BioLargo Inc

OTC:BLGO

Earnings Call Transcript 2024-Q1

[Operator]

Good afternoon, everyone, and welcome to the BioLargo First Quarter 2024 Earnings Results. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Brian Loper. Sir, the floor is yours.

[Brian Loper, executive]

Great. Thank you, operator. Good afternoon, everybody, and welcome to BioLargo's Q1 2024 Earnings Results Conference Call for the month ended March 31, 2024. By now, everyone should have had access to the earnings press release, which was issued earlier today. This call is being webcast and available for replay. In our remarks today, we will 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 that may cause the actual results to differ materially from the forward-looking statements. A detailed discussion of such risks and uncertainties are contained in our most recent Form 10-Q, Form 10-K and in other reports filed with the SEC. The company undertakes no obligation to update any forward-looking statements. On this call, we will refer to non-GAAP measures that when used in combination with GAAP results, provides additional tools to understand operations. And with that, I'll now hand the call over to BioLargo's Chief Executive Officer, Dennis Calvert.

[Dennis Calvert, executive]

Thank you, Brian, and thanks, everyone, for joining us. We've had a great quarter and a great year, and it's a wonderful time to regroup and take an inventory and talk a little bit about the future for sure. I hope you saw the press release, BioLargo generates positive operating cash flow and record quarterly revenues for the first quarter of 2024. And not just a little bit, it's pretty meaningful. Of course, we still feel like we're just getting started in so many ways, but it is a significant milestone. And also, everyone probably saw the press release just a day ago about our upgrading to the OTCQX, really nice move. Very much a natural next step as the company is really moving into the upper tiers in the OTC that represents about 12,000 companies. It probably puts us in the top 400, 500. And of course, it also is a good signal to the market for the Company's opportunity to continue upward and potentially national exchange listing, which we've talked about for years, and it's coming closer and closer, which is awesome. And by a larger, we make life better. It's a big calling, right? Sustainable solutions for some of the biggest problems that face the planet, really focused on good for people, good for the planet, good for commerce. That's a sustainable solution. And that's where we live, and we've lived there for almost over 15 years. And as a result, we're now witnessing some of these technical innovations, find a way to market, generate significant revenues, really proving out our investment thesis, and that is to invent it, prove it, and partner. Easy to say, really hard to do, okay? But meaningful. And we need to get it right, it really works well as it is now. We're going to talk about that a little bit more for sure. We cover the forward-looking statements, of course, the safe harbors. Always refer to the 10-K and the Q for complete disclosures, including substantive risk factors. I always talk about risk and really, we pride ourselves on risk mitigation, risk management. But everything we do has risk. I mean, when you're trying to provide transformative technologies in competitive markets, it's a jungle. It's a war out there. And so, we pride ourselves on overcoming the hurdles. Sometimes it's taken us a while, but we do overcome. And again, we're witnessing that now. But I always refer to those significant filings for a complete picture of the risk factors that impact our business. Yes, science and engineers, passionate about health and human sustainability and human health, driven by a passion to do something worthy, worthy of a career, worthy of a company, worthy of significant investment, focus on best-in-class solutions, lots of engineering, tons of engineering to science, and focus on problems without a good solution. That's a big calling. This slide always has way too much for us to cover, but we like to print it so that you're going to look at it later and just highlight, we've got the BioLargo Engine, right? That's corporate office. That's finance. It's a lot of engineering support for all the operating units in R&D at our operation up in Edmonton Canada campus on University of Alberta. It's quite a collection of people. We said in our press release, highly qualified people doing something important and having the freedom to go out and stretch and really tackle some of the biggest problems as we say, to face the planet, face industry. Clyra is doing great. We're anxious for it to push through on the launch of products to the next stage. It's in the works. It's close. We're making significant investments in the infrastructure. We'll cover that in a minute. The Energy company is the youngest, of course. We're producing battery cells. We'll talk about the detail on that in a minute. We hope to have those battery cells in our hands in Q1, so we're pushing a little late. And there's a number of technical things going on there. I'll describe that in the deeper presentation, but we're on the cusp of being able to deliver a battery for our own testing, also for third-party testing, which is a pivotal moment to really open up the opportunity to the next step. ONM Environmental course breaking records, carrying -- with the Pooph in ONM, they're probably carrying [indiscernible] at 90% of our revenue, 85%. It's a big number. Just continuing to push forward and break records an incredible year and an incredible first quarter really significant. And again, full story circle -- full circle story for the company, full circle story. It goes back to the origin story of the company. And we're also watching some of these additional product designs come to market in our partnership with Pooph. Pooph has done more above and beyond what we had ever really hoped for. It's just an incredible opportunity that's continuing to expand, and we're proud of that. The PFAS, of course, is a super-hot topic. These most recent regulatory shifts that came out in the last couple of weeks really pushed the market towards us. We're going to dicycle some of those for you in here in just a second as well. It's really meaningful for the value proposition we put forward in that marketplace. And again, it's just pushing customers to us every time the new rule comes out, people look at you to go, "Oh, now I get it." Yes. Now you get it. We're here with a solution that's years ahead, years ahead of those regs and the market. And as a result, we still are very optimistic, difficult, very hard. We're optimistic about the future, for sure. Okay. That's -- this is a slide from the last quarter. So that's 6 years, right? 6 years looking at revenue growth. I would say we didn't forecast the way we did it. It's really good. And then here is the quarter and what it looks like. Right? And notice the significant increase in revenue, but not a significant increase in SG&A to correspond and hence, positive cash flow. Q1 $481,000, an increase of $483,000 from minus $2,000 in Q4. Revenues over Q4 is up about $390,000, 9% quarter-over-quarter, 28% compared to Q1 2023. Net loss is reduced quite a bit and 32% decrease at 57% -- 57% increase and net loss of the amount of the net loss, $623 million is non-cash equity compensation expense. And the accounting treatment on that is just really incredible. So that investing schedule impacts the P&L in that way. Of course, we do believe we'll overcome that as well as we continue to increase the top line revenue. And of course, that's highly subject to our partners' delivery, but we do believe that it's a bright future. We took the run rate that we're currently operating, and we just multiply by 4. It's really pretty simple. If we just do what we're doing and maintain this average threshold, then year-end 2024 will come in at around $19 million. That's pretty awesome. That will be another 100% year-over-year growth. And while we're not projecting the positive cash flow from that, what we can say is we're always very capital conservative. We want to conserve that capital by leveraging partnerships, making incremental investment, breaking through the proof of claim, and then really relying on the tools and resources of partners to expand in a national and potentially global level as we've done with Pooph, that's the best example. And what it really shows is the power of that model. I will just go back real quick. Let's just take a look at that SG&A again a little more time. As the incremental revenues climbed dramatically and the overhead rates -- the overhead SG&A stays relatively flat, the incremental cash flow is -- can be substantial. We expect that trend to also continue to hold true. We are investing. So when we look at net loss, that includes all the R&D and the non-cash charges to the equity compensation arrangement. And as much as possible, we're focused on investing in capital assets for making money. As we are like we're clear, we made a substantial commitment of almost $900,000 to beef up the infrastructure to support distribution of substance, big numbers. And we're excited about that. It's been a long time coming. And again, we would have expected it to really launch sooner. But in the throes of the battle, what we've learned, of course, is that the detail required to support the kind of expectations, significant expectations of our future really required that we invest and prepare and invest and prepare and we've been doing that all along, and it's really quite exciting. The other is net shareholder equity. Again, big number because why? Well, because if you want to talk about national exchanges, that net shoulder equity number is a big number. We do expect that to continue to rise with rising revenue, rising cash flow, and incremental investment. And remember that part of our strategy that's so unique is we do have the ability to capitalize some of the ventures, the subsidiaries and their venture status with partners, investors who come in and purchase equity in those subsidiaries to give us some leverage, right, leverage without relying on dilution at the parent level when -- when a lot of people believe our valuation is still quite low. So we're really sensitive to that. And we've been -- we've executed that strategy successfully now for years. We expect it to continue. So when we're talking about the portfolio, again, sometimes, if you've been watching the company, you know a lot of this, but I'll cover it quickly because sometimes, we get new people that come in and they just want to understand, right? So Pooph is an incredibly wonderful product and company, and we partnered with them now 2.5, 3 years ago. And they've done exactly what they said. They're experts in brand building, brand building. They've built national brands for the last 30 years as individuals in their career, and they came to us and said, "Hey, we think you've got a product that could be a $1 billion brand." And we said we did 2. And they said, "Well, we can do that with you." And so we made a deal. We said we'll do that if we can control supply chain, make a little bit of money on the supply chain, make a little bit of money on a royalty, and we gave an exclusive to our partner -- for the Pet Odor Control category in exchange for an exit -- for participation in the exit, if it exits the 20%. They're doing so well and breaking such significant records that we hope they really want to grow it to a significant level. We hope so. That would be awesome for everybody. And they're doing so well with it. And the products, we've got some stance here that are helpful. Their thesis for us is their target is 20% quarter-over-quarter growth. Now that's Pooph tells us 20% quarter-over-quarter. Our number as a wholesaler, basically increased when their numbers increase, decrease when their numbers decrease. So far, they consistently hit that mark, which is roughly 100% growth over the year-over-year. They've also expanded retail outlets. So one time they said we're targeting 25,000 retails. We know we've blown through those numbers. Now what's happened is they've got such a great presence and the numbers are so significant. Less and less information is available. We think that's just fine. It's a highly, highly competitive market. So we win with numbers, and that's exactly what they're doing. They are advertising, Walmart, Amazon, Ace Hardware, Home Depot, some others once a while, you see an advertisement. But they've got a whole menu and an expanding menu of national accounts. We also have new products and coming soon, we don't have official launch dates, but we've been active on the supply chain and the design. They're really cool. We know there'll be some new content that will come out to support their merchandising strategy on the television direct-to-consumer. So again, very excited. Nothing's changed except that they've proven that they're able to achieve their goals, which is 20% quarter-over-quarter. So as we say, say a prayer and support them. That's going to keep going. It's really fun. Pooph. Okay, clear. We talked about it briefly. We just made these significant commitments. We haven't spent all that money, but we spend a lot of it and more coming, more to be spent to support the kind of rollout of products at a very large level, a very large level. The thesis of the Clear products, we did make a decision, sometimes I'll hear why don't we have 100 reps out there selling this product. We made a decision for a number of what we thought was wise decisions to focus on the partnership at a high level, partner with distribution that often includes co-branding.It includes very much like Pooph and [indiscernible] as a manufacturer, where we have contract manufacturing, we have building manufacturing. We contract with professional manufacturing companies, and we have a markup. We were -- we establish a sale rate or a take rate and then our partners can take those products throughout their distribution channel with proven call pattern, complementary to existing products to really introduce a very technical product to a very technical audience, the healthcare field. The first target, as we mentioned, orthopedic surgery with this Bioclynse, there's a number of other opportunities that are coming. We're now negotiating with a number of national parties, which is awesome, in particular, that are quite significant and some other entrants are now entering into the field. And the good news is that all this work that we've done to prepare for such a significant rollout is also providing the comfort and the credibility and the information necessary for some of these large companies to know that they can depend on us, and that's very important. The kind of numbers we believe can happen will demand a lot from us, a lot of support, some capital and the infrastructure to be well in place and proven and ready for the kind of scale we're talking about. That's what we've been doing. So our optimism has not waned. It's grinding. I can tell you that. It's a lot of work, and it's really demanding, but it's good. And we do believe we're going to successfully land these partnerships and start to see revenue. It's probably, if you think about the logistics of that, you're probably talking about really launching product in early 2025. But again, at such a high level, at such a high level that the numbers can become dramatic for the company. So we're very excited about Clyra. PFAS, PFAS is, we say everywhere. Rhetorically, it's not everywhere. It seems like it's everywhere. It's in your products and in your body and cosmetics and food and food packaging and on and on it goes. And it's getting so much attention. I just noticed just a couple of days ago, they were talking about rereleasing Dark Water as the movie. Just again, I want to say, if you haven't watched it, find it, I think it's on Netflix. And it's the story of the attorney who took on big industry, mostly DuPont for producing these forever compounds that nature cannot degrade and if they can't degrade them, they stick around forever. And of course, they're linked to birth defects and cancer. And it's a huge global problem. Now total addressable market, we've heard people say $17 trillion. Let me just understand the magnitude here. And we know that the government has just allocated just about $10 billion. One of the 3M litigation cases settled for, let's say, $10.5 billion. DuPont has a couple of billion-dollar cases settle. [indiscernible] for the firefighting foam has had some really large settlements as well. And what just recently happened is the regulations continue to tighten. And as they do, we're looking smarter and smarter, smarter and smarter. Now this has been almost 4 years of work, and we've got over 13 trials. We've got our first customer and a commercial installation process. We're building that unit as we speak. Okay. On April 10, the EPA came out with the finalized standard of 4 parts per trillion. That's a testing limit. It means that if you test for PFAS and detect greater than 4 parts per trillion, you have a problem and you have to fix it. Now that's a drinking water standard, right, drinking water standards. A lot of the industries are going to have other standards, but it really points the way towards how the government is thinking about this contaminant. And basically, I've heard people say, the no amount of PFAS is good. Want to say that again? None. We've even seen some people really pushing for regulatory enforcement to a non-detect level. I asked hydrologists the other day, working -- I was at one of these big conferences. I said how many years is going to get -- take the water table to clean up the PFAS? 50 was the answer. 50 years. It's just not going to -- it took 50 years ago like 50 years to get out. If you can get it out. And he's really sure. Anyway, the point is that the government is taking aggressive action and it's forcing the industry. A lot of people have been on the sideline waiting for regulatory. Oh, they'll never go to 4 price per trillion. And we've been saying since -- for the last 2 years. Yes, they will, and sure enough they did. Just recently, some additional rules came through announcing the $10 billion in funding, $9 billion for municipal -- to support municipal fixes for drinking water and $1 billion for underserved communities. So that's a $10 billion package. And they also started this circular. Circular designates the Superfund law and the Superfund law now says that the polluters will be forced to pay, okay? We'll be for [ spec ]. So this is really a designation creating legal liability for the polluter and legal recourse for the people that have been injured. And because PFAS is everywhere, there's a lot of complication like are you a passive receiver or an active polluter. Did you make compounds and release them in a production facility, that's an active? Are you in a waste facility, waste handling, where the PFAS collects, what are you going to do? Are you liable because you collected PFAS that somebody else made? Lots of complicated rules. So there's still uncertainty about what to do, but I'll tell you what is known, okay? And what's known is that it's fallen under Superfund, which is pointing to the direction of making the waste stream a hazmat. That's what it's doing. And we've predicted that that's what would happen, and we did it 4 years ago. And sure enough, that's what's coming true. And as a result, it really is like an "aha", "uh-oh" moment is a better way to say it. An "uh-oh" a moment. If you're not in a -- if you don't have a solution, they can shrink the footprint of the waste stream. High waste, high money. Prices going up. The other thing, these are recent, and I'm not -- I don't want to pretend to be experts. Tonya Chandler's our expert here and she's speaking all of the country still. But basically, these notices, there's always something moving. And every time they do it, they're kind of boxing in the market. Just the other day, there was this example where they said, "We're not going to tell you that you can't recharge carbon. Listen, so carbon is incumbent. It's an incumbent technology that's used. It's been around forever, 50 years, more -- and it does okay, collecting a lot of PFAS. The problem is it's got other issues, channels, they can get [indiscernible] breakthrough. It's going to have a hard time with some of the short chain molecules. But the big thing is it's just huge waste stream. Remember our thesis is where that produces 80,000 pounds, we produce like 2 or 3 pounds. It's a big deal. Well, okay. If that waste stream is a hazmat, right, then what are you going to do the 80,000 pounds of hazmat? We got to pay to have it handled. Well, a lot of the incumbents to say, well don't, we'll be able to recharge, recharge a car, reuse the resin. Well, no, it's going to be a real problem. And so for example, a lot of that recharge of carbon is done to incineration. Well, the government came out and said, we don't like consideration. So we can't say don't incinerate it. But if you do, we're going to establish testing guidelines that can distinguish between long chain and short-chain molecules, including the breaking of long chain, which in terms of ensure chain. So a very, very sophisticated test that's going to exclude most people from doing that. And the second is you're going to be liable for the release of PFAS to the air. That's a problem, okay? And that's one of the biggest problems when you look at the carbon system because it's really in a spot where they're going to have a hard time answering to these regs. I mean that's -- and it just -- it's going to get tighter and tighter. So this is constantly evolving. And every time a new rule comes out, we go ready to go because it's really pointing people to us. Okay? So again, the thesis we covered this already, but we can save money. We work on all sorts of different types of water. That's very unusual because of the nature of our using an electrostatic field to migrate and collect PFAS and a flow of water. And then, of course, we have a fraction of the footprint. We'd like to keep these a lot of words here, but we like to see it up because people will come back and look at it, and it's really the principle of our value proposition and our selling approach. And it is a turnkey solution. Don't forget that. So truckload versus [indiscernible], it's really pretty simple. And if it's -- if the cost of handling hazmat material and its ultimate, just removal of destruction and then what do you do with all the equipment, as that continues to regulate our value proposition [indiscernible]. We'd like to show this because this is about 1,000 gallons a minute system. And this is -- so this would be a decent-sized commercial account, to be about 30 feet by 25 feet, small building. We can also go vertical. The first time it's a much smaller system, which we think is good for the first in the field deployment, and that's scheduled to happen in the October, November time frame. Okay. Salinity, as you recall, we acquired this technology, we've just built a small production facility primarily for building out batteries for demonstration and testing. We do believe that there's commercial opportunity in any size of those factories. But based on the response we're getting from our partnering strategy; we believe that achieving some economy of scale is very important. So I'm going to talk about how that's going to happen. Every day, there's something in the news just rhetorically. It's almost every day. And you hear about big data. You hear about the Bitcoin mining and artificial intelligence, supercomputing, how people are worried that the grid can't handle a 3 to 10x increase in demand. Renewable energy is still a priority. And even if it's not renewable, you still need storage, right, to deal with peak demand, right? So battery's not going anywhere. And I don't know if you saw this morning on LinkedIn, we saw article that they just passed the tariff, putting a 25% tariff on China for importing batteries in the United States. That's a big deal. That's a big deal. And so made in America, no runway fire risk, a lithium. Lithium is not a [indiscernible] and people are still deploying lithium batteries and fixed site locations like their garage and buildings and mission-critical operations. They need the batteries, but they have a fire risk. And it's real. The safety risk is real. And again, just to do an Internet search, you'll see it for yourself. So the value proposition then gets defined pretty easily, right, better, safer, less expensive, no rare earth, no geopolitical, no importing from a foreign country, certainly no child labor and all the other stuff that you hear about, none of that, non-venting seal design longer 0 to 100, 100 to 0, right? You don't have to notice when you get a lithium battery like in a car does just charge a 20% charge to 80%, right? Because as it gets to the outer limits of its range, it causes damage to the ion exchange that happens across the electrodes, degrading their performance. So they don't last as long. We have none of that. We have not yet. So we believe this is going to be a winner. It's early. We've got work to do. We also have talked about this thesis. I don't want to get too long-winded because I can really go here. When we first built that little small production facility, we said to ourselves, we can make and sell batteries, which is still true, by the way. But to get to scale, what we need to do is we need to show demand for our battery -- whatever that is, show demand, right? And then as we looked at the economics and the capital required to get to that scale, we believe the way to do that is to partner through a licensing venture orientation where we would take a minority position in a royalty and literally build the factory to suit. So it's a big customer. I need some batteries. Do you know what the question to ask is how many would you like? How many factories do we need to build for you? Because we're asking for a royalty and a minority share, we're essentially working on tech transfer. And we've got such an incredible response at this stage. It's very encouraging. Again, work to do, a lot of work to do, chicken and egg everywhere. And what we learned also, of course, is that the scale-up of the manufacturing technique for components is really critical. The components that go into the batteries. And we've been dealing with supply chain at BioLargo for 16 years, by the way. And it's always this way. You come in with an innovation and you say, "Gosh, I hope I can get the supply chain squared away." Well, how do you get supply chain squared away? Well, you have demand. If you're a big customer, supply chains will participate. So right, there's a certain amount of economy that comes with scale. So what we're doing really is we're proving the technical pieces of the battery. We'll then take it through our testing, we'll take it through third-party testing, and we'll then begin working on the scale-up version of that cell that will make packs, and we're also negotiating partnerships. And we've got so many groups that are interested at this stage. It's really encouraging to us, encouraging to pursue, and encouraging to invest incrementally to get through this validation stage and see if we can put these partnerships together. Ultimately, if you have scaled production, a lot of batteries, you can be in the energy business. And that's what we're learning, of course. And so that's a later down, that's a later event to be considered. But once you're there, you can be in the grid scale storage business, you can be a renewable business, you can partner with renewable energy. The batteries are a critical component of making all that pencil and work. So here's the marching orders. We're at complete pilot manufacturing, make a test for cells. Again, we hope to have that done in Q4. It's late Q1. We are at the final stroke. And so we're optimistic that we'll be showing up with the battery in our hand that's working very, very soon and at which point we can start the testing and the next piece of the work to scale up being in partnerships and build the first components.Again, we've had such a positive reception to the plan that we believe we're onto something that presents an extraordinarily scalable model that will allow us to expand the opportunity to expand on a global basis. That's the thesis. Okay. So to wrap it all up. We have a family of companies, innovation engine. We're excited about the business. There's my contact information [ dc@biolargo ]. You're welcome to reach out to us. We'd love to chat. And now I'm going to open it up to questions. Mr. Brian, can you come back?

[Brian Loper, executive]

Great. Thank you, Dennis. I appreciate that overview. Pretty exciting stuff for BioLargo in Q1 here, positive cash flows, really solid revenue. I wanted to clarify, is Pooph still the leading revenue driver?

[Dennis Calvert, executive]

Yes, sure. I don't know the exact number, but it's got to be 85%, 90%.

[Brian Loper, executive]

Yes. Excellent. All right. So we have a few questions. Let's start with Pooph, the most exciting one. So Michael Mathison, analyst at Singular Research. He asked, are there any new retailers that have signed up to sell Pooph, and where do they stand in the rollout?

[Dennis Calvert, executive]

Yes. We do. We have the benefit of that knowledge, but it's not public information. And it's really obvious why, right? Well, because Pooph's managing a lot of national accounts. And each one has a different margin analysis. And in fact, they pursue what they call an omnichannel, omnichannel strategy.That means all channels, and each channel has a cost metric and a reward and they pursue all of them at the same time. So omnichannel. So yes. And there's their stated mission is to use direct-to-consumer to brands, to build brands and leverage that brand so that they drive customers to the retailers to support essentially global rollout. So that's what they're doing. So yes, it is expanding. There's a lot there already. We believe it's well over 30,000. And I know along the way they said, over this next year, they'd love to be at about 80,000. I don't know where they're adding that, and I'm not sure we'll be publishing. I just think what we're going to see is significant growth in revenue. And that's what we have seen, and that's where we're going to find our rest.

[Brian Loper, executive]

Yes. You've mentioned before Pooph having new products, like wipes or copy pads, there any ETA projections on sales for those?

[Dennis Calvert, executive]

I don't know. We're not aware -- in the past, what we know -- what we do know is that the way Pooph operates is the test, test, test, test, test and refine. It's a methodical process designed to optimize results. They don't spend a lot of money and hope to spin their way to success. It's precision. So I suspect they'll do similar with these. They'll test and test and test and they get it just right, then they'll push the accelerator down. And so we've seen some of these products in early market team. And so I suspect that we'll see some of these results start to show up here in the near future. But again, I'm not in a position to predict timing.

[Brian Loper, executive]

All right. Switching gears, a few questions here on Clyra. So from investor, John [ Seating ], what has prevented Clyra from finalizing with their intended partner?

[Dennis Calvert, executive]

Yes. It's a great question. Yes, mostly it's preparation for launch. It's -- and again, we use language and people miss words all the time with all of these talks. It's hard to do. And one of the -- some of the words we talked about we're negotiating a partnership, and that's -- everybody got their head around that. That's fine. It's a little more than that. What we're really doing is preparing to launch product in a national market with a big partner. And so material terms are agreed upon the partners, the parties who want to play together have met agreement about what the products are the claims. And so then the question is, are we ready to go big and that's hence the investment. And so we needed to make sure that we had strong supply chain partners, ready with all the technical support, ready with all the FDA compliance, ready with all the technical challenges to go to scale and dozens. I mean, in fact, it's hundreds of items on the checklist. So we've been marching through all that. And I think the answer is when that product is ready for that scale, everybody wants to launch.And so we've been pushing that along. And it's been very intense and demanding, hence, the major investments that we're making on the supply chain. Now when we make those investments in capital equipment, we're buying equipment for our supply chain partners that we own in their locations to help support them in the kind of scale for the product design that we've made a mutual agreement with our partners.So the answer is, there's a lot going on, and we're very excited, and we're getting real commitments and we're anxious to see that result in the launch of a global product, again, co-branded with great partners. So standby is coming.

[Brian Loper, executive]

Yes. And in the release, it also said that you're investing scaled up manufacturing of Bioclynse. Do you have a forecast when you'll be ready for?

[Dennis Calvert, executive]

Well, that's a good question. We feel like in many ways -- so that's a good question. Some of these products have special design and packaging and the way they're used in the marketplace, confidential. And so some of that requires special equipment. And so all of that's been spec. And if everybody is in go mode, you're probably talking about 4 to 6 months before the first product is coming off the line, at which point you're ready to launch. And so really, we're at that moment where as everybody ready or not ready, and let's check off the list and as we say, let's get going.

[Brian Loper, executive]

All right. Let's talk a little bit about Water. Let's see here. Patrick [ Ginger ale ], how quickly does the Company expect to begin signing additional AEC projects now that EPA regulations have been finalized.

[Dennis Calvert, executive]

Yes. Well, we've got a bunch on process. So again, when we have a proposal with a client, those are 20-page documents that go through a complete specification and capital budget and execution, including the service contracts and the warranty and all the things that go with it. So we've got many, many, over 20 of those kind of projects that have gone through that exhaustive process. Now the regs have kicked in. There's still a lot of deciphering going on. But generally speaking, people are realizing the waste stream is going to be a big deal, and it's our value proposition highlighted. And so when it's such an easy question to ask. I don't think I can win on the answer. We think soon, we've been very optimistic. We've got a lot of prospects at the table, and we're hoping to get them closed just as soon as we can. That's what we get.

[Brian Loper, executive]

Yes. Just one note on that. I know you guys didn't have to make any changes to your technology when the new regs came out. You were already meeting those standards where some competitors are going to [indiscernible].

[Dennis Calvert, executive]

Yes, let's be more specific. Yes, so the 4 parts for trillion, we've already proven non-detect capability, right? And consistently below 4 parts per trillion is the wheelhouse. Also, the new PFAS compounds that have been designated, we've proven success in eliminating those in a variety of different types of water as well. So yes, and then, of course, the simple intuition on the handling is less is more, right? The smallest footprint on the waste stream wins, that's the smallest footprint. And remember, the whole argument was to be the most efficient collector and then you can manage the waste. You can manage destruction. It's pretty easy to handle 2 pounds of PFAS for destruction. It's not easy to handle 80,000 pounds of carbon-laden PFAS that's a hazmat. It's just not. And the same thing, even the ion exchange systems that we've seen deployed, they have a reject [indiscernible], which is a concentrated waste spring. And the thesis has been we can regenerate the resins to reuse them again, making them "efficient" right, more economically efficient. I don't think so. I mean now you got to get down to 4 parts per trillion, and you got a hazmat. And in order to break the long chain molecules attached to a resin, you're going to destroy the resin, right? Somebody may prove me wrong because so far, we haven't seen anything like that in the market. So again, these technical challenges are solid, they're very technical. And we're out in the marketplace educating and helping train the customers and the engineers to understand what's being -- what's going on. I mean it's -- and we're always amazed. We go out and we laid it out just the way we see it. And what we hear is, oh, my goodness. Well, you're a game changer. I mean this is what we hear. You're a game changer and say, yes, we are. We should get going. And they go, I got to rethink my strategy. We say yes, that's right. And so we offer a performance guarantee, right? Performance guarantee. We offer a full-service solution for the destruction. And so again, our packaging of the proposal, as far as we can tell, literally unmatched. We haven't seen anything that can match with the proposal. Now what's missing? Well, we don't have 100 installed, right? If they didn't know BioLargo, who's BioLargo? Right? All those questions come up. So that's part of the early adoption cycle. You got to kind of get over that. And how do you get over it, you earn your way through. That's what we're doing. We're earning our way through.

[Brian Loper, executive]

We do have a technical question here since we're on the topic, gentlemen, maybe John [ Demand ], I was wondering how a carbon system creates 80,000 pounds of waste, but the BioLargo system creates 2 pounds of waste. How is that possible?

[Dennis Calvert, executive]

Yes. So these are proven through experimentation in through piloting by the way. So we're not making it up. So a carbon system is a little technical. I'm going to go fast and engineers on the phone probably correct me. So this is the businessman's version. So there's all my qualifications, right? Carbon is an adsorber, adsorber. It relies on its charge to collect particulates of this opposite charge and all the nooks and crannies in this highly porous surface attract and buying to the surface, including PFAS. And if that works, okay. So that's good, right? Yes, it's pretty good. It takes some PFAS out. But it also binds everything else. It takes out other minerals, other contaminants, and they fill up all the spots. And then over time, they can channel, so they require long, longer contact time. That's an issue. And then they can channel the channels, not only sell stories like pouring water down in anthill. It finds this channel and it runs down the channel. Same thing happens in carbon, okay? And then it has an issue with release, so it's going to accumulate PFAS and then all of a sudden releases it. And the way we say that is it works until it doesn't work. It's working, it's working and working and then all of the sudden it's not working because it essentially is filling up, right? All these sites are going up. Okay. That's especially incumbent. So the AEC is in the concentration technique. It's a machine that has a plus or minus, you flow water through a cell, it's a big plate. It's about 26 by 30-something inches. And as the water flows through that plate, it is cast through or flowing through an electrostatic field. And what that does is it pulls the PFAS to one side or the other, it's to its opposite charge. But behind or in front of the electrode is a membrane, not a membrane forcing the water through but forcing the water across. And as it comes across the membrane, the PFAS is attracted and down to the surface, the business word is like flypaper. So as a result, the other containments pass through. So one is an indiscriminate collector, and the other is highly selective extraction. It selects the PFAS, the others go through. Now we get a year of traction on those membranes. That's pretty good. What actually happens is the electricity that's flowing through, actually degrades them well before their loading capacity is met. And that also has great remote monitoring features and all sorts of really technical things that make it feasible in the marketplace. But the punchline is, we can load that membrane and let all the other contaminants flow through because we are selectively extracting the contaminant of interest. So the thesis, right, be the most efficient collector. So that's how it works. And again, easy to say the art of the execution is pretty dramatic flow, temperature, electricity substrate degradation. I mean it's like going up. And that's the stuff of patents and the stuff of our art. And so we've had enough now work with that to be able to go into the field and make these things work for a long time. So that's what we're doing.

[Brian Loper, executive]

All right. So last line of question here is on BioLargo Energy Technologies. I'm not sure about this one, but did we abandon battery manufacturing?

[Dennis Calvert, executive]

Yes. No, no, no, not at all. Yes. No, what we said in the early description of our activity is that we believe that plant that we created, if turned into a commercial enterprise could generate about $3.5 million to $4 million worth of batteries a month, as what we said. And we still believe that's true. The caveat is always the same. Have we've proven demand, right? So do we have an offtake? Do we have sufficient proof on the demand side to give us leverage on the supply chain? Again, that goes back to the same story for every technology we've ever had. I just think about Pooph. With the success of Pooph, when we open another product category into the same channel, every supply chain partner in the world wants that business. We get great rates. I mean incredible rates on the supply chain. We bargained from a position of power because we have a big order. Well, that dynamic is going to be required in the battery industry for sure. And so you got a piece of pieces together. And if somebody says, "Hey, make some batteries and sell them", yes, that's not a bad option. I think we're going to be really busy with the bigger option with partners paying us to build factories. I mean if somebody steps in and says, yes, we can do some small batteries, but hey, I want to optimize the component manufacturing and want to optimize the performance of the cell and here's an order for a $100 million project, that sounds like a good business. And that's kind of what's happening. It's moving very quickly. So very quickly, there's a lot of work to do. I don't want to be this is a big business, they're highly competitive. And so there's a lot to do to get to the point where we have partners saying, let's do it and start funding things. But -- so it's not done very critical. But if I didn't believe that that was achievable with our better battery technology and highly skilled people that have been doing that for their career, we wouldn't be doing it this way. We're going to leverage our core competencies. That's technology. It's finding its way through the barrier, bring enough capital to get through, developing a business model that's got leverage, so we get scale to significance globally. If you've got a business model that says, how many batteries would you like, I'll build you a factory so that you have all the batteries you'll ever need. How big a factory would you like? That's a business. And just to be clear, that's what we're talking about. So I believe it's really optimistic. Now what do we need? We got to have a battery. We're going to have data. We're going to show the world that this battery is going to perform as represent. That's what we're doing. So can we sell some batteries? Sure. Sure. I think we're going to move a lot quicker than that, though, in the other category, but we'll see. We got some more to do.

[Brian Loper, executive]

Yes, certainly. So what are the top 2 priorities for BioLargo Energy through the end of the year?

[Dennis Calvert, executive]

The first is we need this battery in our hand so that we can show it to people and show that it works. And so everybody is on point and really focused, and it's intense. It's good. It's a good intensity. And we did have some technical things that happened in the production when we got to actually assembling the components. And some of it has just required supplier participation and refinement of frequencies and all kinds of really technical stuff. And we're working our way through them. None of them deal killers as just another hurdle to overcome. So we're doing that. Once that battery's in our hand, which could be soon, we don't know exactly the date. Then we'll start testing and we'll also send some matters out to third parties. We've interviewed a number of third-party testing groups who want to take our business, which is great. And so that will help. And then the first task, so that's number one, get the battery. Number two, we need to then be in the engineering design of the scale up cell, and we're going to go to about 3.5 by 13 is cell, and those will be assembled in the past to make a battery storage system, packs and batteries -- packs of sales. That's the way to think about it. And then the third is start forming these partnerships. There's a lot of partnerships already at the table, but they inevitably, as you might imagine, will find themselves to the point to say, are you sure this battery is going to work? I'm going to say, yes, we are sure, but here's exactly where we're at in the revalidation process.And that revaluation is required for somebody is going to put up $100 million or more. And so that's what we're doing. So that's the top 3, right? Finish this battery and get it prove and test it, start that process, scale up and then start negotiating partnerships.

[Brian Loper, executive]

All right. All right. And Mr. [ Curtis Nortel ] was wondering what is the fastest way for BioLargo Energy to monetize the patents?

[Dennis Calvert, executive]

Yes. Well, we think what we're talking about is faster than trying to piece all the pieces together to be a small battery producer. It may actually happen that we'll have those tools in place to make batteries and we can start selling some. That's fine. There's nothing wrong with that. That's not a bad plan. It's hard to get big doing in. It's hard to get scale. So we took our investment thesis, which we showed as short graphics. And we took it up with the marketplace and said, here's our plan, partner to build a factory for somebody who really wants a big factory to make a lot of batteries, right? Who wants to do that. And there's all types of different people. It could be the public utility. It can be data centers. It can be AI, anybody in the AI business. Anybody that's in renewable energy, right? Running solar. Solar. Solar is a big customer. Whoever has got the bandwidth to really need this tool to leverage their business, and that's a lot of people. So -- and then they say they're going to ask the obvious question. Well, listen, here's what we're here. Let me get this right. You'll build me a factory, so I can make as many batteries as I want. We say, that's right. How many would you like? And they say, "Well, I need to see that the battery is going to perform to the specification that you've shown me" and we say, yes, that's what we're doing. So it seems to get that done. How many barriers would you like? And it really is that kind of simple, okay? Now it's still big numbers. But look, you got to remember, there's a 30% higher cash reduction credit for the deployment of batteries, 10% made in America, plus if you're going to bundle some of these other opportunities for tax credits and incentive-based financing. And we've mentioned that we've got some really nice relationships. We'll have more disclosure soon, some work in the tribal nations, which is really fascinating great partners. And that's it's really fascinating. You get to do a great work for a community that needs it. And when we talk about that kind of opportunity, we bundle workforce development, micro plant focus, community engagement, this whole sort of holistic approach that allows for us to provide an economic and social transformative opportunity for a community. And of course, the funding for that target community is unbelievably significant. And so right, that's just another wrinkle on how we get this positioned in the marketplace, and it's significant. So again, I can't [indiscernible], it's so simple, but you know where it all starts? You got to have a better battery. So really, I've got -- we've got the proof that we have a better battery. And all this vision of what could be is not going to take place until we've done that. And then once it's done, I think we're going to see such a flurry of activity that will form these partnerships, and we'll have 3 or 4 projects underway, essentially replicating these designs 3 or 4 different times, each creating this massive demand, right, which gives us economy of scale in the supply chain and leverage the balance sheet of our partner. That's a scalable model. How many would you like, sir? And again, I hate to make it sound so simple. But really, if you have a better battery and you have the skills that we have, we do have the talent in our company to do this, and we're going to leverage that talent. They've been doing their craft for 30 years. We've got subject matter experts on board, and we're executing. I need the battery, you need a third-party [ validification ] and you need a solid supply chain. So that's what we're doing. It was a [indiscernible] but it is significant. I can tell you that. It's significant. And at the same time, we're serving clients and managing cash flow and making -- now we're making some cash, making some positive cash flow. It's a good time for BioLargo.

[Brian Loper, executive]

Absolutely. All right. Saving the best question for last year. This is from investor, Patrick [ Ginger ale ], but some platforms, including Vanguard, do not allow purchasing of BLGO stock. Were you aware of that? And is there anything on your end that can be done to remove those restrictions?

[Dennis Calvert, executive]

Yes. This is such a hassle for everyone. So Pat, I'm empathetic with you and the implication of the company. This -- it's a fascinating turn of events. We've seen big brokerage firms say, yes, yes, yes, and all of a sudden say, no, like an allocation. And it's as varied as the firms. I've never seen anything like it. And it starts with a small stock, right? We're in the OTC Market, not in the NASDAQ qualified marketplace and a small stock price. The small stock price, low 0.30, 0.35. A lot of people see that as a negative. We made a decision, okay? And the decision is to look out for our shareholders by avoiding catastrophic manipulation of the cap structure to accommodate some of these issues until the company was well along in a strong financial position and really reap some of the benefits of its being public and its valuation. We think that's happening now. So in the perfect world, we would continue to execute, and we'll see a natural rise of our market cap valuation. As that's occurring, the ultimate answer for Pat and for many people is to get it listed on a national exchange like a NASDAQ or NYSE. One of those is national exchanges that would take it out of this category at a much higher price. We're weighing the balance between those choices always. And we've always taken a conservative approach and said, "You know what we need?" We need a successful business. When we have a successful business, we can take care of that. So I think the answer is continued succeeding that will take care of itself. Grow the top line. Now we got about $100 million market. I was at Wall Street for about, I don't know, 9 days, 2 or 3 weeks ago, they all run together, making the circuit, meet with exchanges and number of bankers and conferences. And I heard a story, one of the bankers for microcap is $250 million microcap. In total story about 83 IPOs and 73 of the IPOs since the average raise was $8 million, average market cap was under $50 million. Okay? Under $50 million. So that's half our microcap. Average raise $8 million, of $73 million of the $83 million we've lost 65% of their value listed. Okay? So the small cap market has had a lot of uncertainty. So that's happening while we're growing 100% first 1.5 years ago, 108% this year and generating positive cash flow with the portfolio that we've invested years building a significant investment that is potentially transformative in all these markets. We are so unusually unique in the world right now that people gravitate to our company. And so we think it's only a matter of time until what -- when you say you're not on the radar, who's the BioLargo? It's just going to be different. People are going to say, "I know who BioLargo is." And you say, "Yes, and why?" Well, because we're going to have technical performance, financial technical performance, okay? So these regs that are -- in the way these brokerage firms are being forced to deal with is a function of regulatory pressures from Congress. Okay? I mean it's real simple. They don't say you can't do it. They just make the paperwork so burdensome they don't want to do it. So these brokers firms are making choices. They don't want to do a small stock because it takes too much paper, okay? So do you put your stock in that account because they're really good for you? That's your business. But I had investors, one time [indiscernible] is I've got $30 million in my IRA. Telling me you're moving your money and see if we take our shares. At some point, people say, I want to take care of my customer. So that's the question to ask. Do you want to take care of your customer? Right? And then raising the bar with the equity. So it's both. You need to both again long answer, but very complicated question. I hope that helps, Pat.

[Brian Loper, executive]

Yes. Thank you for that. So that's all the time we have today for questions. I want to thank you, Dennis, for.

[Dennis Calvert, executive]

Well, let me close out. Yes, let me close out real quick. So if we look forward, we want to bring some customers in an expanded PFAS of course, check the milestones on the battery tech, get this clearer deal in the go mode. We need to get that done like as soon as we possibly can and then maintain the platform.Keep doing what we're doing because we're heading in such a good direction. And we'll be watching carefully on the incremental cash flow generated from increase in sales. So if Pooph is able to continue its targeted 20% quarter-over-quarter over time, I think that's kind of bode really well for BioLargo and to shareholders. So this is a great time to get a stockholder at BioLargo. And thank you, everyone. I look for your e-mails. Please reach out to us. So if I'm not responsive, just ping me again because we're not in [indiscernible], all right? Thank you very much.

[Brian Loper, executive]

Thanks, Dennis. Thank you, everyone.

[Operator]

This concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.