BioLargo Inc

OTC:BLGO

Earnings Call Analysis

BioLargo Reports Strong Revenue Growth Amid Strategic Innovations

BioLargo achieved $14 million in year-to-date revenue, projecting over $19 million annually. Despite a quarterly dip to $4.4 million, growth remains robust, driven by ongoing projects and anticipated revenues from their water technology and battery divisions. The company aims for 100% year-over-year growth and has improved its net loss to $1.1 million, reflecting better operational efficiency. BioLargo expects major advancements in their products, particularly with Pooph and water technologies, setting a goal for uplisting by 2025, contingent on continued market performance and stock price appreciation.

Strong Revenue Growth Amid Challenges

In the third quarter of 2024, BioLargo reported revenue of approximately $4.4 million, marking a substantial increase from the previous year. For the first nine months of the year, total revenue reached an impressive $14 million, a notable rise compared to the same period last year. The company aims to achieve an annual revenue of $19 million or more with this run rate, indicating robust growth potential. Despite a quarter-over-quarter slight decline, year-over-year performance remains strong, suggesting underlying strength in the business.

Optimizing Cost Management

The company has made significant strides in managing costs while maintaining growth, reporting a quarterly net loss of $1.1 million, which is a substantial improvement from a loss of $2.6 million over the first nine months of the previous year. This improvement in the profit and loss statement can largely be attributed to stringent cost control measures, indicating that as revenues grow, the company is effectively managing its operational expenses.

Future Revenue Projections and Product Launches

Looking ahead to 2025, BioLargo anticipates significant growth driven by various key projects. The launch of Clyra, which is expected to be substantial, will potentially impact the financials positively. Additionally, Pooph, their odor control product line, is projected to achieve a growth rate of 20% quarter-over-quarter, showing progressive momentum in the marketplace. The management also expects that the upcoming improvements in water technology assets will further bolster their revenue streams.

Focus on Innovation and Market Positioning

BioLargo is distinguished by its commitment to innovation and technology development. The company operates through four main divisions: medical, energy (battery technology), odor and VOC control, and equipment focused on PFAS and water remediation. Their technology portfolio includes unmatched innovations aimed at addressing significant market gaps, positioning them strategically for transformative change and profitability in the future.

Uplisting Aspirations and Stock Performance

Management expressed a desire to uplist to a major exchange like NASDAQ by 2025, contingent upon certain market conditions and financial performance improvements. They believe that increasing revenue, achieving positive cash flow, and enhancing shareholder equity will facilitate this process, ultimately aligning the stock price with the company's underlying value. This potential uplisting could significantly enhance the visibility and credibility of BioLargo in the financial community.

Investments in Sustainable Solutions

BioLargo is deeply committed to sustainable solutions, particularly in the context of clean energy and water technologies. The company’s strategies involve significant investments in battery technology, which they believe could have a valuation of $2 billion to $2.5 billion in the long term. This reflects the company's strategic planning and their focus on tapping into rapidly growing markets.

Overall Investment Thesis

The recent earnings call underscores BioLargo's potential as a growth-focused company with a commitment to innovation and sustainability. With strong revenue growth, planned product launches, effective cost management, and aspirations for uplisting, BioLargo appears to represent a compelling long-term investment opportunity. Investors should closely monitor the execution of their strategic initiatives and market conditions as the company aims to capitalize on its robust portfolio of technologies.

Earnings Call Transcript 2024-Q3

[Operator]

Welcome to the BioLargo Third Quarter 2024 Earnings Results Call. [Operator Instructions]

I would now like to turn the call over to your host, Brian Loper. Please go ahead, Brian.

[Brian Loper]

Great. Thank you, operator. Good afternoon, everyone, and welcome to BioLargo's Q3 2024 earnings results conference call for the months ended September 30, 2024. By now, everyone should have had access to the earnings press release, which was issued earlier [ this ] week. 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 [ the ] questions.

Forward-looking statements are based on management's current knowledge and expectations as of today and are subject to certain risks and uncertainties and may cause the actual results to differ materially from the forward-looking statements. A detailed discussion of such risks and uncertainties are contained in our most recent Form 10-Q, Form 10-K and other reports filed with the SEC. The company undertakes no obligation to update any forward-looking statements.

And with that, I'll hand the call over to BioLargo's Chief Executive Officer, Dennis Calvert.

[Dennis Calvert, executive]

[ Hey ] Brian, thank you very much, and thank you, everyone, for joining us. And as always, we've got a lot of information to share, so we're going to [ plough ] through it. At BioLargo, we make life better, focused on sustainable innovation, right? We have an innovation engine for a better tomorrow. Again, I'm very thankful for you to be here.

Brian mentioned the forward-looking statements. Just to [ recast ] that, look for the Qs and the Ks for the most current information, including all the risk factors. Very important. We're overcoming risk every day.

Okay. Who are we? Innovators and scientists, entrepreneurs, passionate about sustainability and human health, driven by purpose, make life better, best-in-class solutions. I can't emphasize enough. Remember, we focus on innovation that we believe is a cornerstone for transformative change in the market, transformative change. If we didn't think it was #1, we wouldn't be doing it, right?

And execution, of course, is critical and the right timing in the world, there's a lot of risk factors to overcome for that, but we do believe the cornerstone of innovation is really -- the centerpiece of the company is technology. Lots [ of ] engineering, and we focus on problems that don't have a good answer, and that's our job.

At the parent company, of course, we have engineering as a centerpiece and R&D group out of Canada. Corporate serves as direction, capital, entrepreneurship to assist all these operating units in finding their way through the innovation, the [ invent ], prove and adopt phase for commercialization.

So we've got 4 operating units: medical, focused on [ texture ] control; energy, cutting-edge battery technology; O&M, Odor and VOC control, our #1 revenue producer, growing like crazy, great story, we'll talk about that; and then, of course, our equipment group is focused on PFAS and all things water, making some good progress in that category as well.

It's a new slide. We [ wanted ] to take a time to do just a little bit of a deep dive here. I'm often asked the question, what's the point of all this, right? What's the point? What's the [ prize ]? What is the [ prize ]? And so we like the word unseen value at BioLargo. I think there's a pretty good argument to say at this moment, the market really values our technical performance. There seems to be a good theme that goes on when people study the company and they'll say, at current valuation, it's really supported by the execution that's already at hand and yet there's so much more to come.

As a result of our investments, significant investments over an extended period of time, we've developed a multitude of portfolio assets, technical assets, we would call them unmatched technologies. They are unmatched, very important.

We pursue a capital conserving strategy. We have extraordinarily high qualified people. I think our employee count is somewhere around 35, something like that. But really, there's another 10 professionals who are engaged in a very material way with the execution of our business. So we've got some critical mass, number of PhDs and engineers of really world-class stature, highly qualified people and then driven by impact. When you study these portfolios, we believe that the underlying value that we intend to capture is represented in this graph, right?

So we often talk about the business strategy for the Odor division, Odor and VOC control under ONM Environmental. As you know, we went industrial. We found a great partner, breaking records, growing a brand with a partnership through Pooph. And we predicted that eventually, as that company finds its traction, which it's doing, it's going to find an exit somewhere between $350 million and $700 million. And we have negotiated a 20% participation in that exit. We fully expect that, that will create an exit value somewhere in the $100 million range.

The same applies to these other assets, but they're orders of magnitude larger. And it's critical that we share that information so you know why we're willing to invest and slug away to get these technologies through the innovation and adoption cycle and willing to make such significant commitments of time, resource and passion to make sure we're successful.

We think the next one to really go big is Clyra. And we've talked quite a bit about that, and we're going to talk some more about that on the schedule. Right now, we believe that we'll be in the ready to go mode, ready to go, right, first quarter. I've acknowledged that we faced every delay in the book. It's quite a daunting task to prepare to launch at the scale that we're preparing for. We've made substantial investments. It's about [ $1.6 million ] equipment, plus we've supported extraordinary investments of time and resource and third-party validations to prepare those products to launch.

And so, we have a couple of partners there, right? We have a partner on the manufacturing side, we have a partner on the distribution side, all working together to prepare a product to launch into the market of significant scale. We believe that the Clyra assets represent an entire portfolio of assets. There's a core technology that's a cornerstone. But literally, there's hundreds of products under the umbrella of Clyra.

Now what's unusual is that we've been able to sustain that development cycle for so long with a significant investment to prepare to launch at a global scale. Global scale. All right. Let's define that a bit. What that means is, we're starting at the top with some of the top players in the market. And we think that it has the potential with the partnerships in place and scaled manufacturing to disrupt the market.

Not we hope so, we believe it will. So be clear, we believe it will. It's a technical leap forward in the way we can manage patient care for the best outcome and for infection control and for wound irrigation. And it's just got a sweet spot in the marketplace because of its technical performance and its safety and the features that make it unique. We believe, as we've said at the top, make it an unmatched technology. So to be able to survive and thrive to get that technology seeded and [ the ] start at this level, we believe we're going to enjoy a remarkable valuation, remarkable.

We talked about before, part of the strategy at BioLargo is to invent, prove, and partner. Once we prove, there's a number of ways to monetize these assets, including potentially an IPO. We think Clyra is a perfect candidate for that. So we'd love to be in that spot. We think it's coming. We can see it in the future. And right now, we've got our -- as we say, we've got our -- we're at the grindstone, grinding [ a way ] to get that product positioned for a launch.

Q1, we're hoping to be in ready mode. When we say ready mode, we're talking about ready for scaled manufacturing, large scale, large volume to supply a distribution channel of significance. It's taken us quite a while, and it's tested all our patience, and it's really required significant investment on our part, but we're very excited about the next step.

The equipment group. The equipment group, we talk about BioLargo equipment, it's really water and PFAS. This is a market that's going to require a lot of work in infrastructure, a lot of work in infrastructure. It's slow. It's methodical. It's slow to adopt. The beauty in our portfolio is that we have multiple assets to deploy into the market at many different levels of market opportunity.

For example, there's drinking water, there's municipal wastewater, there's industrial wastewater, there's groundwater, PFAS [ latent ] firefighting foam, the recycling and reconditioning of stripping PFAS off things like ion exchange and on and on it goes. There are so many opportunities.

And the beauty in our case is we've got a -- our first commercial adoption. We just got permitting done just a little bit ago, and we're waiting for the general contractor to get us to go ahead on the building. Anxious to get that first install done. We have a pipeline of customers that's remarkable, and we've really established ourselves as a frontrunner for the emerging technology sector of that space, the emerging technology sector.

To our knowledge, we're the only company as an alternative [ tech ] to ion exchange and carbon that actually has a commercial account. Now, I'm hoping someone proves me wrong. I'm anxious for that. I keep saying it and no one comes forth with a competitor that's actually got a commercial account. But it's remarkable. And the fact that we're here at this spot really puts us in the frontrunner position.

And then there's battery technology. I'm going to describe the business plan for that, and I think the business plan has got global scalability, global scalability by leveraging core competency and working with partners to expand on a global scale with rather meager performance. I'm going to highlight that. We believe we can create a valuation in the $2 billion, $2.5-plus billion range, and we're going to talk about that in some detail as we get to that.

Of course, the warning is this is not a forecast. This is the [ prize ] that's before us with the technology as a cornerstone and execution risk, proper financing, all those things apply. So we don't want to short circuit that at all, of course.

I'm now going to ask Charlie to step up and talk about the financial performance on a technical basis for this most recent period, year ending September 30. So Charlie, you're ready?

[Dennis Calvert, executive]

Okay. I think I'm off mute. Can everybody hear me?

[Dennis Calvert, executive]

There you go. Yes.

[Dennis Calvert, executive]

Good. Well, so, thanks, Dennis...

[Dennis Calvert, executive]

[indiscernible] We're on the first... Thank you. Go ahead.

[Dennis Calvert, executive]

I got it. I'm on. And thank you, all, for everyone on the call listening to our third quarter report. So on the slide with the revenue, we did have another great quarter and certainly fed into our 9 months. We're at $14 million, which is a large increase over where we were last year. And we believe at this run rate, we should definitely be $19 million or more on an annual basis. Next slide.

[Dennis Calvert, executive]

Yes.

[Dennis Calvert, executive]

I don't have it up.

[Dennis Calvert, executive]

I think you have a slide.

[Dennis Calvert, executive]

[indiscernible] Dennis.

[Dennis Calvert, executive]

I've done it.

[Dennis Calvert, executive]

Yes, I'll check. I don't have it, but let me -- I have it -- separate. Okay. So...

[Dennis Calvert, executive]

Slide number 8, yes.

[Dennis Calvert, executive]

When we look at the -- yes, the revenue and SG&A. So, let me start with the SG&A and the net loss, and then we'll go back to the revenue. We've been maintaining our costs even as we've been growing revenue. It's been a big, important area for the company, which is why our quarterly net loss is $1.1 million, which was an improvement from last year's third quarter. And our 9-month loss was $2.6 million, which is almost $1 million improvement from last year's 9 months.

Again, much of that is noncash, $337,000 in the quarter and pretty close to $1.6 million in the 9 months. So, for our perspective, we are improving on the P&L and our operating cash situation. So for the revenue, you notice that there is a decline quarter-to-quarter. And that I want to tell everyone is an accounting convention. It is -- it has to do with what we can recognize as revenue and what's in our working capital.

If you look at the cash flow statement, you'll see that our accounts receivable has increased substantially and also our contract liabilities, both of which are due to our increased business. And because of accounting conventions and what we can recognize as revenue, they show up as assets on the balance sheet, which we fully expect that they will fall into revenue. So it's a timing thing.

So going back to cash flow, we used $1.9 million -- $1.29 million in the quarter -- or in the 9 months. Again, the actual P&L aspect of that was an improvement from last year. And then again, like I said, our working capital changed and -- for a good thing, but also just because of the way we have to account for it, it turns out to be a negative on our statements. But the truth is the business continues to grow. Our revenues continue to grow, and our loss continues to decline.

From a cash perspective, we're sitting on $3.9 million. So we continue to be in a really good cash situation. The liabilities, certainly third-party debt is very, very small and in fact, has declined again in this quarter. And if you kick to the next slide, Dennis, you'll see the result of all of that, which is an increase in our stockholders' equity.

[Dennis Calvert, executive]

Very good.

[Dennis Calvert, executive]

Okay. So, in essence, from a balance sheet perspective, we're in a really good position. We're increasing equity, reducing debt. We have really good operations. We've increased revenue and reduced the loss. So back to you.

[Dennis Calvert, executive]

Yes. And then I'll just comment a little bit of color. We've also made substantial investments in equipment, primarily related to Clyra, and that has taken quite a bit of cash. Also BioLargo invested alongside investors that have come into Clyra. So we actually put $0.1 million to work over the course of 9 months into Clyra in exchange for equity on the same price in terms of the investors who funded that operation, which has been great. And so we've been able to maintain our position at Clyra at about 52% as of the end of the quarter. And of course, we have the royalty income -- royalty revenue associated with our position as well.

And we also believe -- by the way, it's important to note that the investments, not all to the balance sheet, but the investments of resource, time, money, energy to prepare these products for preparation for the Q1 is pretty substantial. I mean, there's a lot going on. And so, the good news is Clyra is in a good cash position, and we've been able to support that as well to make sure that we show up and are ready, just as fast as we can possibly get ready to launch those products. Okay? Little backdrop.

The other is we've continued to support R&D at the battery tech, technology company, and that's important because we think it's so valuable, while we have -- and we'll talk about some detail on that for the last 9 months and some of the things that took longer than we expected, but we've been able to achieve success in terms of validating the technical claims associated with this phase of our development, which is super critical to the next phase. Okay?

Okay. We'll break down real quick a couple of the big stories in the portfolio, of course. So Pooph, how can you miss Pooph. This is a Petco, in [ caps ], just beautiful. And it's a full tech -- it's a full circle story for the company. All those products we've created for our partners at Pooph. We're the manufacturer of record. And we've outsourced some. We supply some of the ingredients. There's a lot going on in the supply chain there, but it's just awesome. And notice there's the Potty Pads at the bottom, and that's a relatively new entry into the marketplace. It's a beautiful image.

And again, testimony to the science, the engineering, the ability to produce those products and then a little bit of entrepreneurship in putting the business deal together, that's working so well. And we're, of course, thankful for this great partner.

So again, major retail outlets, we estimate they're in about 35,000 retail outlets. Their stated goal is to get to 80,000 retail outlets. Okay? So they're going to continue growing. We've experienced in the past, their largest quarters are Q3 -- Q4, Q1. That's been our history. Depending on whether you've got major retail outlets staging inventory. So there's always a little bit of lumpiness in that, but the trend is all in the positive for those products and for us, which we're really excited about. And so it's the who's who. I've seen a couple of competitors' commercials talking about their products, and they referred to the Pooph brand as the leading brand. I'd say that's a big compliment. So that's pretty cool.

Okay. Remember the business deal. The business deal is really important, right, because this is a product we invented. These are products we invented and we produce. And so we make a markup on the cost of production, a small markup. And then we make a royalty on sales and then we participate in 20% of the exit. That goes back to that earlier slide where we're talking about the things that are unseen, the value that's unseen. You just have to remind everybody, when that brand sells, we [ own ] 20% of the exit, 20% of the exit. And given its success, we think it's going to be a big number. So we're pretty excited about it. And that underlying participation [ and ] what's created, it permeates our business model throughout the company. So don't forget it. People forget, don't forget. It's worth a lot of money.

Okay. Clyra. There we go. Historical performance. There we go, we stated that 80,000 is the goal. I think the highlight there is to show the Potty Pads. The Potty Pads are a full circle story for the company, and it goes way back to the origin story of the creation of our business. And the story really highlights the leverage that comes with brand recognition and scaled supply chain. As we get scaled supply chain, the benefits of our journey accrue to the partnership at Pooph and allow us to enter the market with competitive pricing and margin as a major player on the first order. I can't emphasize it enough. And that's a great example where that's come to bear.

We talked about Clyra briefly, and it's ready mode. We talked about ready mode already. I don't need to detail it right now, but being ready to scale for manufacturing at an extraordinarily large scale. That's what we're talking about. Products ready to come off the line. We spent a lot of time and a lot of money working with the partners.

The other thing I want to just emphasize, it's a journey in which the 3 companies are working very closely together on a continual basis. This is not one where, call me when you're done. This is the kind of relationship that requires 3 parties to journey together to get to the mark at which we can produce and scale manufacturing for a very significant distribution opportunity. Very excited, and we think the valuation is going to be reflected as that asset goes to market.

I'll acknowledge too that it's taken longer than we anticipated. We've had all sorts of delays and the details [ mind ] -- I mean the good news is we've just [ clicked ] off the list one after the other and continue to march towards that success. I was talking with Charlie Dargan this -- earlier just before the call. And we take 2 steps forward and we take a half step back, and then we take 2 steps forward, but we're definitely moving forward. And again, we're predicting success on this asset.

I'll just also remind you, what's unseen is the idea that under the Clyra umbrella, there's the potential of, let's call it, dozens, even a 100 products. Literally, it's a platform that just has legs and it goes on and on and on. And so when you finally find your spot to enter that market in such a significant way, there's other opportunities, think about it, very much like the Puppy Potty Pads. Right? Until you have the position in the market, you have the distribution channel and the scaled manufacturing and the price, purchasing power associated with supply chain. It's the same for many of those products. Until you get to that level, those products don't make as much sense. But when you do have it, you can push the button and go.

Okay. We're [ going to ] talk about the battery technology real quick. So this article is very important. If you haven't read it, please do. You can also reach out to us. The economists wrote this about 1 month ago. Clean energy is next trillion dollar business. It's talking about long-duration energy storage, long-duration energy storage. Okay? When you say long duration, that basically means in layman's terms, grid scale. So the primary use is offloading renewable energy and balancing the grid. You're talking about those trailers that -- out in the field with hundreds of trailers that back up the grid. That's what we're talking about, big business.

Estimated to go somewhere between $1 trillion and $3 trillion by 2040. It's only 16 years. I mean it's coming fast. And it's a market that people didn't even know about, but we saw it. And by the way, the inventors that originally invented this technology, they saw it. They looked at this and said, long-duration storage is a piece of the future. We believe it is too. And so, we've got an asset that we believe has a global opportunity of significance.

Let see -- let me make sure I've got this right. Yes, what are the markets, right? So we talked about renewable energy offloading, balancing the grid, perhaps EV charging stations, perhaps next to the home, certainly next to buildings, emergency backup and the like. Okay?

What's the problem with the current systems? Well, lithium is #1. There are competitors, by the way, coming to market in the long-duration energy storage space. Tesla is famous for installing batteries and these battery packs that go adjacent to a building [ or ] to a home. We just think there's an inherent risk that's a problem, and that's a fire risk.

There's also a number of other catastrophic issues to deal with, like global supply chain and geopolitical things that we can go -- we can do a deep dive in the politics. But the punchline to the story is, lithium [ ain't ] the answer. That's the bottom line. It's not the answer. And so there's a big push, right? There's a big push.

Okay. So the Cellinity battery. Everybody knows we acquired this technology. That's important. We acquired it. We had to redo the work. It took us -- and we thought it take -- we originally scheduled to have that work complete by the end of December 2023. It took us till basically September, next [ to ] 9 or 10 months. But what we've successfully done is validate enough of the technologies to know that the technology is the real deal. Okay. So what's the point? It's a safer, sustainable, durable and efficient battery.

You can argue it's a better battery. It's simply a better battery. Okay? And that's an argument, right? And that's an argument. But I'm going to show you a couple of [ stats ] that are really important, and it's extraordinarily well situated for long-duration energy storage, long duration. I'm going to just find that, report you real quick. People don't often know. Long duration means that when you pull the energy from the battery, you can pull it for a very long time. Okay? It's not longevity. Ours is a 20-year battery, but it also can be pulled, energy drawn for an extended period of time.

And the convention historically is about 4 hours and then there's an 8-hour and there's a 10-hour, and we believe that this is really well situated for at least a 10-hour draw, meaning you can -- it's a reliable source at very high volume. [ Digging ] the put ups by the market. I'll point out a couple of real quick.

[ EOS ], talk about [ EOS ] all the time for a couple of reasons. EOS is a competitor. They have a zinc bromide battery. We would argue that they can't match some of the very specific features of our design, but they've done a good job, and it is a good battery. So don't miss it. It is -- it has a much lower energy density, for example, it's got self-discharging issues. We think our battery, especially in the long duration, is going to be a better fit. They've invested in 10 years and well over $0.25 billion, okay, just so you get perspective, and they are now commercial.

But the thing I think that's the most important tell about that company is they've got -- reported over $13 billion in the pipeline of soft commitments, basically commitments that as soon as you can make it, I'll buy it. And what that thesis supports -- that example supports in the thesis is the idea that if you have a better battery, you may be able to sell them before you ever make them. Okay? It's a pretty astounding thing. Okay? And these other companies are big companies. They're using a lot of lithium. Now sodium ion is coming on. That's the article, the economists going to talk about that. We're very different than the sodium ion as well. Sodium ion is not going to compete with us either, just to be clear.

Okay. And the stats, I'm not going to go through all these stats. I just want to highlight a couple of things, and that's the green on the right. These are technical competitors, sodium ion there. Sodium ion, look at this, 75 to 165 energy density, and we're at 552, okay, right? So that's what, [ 2.6 times ], something like that, plus we're operating in extraordinarily high voltage. So the combination of high energy density and high voltage, right, gives us flexibility in the way the battery can perform in the field. It fits in a long-duration model -- long-duration storage model.

And then there are other features, right. It's no runaway fire risk. It's -- there's no self-discharging. It's a 20-year battery. It's fully recyclable. It's got no rare earth elements, no cobalt, no nickel, no lithium. Okay? No geopolitical supply chain risk, earth abundant materials. We have a significant cost of goods advantage, especially when we get to scale. And of course, that's a challenge, right, how do you get to scale.

Okay. We built a little factory. This is our pilot facility. This -- we put about $1.2 million in this. I don't know the exact number, but I believe total invested capital right now on the battery project is about $2 million for us. Okay? And I say that because it's extraordinary what we've accomplished with so little. Right? Show me a battery company that can show up with a working cell for $2 million. It's not -- there's none. Just be clear, there's none. There's none. $25 million is more like it, maybe [ $100 million ].

And so, it doesn't mean we're complete, right? This is not [ scaled ] manufacturing. This is not automation. This is pilot production to prove the technology and position it for the next phase. We've done a remarkable job. We had a little open house just a few weeks ago in September. And you can see the cell on the right and there with a couple of our techs and their daughters. We had some dignitaries in from overseas. We also had a future partner out of Arizona, and they brought in their technical team to really do a deep dive and look at where we're at in the status as we're negotiating to form partnerships to build factories in their territories. That's the idea, of course.

Anyway, it's great moment. And then, of course, we put out a press release, but let me get to the meat on the bone for the business model. We came up with a basic strategy to conserve our capital and ask ourselves, how can we deploy what we believe is a cornerstone of innovation that's unmatched in its technical claim. Okay? I mean, just cut to the chase. I -- We've not seen a battery that matches our claim. And we've got to prove it. So we're not done proving, but we know it to be true. We know it to be true. And we have enough evidence in hand to really stand out in front of the world and say, we've got a battery that may be one of the best situated batteries for long-duration storage that we've seen anywhere. Okay?

So the idea, right? So how do you do that? Well, [ sell ] [ factories ], not batteries. That's the simple answer. In other words, give more than you take. Enable the technology to be put to work throughout the world in partnerships that have financial incentives and political incentives and geopolitical incentives to see these assets be deployed in their country that are willing to invest to see it happen. I mean, just think about the United States alone. The Department of Energy has this -- of course, you got Inflation Reduction [ Act ], tax credits, everybody knows that, that's energy credits for deployment in the field.

But you've also got land programs and loan guarantees and massive subsidies by the government to see this happen. Okay? And it's part of a portfolio. Right? Batteries are not going to go away tomorrow. They're only going to increase. In fact, most people believe -- even as you transition to alternative sources like nuclear and you lean more heavily perhaps in the next administration on fossil fuels, battery demand is not going to go down. It's going to go up. And a better battery that's well suited to balance the grid, right, as AI and Bitcoin and big data, right, continues to expand at the pace it's expanding, the grid cannot possibly keep up. It just can't possibly keep up. Okay? So there's a need. Right?

So in the business model, we looked at this with a hard look and we said, what can we do? Well, we modeled the factory that will take about $140 million to build. Okay? It's a representative factory. That's a financial model, be sure we make it clear. About $140 million. We believe that, that size factory, it's about 200,000 square feet, would generate about $0.5 billion in top line revenue per year at today's prices, $0.5 billion. We estimate about a 16% plus level of profit on a scaled operation, scaled, operating, running. Okay? And what we're looking for is participation as a minority equity holder and a royalty provider at 6%.

So when we look at the business model, we say to ourselves, okay, 6% on $0.5 billion, 4 factories, right, finance with our partners, other people's money to put them in the business, allow them to generate $500 million a year, allow them to hire the 500 to 1,000 people, allow them to create the net export for their country, allow them to develop grid scale, microgrid development to balance the grid, allow them to create economic development for their nation state. What do we want? We want 6% royalty in a minority equity position, and we will put them in the business.

This is a business strategy that will allow us to scale at a global scale as long as we prove it out, and so you can imagine there's work for us to do. We need to establish ourselves as a credible supplier at that level so that the partners who have the desire to see this economic engine and this initiative for the future of energy to be deployed in their country. We believe we can get it done. That's the punchline. We believe we can get it done. Of course, there's a lot of work to do. Once you have a contract, we start making money.

We estimate on [ $140,000 ] -- excuse me, $140 million build will generate about $60 million in revenue over the 2.5 years before it goes live. Once it goes live, we're in a 6% royalty in the percentage of the profit. That's a business model. It's scalable on a global scale. I'm very excited about it. Hence, when you go back to the slide where we talk about the potential value, it's real simple. 4 factories will put us over $2 billion, pushing a $2.5 billion valuation. That's a business.

PFAS. PFAS is very exciting. I want to give kudos to the team. They just made a remarkable advancements with a pipeline of business that's significant in our first commercial account and recognized expertise. And as a result of all that work, think about it very much like what's happened at Clyra. We've paid a dear price to be in the business as an early-stage emerging technology against all the biggest players in the world with incumbent technology that's had some adoption, right, some adoption. But we've got a better mousetrap with a higher value proposition.

As a result of slugging away to prove out our claim and really doing all the work to go vertical, build machines, put them in the field, make sure they're going to work, which is about to happen, make sure we're clear. As a result of doing all that, our business and our technology becomes very attractive to very large companies who have a strategic initiative to go after PFAS. And so at this stage, one of my soft predictions, it's not hard, but soft prediction, is that this business is going to end up being partnered for the various vertical markets around the world with some very large companies.

And I think what that would do for us is accelerate adoption. It would again preserve our dependence on big balance sheets, which is capital intensive for both manpower and equipment and allow us to leverage our way into significance through those partnerships. And we believe that, that's inevitable and likely going to take the path that's really going to watch that technology blossom.

This is just to remind everybody that the industry that sold billions worth of sales is now going to cost $17 trillion to clean up. The perspective is astonishing. The industry generated billions. It's going to take trillions to clean up. And this is not going to go anywhere. It's not going to go away anytime soon. When you ask an -- geo -- water engineer for the water table, how long is it going to take for that water table to clean up, They say, it took 50 years to get [ in ] and take 50 years to get out, okay, to [ give ] perspective.

The thing that's unique about us is we can play in all these different markets. Okay? So this is really important. And it always happens this way. We say, okay, drinking water. Why drinking water? Drinking water is the most difficult politically, but drinking water is the slowest to adopt new technology. It's made by political figures, appointees, public works. They're very, very hesitant to adopt new technology and it's slow, and you got to really work hard to break through that barrier. The other markets will adopt faster, but the other markets haven't been mandated yet. Okay. So you can see the dilemma. The good news for us is that we can play in all those markets.

So while [ that ] we slug away in the drinking water, we get adoption in the others, we believe, much faster. And that's exactly what appears to be happening for us, which is really exciting. So again, we're not moving away from drinking water. What we're saying is we'll get the other adoption fast as we break down the barriers for drinking water.

And ultimately, the big value proposition is in the waste stream. We've covered it many times, won't [ worry ] out. This is a new slide, though. If you haven't seen it, it's a good one. This is an actual -- right, this is an actual work product, 1 to 2 pounds of concentrated PFAS versus 20,000 to 40,000 pounds of [ spent ] carbon. Can you imagine? Right. It's a big deal. It's a big deal. And so when we go into the market, people look at and say, it can't be. I Say, oh, it is. It is. And we've done enough work now to really be credible in that way. And then, of course, getting the next commercial installation and proving out its durability and its performance is really important, and that's next. We're really anxious to get that done.

The life cycle cost, again, hard to follow the detail there, may be too small. The punch line to the story is compared to conventional technology for the collection and destruction, we're going to save between 40% and 300%. That's the bottom line, 40% to 300%. We save money. We do something the others can't do. We don't trade one problem for another. We get to handle the -- all the regulations for handling waste really goes in our favor, and we can play in all these different markets. And I mentioned that because we may partner with some and hang on to others. That's kind of the way the opportunities will present themselves, but we do represent the technical cutting edge.

This is a leachate trial. Look at that water. The untreated is on the right. So the post AEC is on the left. It's pretty remarkable. These are those ancillary markets where we have significant opportunity, they're just emerging for us. Think about it this way, the clients are just now willing to spend money. It's not that we couldn't have done it 2 years ago. They didn't want to spend the money 2 years ago. Now they will. And again, it's a market in its infancy. So we believe we've got a big winner here. And as we always say, it's going to be a lot of hard work, but it's worth it, so.

Okay. I'll pause now. We'll open it up for questions. And again, thank you, everybody.

[Operator]

[Operator Instructions].

[Brian Loper]

All right. Thank you, Dennis. Terrific presentation. Fine numbers as well. Thanks, Charlie, for sharing that with us. I think one thing that's important to distinguish, differentiate is the Q-over-Q numbers might have dipped a little bit, but annually, year-over-year, BioLargo is still growing pretty crazily.

[Dennis Calvert, executive]

Yes. So that's -- is there a question in that one? Is that -- do you want some color on that? Is that what you're asking?

[Brian Loper]

Well, yes, we have a question. Can you explain better the dip in Q3 revenues?

[Dennis Calvert, executive]

Yes. So there's a couple of explanations there. One is that, recall in the past, we've had some projects with our engineers that allowed us to kick up to a higher number. So that was not recurring. Those were onetime event. And then Charlie also pointed out that we've had some contracts that have come in that create asset, balance sheet treatment where we've not been able to recognize some of the revenue yet, and that's also related to the engineering group. Good example would be our work on the Air Force contracts. And so that has an implication as well.

We also have not seen the dramatic growth that we've seen in the past with Pooph, but we don't believe that, that's reflective of the trends. And we do believe that in our history, Q4 and as we emerge into Q1, that's historically been strong periods of performance for Pooph. So again, the stated goal for Pooph hasn't changed, which is over the long haul, quarter-over-quarter. They believe they can achieve a 20% growth rate, and they certainly have an incentive to do so. So we're pulling for that. We don't control it, but we're certainly pulling for it.

Now I think as we go into 2025, there's a whole bunch more things happening. There's really significant good events. We do believe we'll find traction with some of our water technology assets. That's great. We also have some projects that are coming to us through our engineers. That's great. We also have Clyra preparing to launch in a really significant way, big, very significant numbers, all really bodes well for the future for BioLargo. So I hope that answers the question.

Charlie, do you want to add to that? Or is that enough? He might be on mute. Okay, Brian. He'll come in when he can. Next question?

[Brian Loper]

Yes. So real short question, but what is the revenue number for Q3? [indiscernible]

[Dennis Calvert, executive]

$5 million...

[Dennis Calvert, executive]

No, no, no, $4.4 million for the quarter. [ $4.365 million ], just under $4.4 million.

[Brian Loper]

Okay. Great. Let's see here. All right. We have a number of questions from investors on the call today. I guess let's start with this one. When do you expect to uplist to a major exchange? And what will it take to make this happen?

[Dennis Calvert, executive]

Yes. That's a great question. I'd like to see it happen in 2025. That would be my goal. Can't guarantee it. There's a lot of factors that need to come together. We've been hesitant to pull the trigger on that until we see some price appreciation in our underlying equity value of stock price. We believe that in simple terms, because we're in a good cash position, and we're continuing to execute on advancing our business, and we're not capital starved at all, it puts us in a very strong position to be able to just execute the business and prove out their commercial viability and results.

If that's the case, which we do believe it to be, then that's what we should do. We should make the business grow. And so that's what's happening, making sizable investments that Clyra is a great example as well as, of course, the other assets, but namely on the PFAS and water technology. And then, of course, Pooph is going to take care of itself, right? They're going to grow and we're excited about it. That's fine. So, we believe that the financial results will be substantial. And as that occurs, the underlying value and price of our shares should be reflected.

Hence, the slide that you're looking at, the unseen value of the BioLargo portfolio. If our value is hinged upon only the technical performance that you see today, then most would argue it's somewhere around this existing mark, but there's so much more. So I think part of that is messaging and part of us -- part of the job for me and for our company and our team is to prove that these assets have commercial viability. And as we do, we should see an increase in our valuation.

If we can do that, then we believe the uplisting process would be much more practical and less painful for our stockholders because we do care about our stockholders. We want to see that happen in the most -- the easiest way possible, the easiest way possible.

Now remember, if you're going to go to NASDAQ, and to find out a stock price, NYSE is much lower, somewhere around $1.5, $2.5, so doable. But given the underlying value, if we can prove that out for the marketplace, then it's possible that our stock can move into that range, which would make a listing at that point merely a paper filing. We have the net shareholder equity. We need to shore up on our going concern language. That's primarily a reflection of our continued investment in venture stage investing like Clyra. That's what that's a reflection of.

We need to increase our revenue base so that we move into a positive cash flow on a consistent basis, heading towards net positive earnings per share. Wonderful to do before you uplift. We think it's doable. Right? We've also demonstrated our ability to continue to maintain capital assets to support these endeavors. It's only been, what, 16 years. Yes, we can do it. And so as a result of all those factors, we believe we should do that, take the path of least resistance with a successful business that is ready to handle the onslaught that will come at the national market, and we'll be much stronger for it. So that's the plan.

We're always welcome to debate it, but that's...

[Brian Loper]

Yes. In that vein, I mean, how can you say the market values management's execution when the stock price is down compared to 10 years ago?

[Dennis Calvert, executive]

Yes, that's a good question. It's taken us a long time to get here for sure. So I don't think you can look at it in a vacuum like that. What you look at today is that we've got a company that's right at breakeven cash flow or thereabouts, is really close. It's easy to forecast forward and look and see profitability. It's also important to recognize that the technical and practical validations of all these assets is substantial. It did require substantial investment, but it's nonetheless real. So this -- the accomplishment of those missions is remarkable.

And now look at the portfolio. Look at the portfolio and the value that we've created, that we now can harvest by monetizing those assets through partnerships. So clearly will be the next one to fall. And yes, it's basically worthy of a career. In fact, I have this conversation all the time. Each of these assets is worth a career. They're so substantial and they're so -- they have so much potential for transformative action in the market, and financial prosperity. They're going to make a lot of money. They're going to do great things for the world and make a lot of money. And that's the mission of the company.

And by the way, I'm just going to point out again, these are the ones you see. There's a whole another list of assets in our portfolio you don't see. There's more coming. And so the business is this business. This is what we do. We find the gap in the market that can make a transformative change. We prove it -- We invent it, we prove it and we partner it. And as we partner it-- Clyra is going to be the best example.

I mean we had to slug away in the other business for, gosh, 8 years before our first partnership. And once the partnership came in, we took a pretty unsexy low-margin business and turned it into a sexy, high-margin, high-growth business. That's what we did. That's remarkable. And the same thing is going to happen with Clyra. And then the same thing is going to happen with the water company and then the same is going to happen with the battery. That's where we're headed. So yes, it's pretty remarkable.

So I think the trick is in this very tough market for OTC companies, microcap, it's been a brutal year, absolutely brutal. And the fact that we're here in such a good financial position really just points to the undervalued nature of our equity. That's the bottom line. It's this -- it's the value unseen. And again, just think about it, people have invested serious money in Clyra. Why? Why do they do that? They do it because they do a deep dive. They're not watching the stock price. I can assure you that, or whether buyers are buying and selling on the wind, especially with the inefficient market. So, as the market ran early in the year with increasing revenues at a dramatic pace, it's really good. That's good for everybody.

We also watched a lot of profit taking. That profit taking took the wind out of that sale. And then, of course, the world went into a period of uncertainty with the elections. Now that's behind us, which is thank goodness, and we've weathered all that, and we're in a good financial condition and then these assets are coming to market. So hope that answers the question.

[Brian Loper]

Yes. That actually is a great segue. Do you believe the new administration will be favorable to solutions for cleaning our country's water sources and [ rooting ] PFAS?

[Dennis Calvert, executive]

Yes. Well, so that's a good question. There's a number of things about our portfolio that will fit well with -- we think, with the current view of the administration. One is, just think about the Made in America concept, right, Made in America. Domestic manufacturing, domestic job creation, net export. That's the battery tech on steroids. It's also the water technology on steroids. I mean it's actually all of them, but those for sure.

Then the regulations for PFAS are set. They're not going to walk backwards. These are chemicals that have been linked to birth defects and cancer. The gig is up. The gig is up. It's a trillion dollar -- multitrillion dollar market. They literally -- these contaminants literally have poised in the earth. So it's going to go forward, not backwards. And based on the comments that have come out of the administration about we're going to have clean water, I think there's ample opportunity for us to thrive in that market.

Clyra. Clyra is politically in -- recession proof, right, keeping people healthy and safe from infection. That's especially a best-of-class solution. It's going to succeed in any season. And pets, pets are widely known as a recession-proof business. Nobody is going to give up their pet, right? Our market, political -- there's no political sensitivity [indiscernible] [ to ] your pet. So I think we're in a pretty good spot. Again, the beauty in our portfolio is that we're nimble and we can sort of weave as the regulations become more and more clear and find our way into commercial.

Again, going back to the water and the PFAS, we play in so many different markets, and now we've validated to a level of credibility, giving us the ability to participate in any of those different market segments depending on what happens with the [ rules ]. So I think we're in a pretty good spot. And then, of course, pro-commerce, pro-markets, that's all good for BioLargo too.

[Brian Loper]

All right. On the subject of Clyra, we've seen [ go mode ], that date pushed and delayed. What makes you so optimistic that it will happen in Q1?

[Dennis Calvert, executive]

Yes. Well, that's a good question. We believe, based on all the information we have that we should be -- there are certain events that have calendars associated with them. I can just give you an example. When you say scaled manufacturing, ready to produce, it's pretty basic. I mean the factory is up, the line is proven, the data is done, the certifications are in place. The materials are all there. Ready is ready. Ready is ready. So right now, the calendar is to be ready for that in Q1. And with that done, that will be the time at which we can say, okay, let's go.

And then there's some lag. You got to produce, you got to deliver, you got to fulfill, you got to train, all that stuff starts with that moment. But it starts with ready to produce to scale. And right now, it's scheduled for Q1. So that's why we're confident. If it moves, it moves. I mean I can't -- things happen that we can't control, and it happens all the time. And so if that happens, then we'll move with it, because here's what I know. You're ready? It's so important and it's so big, what we should do is just make sure we get it exactly right, because when it goes, it's going to go big. And that's what we're doing. That's why we're so patient, and we just don't flinch. We say, yes, get it done.

[Brian Loper]

All right. Let's shift gears to the battery. So when did battery [ submit ] product for third-party validation? When are those results expected to be delivered? And what are the hurdles we expect?

[Dennis Calvert, executive]

What are the hurdles? There's a ton of hurdles. Yes. So third-party validation on the battery testing. So we reported in the Q, we've begun a process of putting a program together with the Department of Energy. I should mention also, we've got the same program going with the water technology, with the EPA, which is awesome. And that was a direct result of some of our relationships through [ Sally ] and other people that have opened those doors at what I would argue the highest level, both the DOE and the EPA.

These issues for the government for the United States of America are particularly national interest. Okay? And so we're there. We're there with the right goods and the right stuff and the right people to execute. We have not submitted ourselves for third-party testing yet. We have 2 private companies we're also negotiating with, and we hope to move forward with them. There'll be a number of testers by the time we're done. So we're trying to finalize that now, make a business deal, get it in motion. But you kind of have to think about it in a minute.

You're talking about shipping cells, you're talking about testing. Our [ cells ] run at a higher temp. They want to know are they safe? I mean all these questions come out, rational questions. I think the work with the government is probably the validation at the highest mark, it might also be the slowest. So I don't think it's going to be fast, but it is significant. So we'll try and move faster with preliminary validations, and then what are other hurdles? There's a million hurdles on the battery technology.

I mean, the way to think about it is, what's it going to take for us to establish credibility so that financiers will build a factory in which we're a partner. Okay? So the good news is we have the talent on board. Our engineers can certainly fill that bill on the qualifications. They've done it for careers. They're highly skilled in this area. And of course, we'll add more talent too. The technology will be validated. We'll have third-party validation. And I think that's a big piece of that moment at which somebody can say, I want that. I want that. And I want a lot of it and willing to invest in it, right, for all the right reasons. Okay?

So then hurdles. Yes, there's a bunch of hurdles. We need to develop technologies that allow for scaled manufacturing. The current designs require automation. They require efficiency. In the lingo of the Street, it's precision engineering to scale. So that's a big challenge. Now again, remember who our engineers are. They're built for this. So yes, we can do it. And it's not going to be me. It's highly qualified people in the trench digging that out. So all those hurdles are before us. We're going to move as quickly as possible to get the third-party validation for the technical claims at this stage. But rest assured, that testing will be ongoing.

And just to remind everybody, when you talk about testing the battery, it's not, does it work and does the energy come. It's, what high temperature, at what maximum charge and discharge rate? What about overloading the voltage? What happens? What do you do there? What about UL certification, safety profile? What about fire risk, no fire risk. All that's going to have to be done before you go commercial.

However, for an adopter -- a technical adopter, we believe that we can prove chemistry stability, we can prove voltage, we can prove high energy density for a charge and discharge cycle, and we can prove durability now. And those are the things that we're focused on to get through the development cycle for partnerships. And again, for a technical discerning party, we got a lot of the goods. And so a little bit of third-party validation will help us. So anyway, we'd like to see that happen anywhere from 60 days to the next 6 months. But we got to get in go mode, and we're working on go mode as we speak.

So that's our goal. I don't know that I can definitively say that's what's going to happen, but that's the kind of range I'm expecting based on what's happening at the moment.

[Brian Loper]

Yes. And just real quick, is the validation essential for potential clients or something helpful?

[Dennis Calvert, executive]

Yes, that's a good question. That's a very good question. I don't know is the answer really. I mean think about it. We can debate it. If it's a technical buyer, it's a technical buyer, someone that's extraordinarily technical. Most of those people already appreciate what we already have. And so they tend to buy. The problem is the people that are that technical often are not the buyers. Right? And so you kind of [ got ] [ or ] shore yourself up with third-party validation so people can rest and check a box.

So I'd say, yes, you need third-party validation to get those deals done mostly. That doesn't mean -- it's not a hard fast rule. It just means the odds are that's the way it will be. Now we've had calls with major funders in the battery technology industry. And what they say basically is, congratulations. And they say, yes, this is what we're going to do. And they say, well, we're going to need third-party validation. But if what you've said is real, they believe that our technology would be a leader in the world. And I say, yes, we do too. And so now you got to do the work. You got to get through that adoption.

The beauty, too, is that the appetite is so high for this sort of technical advancement that some of those parties who can fund and partner, they want to be here now. Right? Why? Well, because they smell a bargain. They want to get involved early as opposed to late. They want to be there when the moment is right. So some of that conversation is back and forth. It's almost like a collaboration to get to the success mark. Very much like our medical deal. By the time we formed the relationship, 3 companies come together to make it work. That's probably going to be the same for battery tech.

So we'll see. We've got some work to do. That's the earliest in the innovation cycle. So don't forget that. It's also probably the biggest and probably the most urgent press from the world to bring forth what we're bringing.

[Brian Loper]

All right. All right. Certainly. And wrap it up here soon, but we have several questions about the AEC. People are wondering about the install date in New Jersey. What are some expectations [ on ] install target dates?

[Dennis Calvert, executive]

Yes. I don't even know. What's happened is the -- it had some permitting delay, and we got notification on October 31st that the general contractor got the permits necessary to build -- put the building up. It's -- I'm pretty sure it's a tilt-up building. It's not rocket science. And so that will go fast. It does have power, roadway, no HVAC, but ventilation, energy, power that comes in to run all the machines. The devices themselves have been built through an Oak Ridge. They're beautiful, big. There's a couple of skid [ mounts ]. So those get loaded up on a truck and they haul in.

And so I don't actually have the installed date. I know the client is anxious to get going and the general contractor gets paid to make it go. So we should know more soon. Other than that, I don't have a date yet, but we should know more soon. Hopefully, the weather doesn't turn bad in New Jersey and delay us some more, but we've got to figure all that out. It really is a spot. We don't control it. I don't even know how to say it more clearly. They -- Other people control it and they tell us when they're ready. And so we're waiting for them to tell us.

[Brian Loper]

All right. Thank you for that, Dennis. I appreciate you being so thorough in your answers. That's all we have for today.

[Dennis Calvert, executive]

Okay. Well, let's just close out then, everybody. So again, I think the unseen value is the slide of the day. And again, we want to thank you for your support. We're steadfastly marching forward on the technical performance. Don't intend to change our thesis on that, and we'll continue to do our best to leverage these technical assets in a capital conserving way. And 2024 is a record year to make sure we make sure everybody knows that, a big record year coming in just under $20 million.

And we think given the growth trends and these acceptance, we'd love to continue the pace of approximately 100% growth year-over-year. So that's going to put a mark out there for 2025, and we're going to do everything we can to make it happen. So thank you very much, and let me know how we can help you.

[Operator]

This concludes today's conference call. Thank you for attending.