. The AEC is the Aqueous Electrostatic Concentrator, that’s a device that started development about three years ago. It’s now got its first customer in a project to do a custom design for a very large industrial client. We estimate that that project at scale will come in somewhere between $5 million and $7.5 million over the course of the year.
We are in the process of scoping Phase II now. Scoping Phase II means making recommendations to our clients about how best to get to the end goal with realistic timing, budget and execution benchmarks. We’re doing that now. We’re very excited about that. That’s a chance to showcase this technology. It has three key features. It’s real simple, saves customers money, it works on all types of different waters. And at the end of the day, its environmental impact is so low that have compelling value propositions to compete in the open market with incumbents. I’ll also note that the first project that we’ve been engaged for is a project that’s designed to replace an incumbent carbon-based system. The customer was just within over the implications and the cost of managing that system, and we’re seeking an alternative.
We’re coming behind a prior install to swap it out for our technical solutions. So we’re very excited about that. In this field, our work in PFAS is dramatic. Most people look at it, and say, it’s probably one of the largest opportunities in the portfolio. And we’ve got some big ones. So that’s saying a lot. A couple of things have happened. One is we’ve started a testing program. We had great response. We’ve tested a number of clients’ water. And in each case, we’re having significant statistical results for performance, great results, even including a non-detect status, which is a remarkable plan. That means we’ve removed PFAS, as PFAS, listed for forever chemicals, that were using non-stick coatings for over 40 years, widely considering the containment of the decade, if not the century.
And we have a technical solution to bring those out of water and soil, mostly water by running them through our system, attracting the PFAS to its opposite charge, selecting on a membrane in what’s called selective isolation. We selectively isolate and collect the PFAS in such a significant easy, fast way. It allows us to highly concentrate and create a small footprint for disposal. In these images, there’s a couple of things to note. The unit on the left is really a demo type unit. The upper right is a small rack and then now at the bottom is a large. That’s 1,000 gallons per minute design, 1,000 gallons a minute. So notice that’s about six feet tall, and maybe 18 feet or 20 long. It’s a small building. And if you think about large municipal projects and you had something like 2,500 gallons or a 3,000 gallons a minute, it’s a very high flow rate, it would be one, two or three of those, you stack them up and you spread the water and you do the work.
So what we’re demonstrating is that we have the ability to go to full scale, and the next slide is a good illustration of what that unit looks like. So just — yes, so PFAS, a couple of things, I want to show you that picture in just a second. A couple of things about our current activity. The first is, I think, we start with the last one. We really are becoming recognized experts across the country. And you say, well, how do you do that, right? Well, you got to remember, first of all, our engineers have been doing remediation work for 30 years. So they are experts. There’s no question. Then we hired time to Tonya Chandler. Tonya is an expert in the water industry. 22 years in the field, working at the highest level, all over the country and internationally.
And such a deep experience, and we committed as a company — as she committed as an executive to become expert at the regulatory, decisions that are being made at the highest level of state and federal, understand what those regulatory decisions mean for now plus the future where they are headed, anticipating the future, and then helping customers and technology providers discern what the future holds from a regulatory perspective and make choices about technology. Well, that’s a lot. That’s incredibly valuable and we do that as a service to teach the marketplace about making decisions that are not based on this year, but they’re based on a year or two and three years out, because the scope of regulatory enforcement is so aggressive and so wide sweeping.
The way we would say it is, we don’t believe any segment of the market is going to be untouched by the impact of regulatory enforcement on PFAS. We’ve even heard the EPA’s make comments. There’s no safe level of PFAS that’s tolerable, right? Okay. So what does that mean? It means that, there’s a lot of heat on anywhere that they’re finding concentrations for sure even and even small dosing, because of the concern that is linked to adverse health effects like birth defects and cancer. It’s not good. So what have we done? We’ve become experts at teaching, sharing, explaining why we make the decisions we make. We think they’re really rational and it’s a good strategy to be the most efficient collector. We’re rolling that technology out in our first custom operation.
We’ve got a number of other early adopters coming to us as customers, which we’re very excited about. And then, we’ve also built a sales rep network that virtually covers the whole country now. And it’s early, right? So there’s a lot of courtship and education that goes on to get those reps trained, so that they can represent this actively. But it will give us a national footprint, and a significant reach to the front line of the marketplace. The thing about the rep network is very important to understand is that, these are reps that have been doing what they do for 10 to 15 and 20, 30 years. They’re highly technical people that are on the front line serving customers with excellence and looking to bring solutions to bear that, the customers are yearning for.
The way we would characterize PFAS or BioLargo is we’ve tapped a nerve. We’ve tapped the nerve. When we present our value proposition, people listen so and that we didn’t in a whole number a number of ways that are really important. We’re being there’s a number of future articles that are being prepared that will come out and trade for us. We’re being asked to speak at regional national conferences, we’re being asked to even educate engineers, right, continued education requirements for their certifications to help them understand, right? How this impacts them at the local level, because it’s moving so fast at the national level, it’s hard to keep up. It takes the company’s dedication to be expert in someone like calmly to actually pull it off.
And so we’re doing quite well. It’s a very exciting piece of the business. Here’s the images. The images are important. These are new we have three of these. We just got just built and what will happen with these machines is they go out into the field where we go through early testing program. We identify a spot, where we can work with a client the customer, and we say, let’s as an additional step just to make sure, let’s bring one of these out, park it into their location for three or four weeks, run some samples, run some tests and show our customer, our prospective customer that says that, the device can be well suited for the custom circumstances that surround that customer’s water source. And I can’t emphasize that enough. When you study the water business, there’s language that’s often used, and that is a standard components customized for the customer, right?
Because in each situation, you just have to deal with a variety of variables that come against you, and it’s the expertise of understanding that and the willingness to take the time and the patients to get it just right for the customer, that sets us apart in the marketplace, so three of those are ready for the field. I believe, we’ve just gotten a commitment are first one to go into the field, which we’re very excited about. So we’ll have more information on that as that becomes more solid. PFAS is estimated something like a $60 billion market a year. We tell stories like Orange County Water District had forecasted to solve their 60-some-odd wells that have detected a high level of PFAS, the total cost of $1.5 billion — $1.5 billion the — it’s a big number.
The other thing that we’ve learned is now entering into the marketplace, the projects are much bigger than we thought, which is good news, but they’re significant. I mean, high-volume water, very large bodies of water, sometimes extraordinarily high levels of contamination. So there’s a lot of technical challenges to go with that. And I guess the takeaway that I’d like to leave you with is, we’re at the forefront with an innovation that has a competitive advantage that so far, we can’t find a match. We think we stand out. It has a chance to be a number one solution. And the second is we have the talent to pull it off. And when we work with a customer, it’s really that custom and that precision at which we define the target that separates us from the rest.
And again, we’re finding a welcome market for them. It’s highly encouraging. Okay. The second, I want to talk about is the odor control. Remember, this started over a decade ago. And again, this is full circle — full circle from its first innovation, early market adoption, the slugfest to get through the market, identify first corporate accounts at the national level for the waste handling industry. Over the last year or two, we’ve won a number of major supply chain agreements with municipal clients, and if there’s a delivery system that’s required, we pretty much built it. I mean, it’s literally dozens and dozens of different configurations on how this technology can be deployed in the market, all featuring a technology that breaks down onerous compounds, no masking, no fragrance, safety stay, eco-friendly, it does no harm safer the people pay it and your pet and hence, the next business, which is, of course, proof.
We’re not going to show the video. If you haven’t seen the video, please go to it, pooph.com, P-O-O-P-H, P-O-O-P-H.com. Please go watch the video. We’re getting texts and e-mails and calls from all over the country now. That infomercial is showing up on national networks consistently all the time. And everybody goes, wow, right? Wow, it’s really exciting. They are launching in Walmart as we speak. There’s a lot of detail about that we don’t have because of the nature of the beast. Walmart says you’re in and you’re in here, here and here and that’s how it starts. And then the next thing, you know it’s 20 stores and then 200, and that’s happening as we speak. The advertising campaign put out by Ikigai, our partner indicates that it’s available in Walmart.
I think it’s just available at Walmart to be clear. We’re going to get more detail on that in the next week or so or two, right? We’re going to be pinning that down a bit as our partner becomes more and more knowledgeable about the status of the rollout on the infrastructure, but we know that product has been shipped, it’s across docks and now set fulfillment, which is really awesome. In addition, I want to point out that we’ve also been notified by our partner that two other major national organizations want to bring the product to market as well. And considering they’re starting with Walmart and bringing on another, it really bodes well for the significance of a national footprint for this product, which is awesome. And of course, direct-to-consumer merchandising through infomercials is an incredibly powerful strategy.
Remember in this deal, in this business deal, we supply the product, so we manufacture it, we make a margin off cost, cost plus margin. And we get a small royalty at 6% on sales and then we bargained to participate in the exit at 20%. That’s a nice win-win situation. If you think about it, it allows us to also toll and track and cooperate in the fulfillment. We have significant tenure. 10 plus years of experience in making these products. How to make them? How not to make them? How to package them? How to deliver them? How to use them? And all the claims that go with it. And that’s a powerful combination. When you combine it with someone like Ikigai guy, who are professional, professionals are developing compelling presentations that allow people to see value and feel the urge to buy it, because it needs such powerful needs in the marketplace.
We have great storytellers in that regard. So the combination makes for a powerful partnership. The way I would say this preparation needs opportunity. This is 10 years of work plus. And when you finally get the right spot with the right people at the right time, you have a chance to truly disrupt the market. Some of the leaders in this category do well over a 1 billion. So when people say, how big is this category? Some of the big competition are in the 1 billion range, okay? So this is a big business. And proof is out to get it. And I think they’re going to win a lot of market share. We’re going to see these numbers continue to climb for quite some period of time. Noticed that is a new bottle. The new bottle put up is nice, and that’s the bottle that you’ll find at Walmart.
If you have not purchased the product, go to Walmart, ask. Ask your local retailer about it. It’s really helpful, right, if our shareholder base and our network takes up the call, but the challenge on the retail distribution marketplace to say, “Hey, where can I get it. We like that a lot. So please buy it. Please consider it. It’s a great product. We welcome feedback. Again, we’ve been using this product for 10 years. It works. It works. It works. It’s chemically designed in such a way that it simply can’t fail. And when we experience any trouble in the execution, it’s usually a delivery system or a particularly unique challenge, but this chemistry is tried and true and safe, tried and true and safe, it works. Please go buy it. Okay. The next is the Garratt-Callahan.
Garratt-Callahan has not launched yet. The way we think about it, and we expect it to be prior to now. So sometimes we wish it was faster, of course, there’s nothing occurring in that process that will keep us from being successful. So we believe that it will generate imminent success. It’s a great system. It’s a great innovation on their side and our team is executed in a most excellent way. There are a number of customers at the table. And Garratt-Callahan is expanding and developing the national marketing campaign to support its national sales force. Remember, Garratt-Callahan is the largest privately held water company in North America, 100-plus years of history. Excellence in customer service is their game. That’s what they do. It’s a great fit for us.
Remember, they came to us and said, if you’ll make it, we’ll sell it. Well, that’s what we’re doing. We expect it to be successful. It would surprise that we get our first customers here soon. In addition, we’ve also spec-ed in this system into a number of our projects that were being recruited by customers with. So between the two of us, we’ve got a number of situations where this asset is going to find its way to market. And again, we’re going to say that it launches with the first sale — and then from thereafter, we’ll kind of break the mold and get on with it. Again, we love working with Garratt-Callahan. It’s all in good order, anxious to get that first hit, not troubled about the delay, just anxious. Not troubled, just anxious — not troubled just anxious.
I didn’t mention what it does, but the Garratt-Callahan’s system, minimum liquid discharge has a key feature that allows us to reuse and recycle water used at cooling towers. Well, that’s a big market. Cooling towers is heat exchangers that probably used in, I don’t know, 30% or 40% of all manufacturing in the country in addition to places like data centers and all sorts of really interesting uses — and wherever water is stressed or the PUC Public Utility Commission wants to reduce the amount of containments are being sent to the wastewater treatment plant. That system is your huckleberry . I mean it is built for speed. And so what it could do is take the water out of those systems, treat it, pull out the containment is put the water back in and generate as much as seven to 10 times the usefulness of the water which means also reduction of that amount of contamination put down the sewer right, to the PUC and allows for reuse.
So it’s a great system. It’ll find its own Engineers. This started technologies four years ago, we made a bold decision to bring an entire team all at once with no customers. It was extraordinarily risky. It turned out to be one of the best decisions we’ve made as a company, and we’ve now partnered with and had the team joined BioLargo as a subsidiary. They are owner-operators, they’re experts in their fields, literally 30 — 20 to 30 years of experience across the team. And they worked at the highest level of industry and government. They are expert. And as a result of having such a significant talent to come alongside an innovator’s pool, which is what we’ve been doing, we have now the capability of taking projects from start to finish all the way through, start to finish, scale up, sell in, support, engineer, scope, construct.
I mean, you name it, we can do it. And so therein lies the challenge, right? Have a small company grow the way we’re growing now and continue the growth curve because of the demands on the labor. It’s a real issue. What you’ll see in some of the projects we’re involved in, we have the chance to be so significant financially, it’s going to put pressure on us for manpower. There’s just no question. Hence, the reason, right, the reason that we want to get to a business model that includes the replication of selling assets like equipment and service and replacement and all the things that create continuity and revenue stream and cash flow. And so it is a hybrid, there’s no question, but that hybrid works because the people that sell in an are expert and committed to serving customers first, look out for them first.
Get the customer exactly what they’re supposed to get, hit the budget on target, on time. It works quite well. Our work with the United States Air Force has — it’s funny, it started out and it’s kind of small, and it became bigger and bigger. It’s just a really nice situation. And another — the largest potato products manufacturer in North America is our customer. We picked up the international account represents 13 locations and doing work and on and on it goes. There’s a portfolio of customers who buy services from us, and we’re thankful for each of them. Two in particular represent what we would call opportunities of significance, right? — things that can really move the needle. And we did complete Phase I, which is a feasibility study.
Again, we want to point out the word feasibility because in this context, feasibility means the metrics that allow the developer right, the metrics to understand the cost of time and the execution cycle to go to a full-scale development in this case at 500 megawatts of energy, that project, if it goes to full scale, which is planned, it would be over $1.6 billion in capital investment. We completed phase one, which is to help the developer understand the components, the choices and where it goes next. Phase two, we expect to start early in 2023. And phase two could easily exceed $1 million, just so you get perspective. It’s a lot of work, and that same developer has also come back to us and said they have six more projects that they’d like to engage us on.
And we’re in the process of scoping, essentially bidding, and we don’t call it a bid, scoping and pricing, the budget to deliver phase one work on six more projects. So we’re pretty excited about that, too. Again, a lot of work. I always say, we win the contract and then the word begins. So — but again, very exciting. And if this goes to full scale, it really is a significant testimony to the expertise of the company and also means serious revenue. Right? Next is our work with Ultra Safe Nuclear. Again, phase one was complete. We talked about the choppiness, right? So from quarter two to quarter thee, we completed phase one. We go into a gap. We regroup for phase two, which is scoping and bidding on the pricing. And again, Ultra Safe just come back to us and said, we’d like to engage you for our work beginning in the first part of the year.
And those numbers, again, will, we think, at least double or more. They’re significant. And again, think about the unusual nature. We’re being contracted as subcontracted design team to support a emerging technology company, focused on modular portable nuclear power plants, that would go underground. It’s really awesome to be on the cutting edge in this way. And in this case, it’s not our intellectual property. We’re being paid to support them. Clyra Medical. Spend the second — here we go, the advanced — of course, the AOS. So we just reported — a press release just a few weeks ago about our work at the now 18-month pilot at Montreal and a number of papers are in preparation for academic publication, plus the results are significant. And I think the key result to take away is, this is a very large-scale operation, the big unit, treating a lot of volume of water.
We were able to demonstrate that its maintenance and service were in conformance with expectations of the industry that it performs. It doesn’t degrade early. It actually does the job. It also really sets us up for a number of arguments to argue, defend a thesis to the marketplace that it has the ability to compete with UV as a disinfection machine that doesn’t have to deal with the turbidity of UV and sometimes the finicky nature of dealing with UV lights. And so, it had extraordinarily low energy consumption. So, very low chemistry, very low energy and does a big job. So, again, it’s working. Again, we’re in a spot where we think that the Advanced Oxidation System will find its first home as part of treatment trains. And so, as our portfolio and our retina work expands, it’s important to note that we don’t bring in a rep network and channel partners to represent AEC’, they represent the breadth of all of our offerings, which is our catalog, including our service capabilities, which is really quite a powerful combination.
All the assets go out to the marketplace in that venue. And we think that, that is — it’s funny how it works. We just brought in also — we mentioned this just a few months — about a month ago, we brought in a supply chain partner, PRM out of North Carolina, great company, 40-year history, 250,000 square feet under roof. They build things like the AOS. So you get perspective. You kind of kind of get your head around it, who are these, right? They’re selling products. And they’re also a contract manufacturer. So they can make AOS, they can make AECs, they can make Minimum Liquid Discharge systems. And it gives us a team of people that are in the business with all of infrastructure in place in the 40-year history and also the technical know-how to see it in the marketplace, go into the market and support it.
And so instantly, we formed an alliance there in which both entities are benefited by the things that we bring to the table. We bring innovations. We bring lots of property. We bring customers. They bring customers. They bring some of their own intellectual property and even they bring the ability to scale for manufacturing for us. So we think that’s awesome. The Advanced Oxidation system in terms of its unique ability to manage micropollutants, that’s pollutants that are highly-toxic, extraordinarily low-concentrations, things like estrogen and estradiol and ibuprofen, right, pharmaceuticals are stuck in water. That’s a marketplace that’s still evolving in North America. It’s further advanced in Europe. There’s, a lot of regulations that are continuing to tighten the news in Europe.
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And we believe it’s only a matter of time before the AOS find its significant commercial home. That has not been accomplished, but the results of our extensive testing and validation work and now the inclusion into a portfolio of solutions with a national rent network, we think it’s the perfect next step. Clyra Medical, Clyra Medical is coming along. We’ve been kind of quiet. I think that’s important for a number of reasons. One is it represents a significant competitive threat to a lot of products. So — we think that it’s going to be a big home run. It’s not there yet. It’s going to require some capital. It’s going to require some tender loving care. It’s had its infancy in selling. It does have its first customers. It’s gotten through the gate of regulatory first market adoption.
And now, Clyra, very much like our other businesses, is building out a national rent network and also working with some major corporate accounts to get the technology and the product seeded into the marketplace. And it’s done so with really a meter budget. And so we’re anxious to see it grow up to the next-level. And of course, it’s designed once it gets economic traction in the marketplace, which we predict it will. Then it’s a great spin-off play for the company and for all our shareholders. Everyone can benefit. We also note that there’s, three-channel partnerships in negotiation. They’re quite large. And if we’re able to get those executed, it has an almost immediate double, triple valuation kind of proposition. It’s a big deal. So we’re anxious to move those to the next phase.
And we’re working through it. And they are still underway, which is good. So what are we going to do to accelerate growth? Well, what we’re doing. We’re going to do it, right? We have a base of revenue projects where we highly focused on the key catalysts, those things we just covered. We have some new technologies that are always coming. And then really, the key for the growth strategy to develop scale is to lean into channel partnerships, lean heavily, right, so that we can tap into channel partners and their reach to the frontline of the marketplace, create economic opportunity for them to participate, to bring cutting-edge technology solutions to be in the market, solve problems other people having trouble solving. That’s the business. And that’s what we’re doing on a daily basis.
And now, as a result of PFAS and because of the success of sales improved, we’re finding that our — as they say, in a rising tide, all ships rise. That’s what’s happened at BioLargo. All ships are rising, and it represents a great time in the history of the company. And then to close, and we’ll open up Q&A. We make life better. It’s a big vision, and it’s focused on sustainable solutions for big commerce that impact the world, a lot of diverse people and talent pull-in together to make these solutions real for customers. And I think this is the dramatic evolution away from hardcore R&D into commercialization is now. And I think the next few years are going to be full of right with dramatic growth. So I’m going to pause for a minute, and let’s open this up for questions.
Q&A Session
A – Brian Loper: Excellent. Thank you very much, Dennis. Exciting time for BioLargo, really hope everyone got a chance to go through the press release and the Q that came out yesterday. I just wanted to highlight an 11% growth, pretty incredible growth here, as well as sustaining it quarter-by-quarter. So we’re excited to be along for the ride. Some questions here from some investors here today. Can you talk a little bit more about Ikigai? So the 10-Q said that we’re in negotiations to expand their rights under the license agreement, is that POOPH rights or something else?
Dennis Calvert: It’s a good question. We have an open door policy, of course, to partner with partners. So when we find a winner, we want to expand. And we’ve got a winner with Ikigai. So we really — we love this company. I mean, they are they are intimate partners in our journey. And so they have a couple of ideas about markets where the technology, they believe, because of their unique marketing tools and they’re now a national brand emerging that they can really make some hay. And so we’re anxious to do that. And there is a negotiation about how we get that done, and I hope it comes to success, and we’ll keep you posted. So absolutely.
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Brian Loper: All right. Thank you for that. And in line with that, so we have a question here. It’s been quite a while since Brian Loper announced national purchase agreements with large waste handlers in the United States, but sales of clean to industrial users seems to remain relatively flat. Do you see future growth in the commercial odor space? And what type of scale is to be expected?
Dennis Calvert: Yeah. That’s a hard question. When we first started into that industry, we had high hopes of national adoption. And we’ve learned quite a bit. So what have we learned? Well, we’ve learned that in the industrial setting, in many ways, odor is a word that nobody likes to talk about. In fact, they don’t want to talk about it at all. And really, until there’s some heat brought into a situation, which is typically like an AQMD and Air Quality Board that’s managing VOCs and outer control for the citizens, unless there’s that kind of heat, a lot of people won’t spend the money necessary to get ahead of the problem. There are also other techniques, so I don’t want to diminish that that people can do to minimize the spread of odors.
So the answer really is we do expect it to continue, but we’ve not found the channel partners yet on mass scale adoption at the industrial side. We’ve made incremental improvements like the joint venture in South Korea. We believe in those people. They’re going to find the market. But it’s not instantly inclusively available. We also are expanding in other categories. We’ve mentioned that, things like foundries and automotive and pain boots and all sorts of really interesting industrial challenges that we can solve even the oil and gas industry. So the way I would describe it is we’re going to continue the blocking and tackling that we do on a day-to-day basis to win accounts that serve them. Of course, we still work with national accounts.
But in many ways, those decisions are still decentralized. The left hand and the right hand don’t necessarily know what’s going on, and they relegate those to the local level. I think because in many cases, they say, if no one’s complained it, it must not be a problem. So we don’t ascribe to that, of course, but we get it. And so I think the future for explosive growth is going to come by diversifying across a number of different industries and then finding channel partners that can really pick it up and adopt it. And we’ve got some promising relationships that have that potential even Garratt-Callahan is one. Garratt-Callahan is involved in wastewater and industrial wastewater, that’s a stinky business, right? So the question would be, at what point does Garratt-Callahan decide to adopt a market opportunity right?
And the answer is they will eventually, in our opinion, right, why? Well, they’re busy, right? What do they do every day? They focus on the things they’re already selling to make them money. Introducing new products is not easy. So again, what does that mean? It means it’s very unpredictable about how it can scale in a mass adoption cycle, but I believe it can and it will because we know it to be the number one performing product in the marketplace that we know of literally in the world. And so that’s just a matter of time. I hope that answers the question.
Brian Loper: Yes, definitely. One more here on POOPH. Is BioLargo prepared for much higher production volume?