BioLargo, Inc. (OTC:BLGO) Q3 2022 Earnings Call Transcript

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.

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?

Dennis Calvert: Yeah. What we’ve done there, great question. That’s a common potential roadblock, right, for people, for companies. In our case, we kind of skipped over all that. First of all, remember, we spent more than eight years making these products. We know how to make these products, and we know all the different techniques for how to coordinate and provide some assurance on quality control, get the volume. And so we made a decision early with the team at Ikigai that we needed to outsource with national co-packers. So we chose decent-sized companies with a bit of hunger that wanted to do something great and get it land an account like this, it could go really big someone that had worked with all the national brands. All historically, a number of big national brands, branded products that were is call it co-packing.

Co-packing means the modeling put a label on it, put it in a box, tape it, palletize it, ship it, that’s what they do, right? So that’s a co-packer plus a 3PL. So what we’ve done is we’ve contracted with groups that have the ability to do this on a very national — in regional and national scale and having the hunger and the desire to ramp up just as fast as we can ramp. So right now, we see no backlog or delay and be able to ramp up production. There’s a lot of logistics that go on, on things like plastics, right? So logistics, the meaning especially if you’re changing labels and changing bottle designs and all the things every wants to do to make it the cutting edge as best as possible. So that’s where the roadblocks happen, not roadblocks, the potential delay is to get ahead of that.

And so we’re disciplined, and we’re working very closely with that we got to do so. In addition, we — as you know is they’ve gone to a custom model. So that’s a great move. It’s beautiful. It’s a beautiful model. It’s high quality. It’s going to be more durable, everybody likes it, a great move, but it also means custom models. And so that has a whole supply chain there, channel. So the answer is large, established, experienced supply chain, Hungary , with the capability of expanding nationally and internationally. So that’s what we’ve done. So we’re not worried about the ability, but you do have to manage all the little components when it’s happening real time, it’s happening fast. And so that’s what we got.

Brian Loper: Great. So shifting gears here, couple of questions about Garratt-Callahan. So will they sell the AEC and AOS? Are they being schools in AEC, AOS operations and benefits of the use? And is there a delay in the partnership?

Dennis Calvert: Yes, good question. So of course, you know what happened, so — one of the challenges is an innovator like us, and I face it in my position daily, and that is how in the world can a small company like this do so much. And when you present yourself with eight technologies and multiple devices, it’s hard for people to get their head around all of it. And it’s natural to try and want to slot you into a spot as an odor company or as a PFAS company that’s normal. That’s normal. So here’s what happens. People have a reason to be attracted to us for some reason. So what could that be? That could be our investment opportunity. It could be solving big problems. It could be a unique thing like PFAS. It could be some of this triggered over water or wound care, whatever it is that brought them into the position of being aware of the company.

By the time they’re done, they come to realize that we’re an innovator across multiple industries with the whole portfolio. And that’s what happens with people like Garratt-Callahan. And so they take a journey. And when they journey with us, you get to know us, they get to who we are, why we do, what we do, what motivates us, how we make money. They see us as fair-minded and committed to serving, right? And so that naturally leads to the question, why aren’t we selling an AOS or why aren’t we selling other control product? And so here’s what I would say. We’ve been at this a long time. And these companies that have established, let’s call it, franchise status, franchise status like area, and they have a franchise. It’s well established. When the franchise is established, the mantra typically is whatever you do, you don’t mess up the franchise.

And the profile shifts, right? It shifts from low-risk incremental improvements, marginal to pick up additional dollar streams for easy pickups with low risk, right? So that’s the nature of the beast. It’s the nature of the beast with also the global multinationals. These — the people that run those companies are rewarded for not taking risk and blowing the franchise. And so what it shows an innovator like us, and this is the challenge that we have overcome and are continuing to, is to do €“ as we say, all the work. You have to do all the work, not 80%, not 90%. 100% of the work, — you got to do it all. You’ve got to deliver this in such a way that your partner and pick it up in a blink and execute with precision and make marginal cash flow of significance.

And you have to catch them at a time when the organizations are ready to do that as well. So time is everything. COVID kind of knocks everybody around, right? The financial marks knock everybody around. They unsettle people. So it doesn’t create hazard chaos. It creates pause. So that’s what happens. So, relative to Garratt-Callahan, there’s nothing bad going on. It’s actually great. And everybody is really busy. And so the way we think about it is, let’s get our — let’s do the main thing, which is the main thing. And what’s the main thing . What’s that? It’s that minimum liquid discharge system. That’s where everybody’s bread is butter at the moment. Can we do odor? Of course. But how many products are we going to pitch? So the answer is, let’s go knock-off number one, then we’ll do number two and then we’ll do number three.

And so this is a long journey. You got to also remember, this company with 100 years of history. They don’t think like we do. They don’t have a quarterly pressure. They have an existing sales force. They got to feed the machine. It’s a big company. They got a lot of customers, and they’re in a sweet spot of how they make money, right? So everything else is incremental. So, good news, bad news. Well, the good news is we’re there. We’re there with a significant force, a great company. I predict over the long haul, they’ll have a chance to adopt all our technologies. So we love it. Timing, hard to predict. Right now, let’s get the first hit on this main thing, which is the minimum liquid discharge, and then we’ll tiptoe around the others, and we’ll find our wins.

When those wins knock into runs and the money to bring in the cash register, then we’ll do it again, then we’ll do it again. The next thing you know we’ll have an adoption. So here you go.

Brian Loper: Right. All right. So, it’s the two-part question. I’m going to paraphrase a couple that have been coming into the portal here. But last year, at this time, you had mentioned that we had a hiring plan to go from 30 employees to 100, haven’t quite seen that. So can you talk about the hiring plan as well as the new additions to the Board?

Dennis Calvert: Yes. So the hiring plan — so let’s make sure that we’re in sync on what the hiring plan is. So first of all, you don’t go to hire 100 people until you have the business, because to do that would mean a significant capital outlay, right, a significant kind of outlay burning money, cash, waiting for customers. So, we’re not doing that. That’s not part of our profile. What happens for us is we have just enough staff to do what we’re doing plus a little more, we land customers and we grow into it, and we land customers and grow into it. That’s just the way it is. We’re not sitting on $50 million to be able to take that kind of risk and exploit it. And we also would argue that the risk of taking that approach is extraordinary risk.

It essentially puts the franchise at risk. In our business and our business model, I would argue, there’s not a single initiative that we’ve executed on and are contemplating and executing that puts the franchise at risk. We’re going to survive when most companies don’t, and we’re going to thrive, because we’ve got great innovation and we’ve got a go-to-market plan, that’s compelling. So, yes. So could we go to 100 employees? Sure. What does it take to get the demand to require that kind of growth? Well, we’re watching it unfold as we speak, right? We’ve got our first PFAS customer. It took a long time. We’re now in the development phase of a full plan going to take a reference site. We’ve got others coming on. And so one becomes two and as we say two becomes four and the next thing you know it’s 12 and then it’s 40%.

And if we look at the backlog of business that’s now in process for new contracts, it’s a significant backlog. I mean conservatively in the five, and we said we’ve looked at $100 million worth of projects. You’re not going to lend $100 million worth of projects. We don’t have enough bandwidth, right? And you want to go to early adopters, okay? Could you find your way into that moment where you’d say, yes, unleash it. Well, sure. That’s why you need to outsource manufacturing. You need more infrastructure. You need more engineers. You need more capital. You need all those things to really accelerate at that kind of level. So at this stage, right, we’re going to grow as the customers are signed up and the demand stretch ourselves so that we have customers paying us as we hire and hire as we hire and grow this down.

That’s the plan. So when you look at all of the opportunities that are in the pipeline, and if half the came in, yes, we’re going to need a lot more staff. And so the way the pure phrase it is — when we look at the opportunities that are now before us, that convert to proposal, the adoption of the proposal Phase I, Phase II, Phase III it is an astronomical growth rate that will demand that we stamp up. And so until those are locked and loaded, I think that it’s — it would be unwise for us to ramp up the kind of infrastructure necessary to fully meet that need until we go through those phases. So that’s what we’re doing. I hope that answers the question.

Brian Loper: Great. Yes. And then you also added a couple new folks to the Board?

Dennis Calvert: Yes, the Board members are great and Christina and Linda are just so awesome in their own unique ways. Extraordinary corporate background, lots of energy, passionate about high impact, I mean, big time. And to get people with their qualifications to join us at this time is, I think, very exciting. They also bring their unique perspective of as entrepreneurs, as corporate players. Linda has been 12 years on Wall Street advising corporate clients on all corporate finance matters associated with Wall Street, including the uplisting, which is going to be awesome. She also super role in licensing. And of course, health science has been her — the last 10 years health sciences – and before that at Western Digital. So, again, highly trained and passionate about impact.

And Christina, my goodness, incredible training. Such a diversity of experience, you know fluid and multiple dialects, all things Middle Eastern, which is amazing, high level of training and academic level. And now as an entrepreneur, living on the cutting edge focused on EV high rapid charging system deployment across the nation. So lots of things that we can do with these two people joining our company, and we’re proud to have them. So we’re going to — we think they’re going to help us move and shake and make some things happen.

A €“ Brian Loper: Excellent. We got another question here on POOPH.

Dennis Calvert: Sure.

Brian Loper: So we’ll do one more here and then one final question and then we’ll wrap it up. But with going into Walmart now and then other retailers, when does BioLargo recognize that in revenue? Is it delivery net 30 or something else?

Dennis Calvert: Well, generally speaking, we’re the wholesaler, right? So, we wholesale to Ikigai and POOPH, right? So we make the product, and so we received a purchase order. So when they want to do an open order, an opening order and then a restocking and an expansion with Walmart, we actually recognize the revenue first €“ for the first to be direct answer is, because we’re the supply chain. So they give us a purchase order. And generally speaking, those purchase orders are recognize over the course of 30, 45 days generally. And then once the product is sold, there’s a retail selling channel, which is direct to consumer, and that’s what they’ve been doing. And now there’s a wholesale channel to a retailer, so that has implications to price and margin, and when they sell to a retailer, we work on a percentage of sales as a royalty, right?

And it’s a cash basis really. No one’s looking for or €“ if you got to finance Walmart for all of us to get ahead of the pay plan, right? So we’re all in that chain together as partners. But the answer is when a company like Walmart starts, they generally would start with a test rollout and then they would roll €“ they would expand and then expand and expand. I can’t remember the number of stores internationally, but it’s a lot, so well over 10,000. And so how do you get involved all of them that takes some time, right? So we’re experiencing that already, and we will continue to experience as it expands. And as I mentioned before, we’ve been informed by Ikigai that they have two other national retailers expecting to come in sometime in the first half of 2023.

Now, it’s funny first half, right, last such a broad category. These retailers, when they have what’s called a planogram and when you go in to sell them your product, they say, okay, I’m in. Let’s do it. This is great. And it’s kind of like a void. It’s like, okay, how do we go from here to there. And they say stand by, right? And they work €“ they essentially work you into the planogram over time. And many times, that’s 9 months to 12 months out. So don’t miss that too, it’s important. And so Ikigai and POOPH have to deal with that, as do we. That’s just the way it is. The good news is that, as it gets ceded, and as we move the product through as Ikigai really supports the market and move that product through those channels, you get a seat and you get to stay there for a long time.

So that’s what they’re after. So €“ the answer is, we’re seeing it already. I should probably just start with that one. How’s that? Right?

Brian Loper: Very good

Dennis Calvert: Yes.

Brian Loper: All right. Last question here. We don’t want to end on a low note, but if you just shine some perspective here, what effect do you think an upcoming recession environment will have on the company?

Dennis Calvert: That’s a good question. We all €“ everybody worries about that a bit, right? I mean, just the nature of the beast right now and the financial markets have just been so unpredictable. It makes it hard. I think two things are really important. One is that, the pet industry has proven itself largely recession-resistant. You’re just — what do you do for your pet. You treat them like your baby, that’s the answer. And that’s a strong market to be in, okay? And then the other market, right, remediation of a contaminant that links to cancer and birth defects. I don’t give a flip how much recession we got. That’s not going anywhere. So I think, the two main drivers in our portfolio have a resistance to that pressure.

And that’s good news. We’re going to do just fine, and we’re busy. And — so I think, it bodes well. Now the other implications are supply chain, of course, inflation, of course, and capital markets, of course, right? And so, we have always believed — and as the technology signed their adoption with our business model and it was a business model that’s prove up, get early market adoption, make the deal. As we make the deal and we watch that leverage occur for national and international expansion, especially in things like PFAS as that really finds its way. That — those issues are just less and less important, especially when you look at the marginal cash flow for things like POOPH. That product could carry the whole company, and we could be out of the capital raising business before you know it.

I mean really, if I look at it and I say, yes, that’s very doable. And we knew that when we started. And now we’ve got evidence to point to it, right? Now you can look at the number, look at the margin, look at the cash flow and say, what if that number was double, what if that number was triple. Why is that so far fetch? I mean, my goodness, you’ve got three national retailers just launching. We’re wholesaling. We’re not at risk on the retail. Now, we went itchy, got to make a bunch of money. Listen, they got to pay their bills just like everybody else. And that’s the thing that you have to really focus on as supply chain partner. Everybody’s got to win. Walmart’s got to win. They got to make money, right? So understanding that, right, understanding that, positioning a largely resistant to recession industry like PFAS through a national channel where there’s a win-win for all the participants, that’s a winner.

And so then, you say, well, how big could it be? Well, we know the number one competitor is over $1.2 billion in sales. Again, that’s wholesale, has $1.2 billion. So this is a huge market. And our overhead is so low and our — we spend a lot of the percentage on R&D, but this is our overhead, it’s so low. I mean, we just are in a spot where there’s not a same — again, I said it before, I going to say it one more time, because it’s really important. There’s not a single initiative in this company that threatens the franchise. And that’s the — I think, it’s the discipline of diversity, its patience. Of course, it took a long time. And at the end of the day, we want to make everybody money, right? We want to make that stock valuable. We want people to say, I’m so glad, I was there.

I’m so glad, I waited. Yes, it took a long time. Yes, it took a lot of money. But when they’re done, they’re going to look back and say, we made an impact. We returned value to shareholders. We made stock appreciate. We’ve built a sustainable business, that’s going to last the test of time. And, as we say, we’re just getting started. I mean, there’s such dramatic innovations that are going to make life of a better — world a better place and life a better place for people. And Clyra is the best example. And again, I won’t wear everybody out, but Clyra goes back to the inception of the company, we can go. And the first innovation was to keep his dad safe in a nursing home from nosocomial infection. Oh, my gosh, 15 years later, here we are. It’s finally happening, right?

And then, when you go through the war story, which we won’t do. But if you go through the war story, like, you got to be kidding me. So, yes, right? And what’s the takeaway purposeful work, unrelenting attention to get through the gate and determined. It’s like a , it takes a little courage and a little stubbornness. And we’ve got both. And so why do you do that? Well, because we know we’re going to make an impact for the world, and we’re going to make money. And everything that we’ve invested in has a chance to be a number one disruptor, it has a chance to impact the world for good. It’s great innovation. And we’ve assembled now some critical mass in the team to get this done. Yes, I mean I look at it and I say, yes, I hate to see people suffer in recession and inflation and all the things that are going on.

I think we’re going to be just fine.

Brian Loper: Actually, I lied, we got one more question here, important to address technical question. Could you comment on the trend in SG&A, which has been down two quarters in a row. Do we anticipate it going down further or flat from here, so selling, general and administrative expenses?

Dennis Calvert: Sure. I think — that’s a good question. I think that there’s a couple of nuances in there that we should all think about, right? One is that when we do these large engineering projects, we do rely on subcontractors to meet the demands of the manpower. And the margin on subcontractor work is lower. And so the idea that you’re going to scale up and handle all the infrastructure, right? So, as you scale up to meet the demands of those types of projects, I think your SG&A tips up, and the margin is compressed a bit. So, you still do fine. But — so that’s one. I don’t think we’re in a position to make major cuts. We’ve got a core team that’s well vetted. And even R&D, the ebbs and flows, I mean let’s just right their contribution is extraordinary to the company.

And so what you do is you say, I want to put less dollars in R&D, but I want to deploy people in the most excellent way because they’re so valuable and that’s what we’re doing across the board. So, no, I don’t think they’re going to go down. I don’t think they’re going to go down. I think flat and even increase as we increase the revenue profile is probably more likely. I also think, too, that infrastructure-wise, we want to grow the infrastructure to be fully qualified for a national exchange and the demands as a very large public company, not a small public company that’s up in company. That’s going to take some manpower. Our historical strategies has to change is to do that as we are stretched because of the expansion in the revenue and all the demands that come to the company, not before.

So, while we may see SG&A increase, we’re also going to see a corresponding increase in revenues to pay that bill. I mean I’d love to say let’s get this thing to profitability and sit back and saw going to be rosy. The reality is we’re going to grow if you’re going to do what we’re talking about doing, you’re going to need more staff, that’s just all there’s to it. You can’t — we’re working triple time over here. And I will say that everybody loves it. The culture is so attractive to people that have spent a career working in a place where maybe they don’t feel the direct impact — direct impact for good for their work. Their tolerance of taking extra risk to do something that no one’s ever done before. It creates a place where people want to be.

And for good reason. I mean, we — as we say, we’re looking for the cutting edge and we live there, right? And then we — and we got more technology coming. So, anyway — I think flat at best. I think increasing with revenue is more likely. And we’ll keep a keen eye on cash flow. How’s that? That’s the way we think. Okay?

Brian Loper: Excellent. All right. Well, thank you very much, Dennis. Very informative. A lot of good things going on, so.

Dennis Calvert: Yes. Let me close with two things real quick.

Brian Loper: Any more — any more comments?

Dennis Calvert: I have two comments real quick. Two; one is, if you haven’t bought POOPH, shame on you. Go out there and buy one and try it. Give it to a friend if you don’t have a pet, you use it for something else. I mean, it’s incredible, right? You’re not going to hurt us sold, it really works. And the second is to be sure and tell your friends about the company to do a deep dive. This is a great company, and we’re proud of it, and you can be proud of it, too, and we think the future is bright. So dig in deep, the more you dig, the more you like it. And we’re going to keep plugging away, all right? Thank you very much, everybody.

Brian Loper: Thank you, Dennis.

Operator: Ladies and gentlemen, this does conclude today’s conference call. You may disconnect your phone lines at this time. Have a wonderful evening. Thank you for your participation.

Brian Loper: Thank you. Thank you.