Monday, 18 August 2014
As announced on August 18, 2014, BioLargo, Inc. (OTCQB: BLGO) entered into a manufacturing and distribution license agreement for its Isan® system with Clarion Water, a new operating division of InsulTech Manufacturing, LLC (www.insultech.com), the latter of which has over 20 years of commercial success around the globe representing hundreds of millions in sales of technical products to Fortune 100 companies.
Owned in equal parts by BioLargo, Inc. and Peter Holdings, Ltd., the Isan system leverages the power of iodine to provide the world’s most effective disinfection dosing systems. It has been referred to as one of the most important technical advancements in food safety in the past 20 years. It won a ‘top 50 water company award’ by the Artemis Project in 2010 and a DuPont Innovation Award for its excellence in science and innovation in 2004.
Dennis Calvert, BioLargo's president, stated: "This represents a promising opportunity for BioLargo to bring one of our platform technologies to market. As we work on initiatives to commercialize several iodine-based technologies, it was important to us to find a partner with the manufacturing and distribution experience, capabilities and capital resources to fully realize the potential of the Isan system. The global applications for the Isan system are vast as industries all over the world seek a sustainable and cost-effective solution to disinfect water and control disease.”
Iodine is a powerful, broad-spectrum biocide that is a logical replacement for chlorine in applications involving irrigation supply and post-harvest sanitation. Through its automated and precise dosing system, the Isan system can help increase the quality and shelf life of fruits, vegetables, and other produce, is effective against a host of bacteria and fungi, and helps producers conform to increasingly stringent food safety regulations such as the Hazard Analysis and Critical Control Points (HACCP), which addresses food safety through the analysis and control of raw material hazards.
“The Isan system has been validated through early stage commercialization and comprehensive testing conducted in Australia and New Zealand. Clarion intends to leverage this early work and focus initial commercialization efforts on the vast opportunities for the technology in improving plant quality and shelf life as well as explore additional opportunities for use in select industrial applications. We are excited to bring this technology into the market place through this licensing partnership,” concluded Calvert.
Tom Bercaw, President and Founder of Clarion Water commented, “We are excited about the significant opportunities for the Isan technology around the world. We conducted extensive market research to validate the high global demand for water disinfection systems with the performance and features of the Isan system. The system features a green, environmentally friendly design focused on solving many of the critical issues faced by agriculture, industry, municipalities and others with regard to safe, effective and responsible water treatment. In addition, the Isan system has been proven to enhance food safety and HACCP compliance, which has been an ever increasing concern in the US and abroad. We believe the Isan system is a good fit for our talents, experience and market presence.”
Terms of Agreement
Per the terms of the agreement, Clarion receives the exclusive global manufacturing and distribution rights to the Isan system and use of all historical data to support its commercial focus. Clarion will pay BioLargo a patent maintenance fee of $25,000 per year paid quarterly in arrears, and royalties on revenue equal to 10% paid quarterly in arrears. There are no minimum royalty payments for the first two years, but at year three (beginning July 1, 2016) the minimum royalties are $50,000 per quarter, at year four $75,000 per quarter, and at year five and onward $100,000 per quarter. The intellectual property subject to the license agreement includes all intellectual property related to the Isan System, including all patents, trademarks, proprietary knowledge, and other similar know-how or rights relating to or arising out of the Isan System or the patents related to the Isan System. The agreement contains other terms and conditions typically found in intellectual property license agreements.
BioLargo and Peter Holdings received a royalty advance of $100,000 upon execution of a letter of intent in February of 2014, which will now be applied to royalties received during the first two years of the agreement. BioLargo retains certain marketing rights to help develop clients for Clarion.
Friday, 15 August 2014
The article and related disclosures are available at Seeking Alpha: http://seekingalpha.com/article/2424525-why-current-water-treatment-technology-cant-solve-the-global-water-crisis
- GE, Veolia, Dow and American Water Works are selling billions in water treatment technology.
- All their water treatment technologies work or they wouldn't be selling.
- In spite of effective water treatment technologies, the global water crisis persists.
- The problem is the high cost of current technologies, therefore the answer lies in lower cost.
- Promising new ultra-low cost and highly effective water treatment technology recently revealed.
The global water crisis is enormous. Today there are over one billion people without clean water and the number is soaring as water shortages spread globally, including todeveloped nations like the United States.
If you are reading this article, you are fortunate that you are probably relatively insulated and unaware of the magnitude of this problem and most likely have not experienced the harsh reality of living without adequate clean water.
Insatiable global demand for potable water is fuelling big sales and high growth in the $360 billion water treatment industry. There are a large number of water treatment companies selling a large number of different water treatment technologies, yet our global population is still facing the most serious water shortage in history; and the quality of water even in developed nations is declining and posing serious health hazards.
A few leaders in water treatment are General Electric (NYSE:GE), Veolia (NYSE:VE), Dow Chemical (NYSE:DOW) and American Water Works (NYSE:AWK). A few examples of commonly used water treatment technologies are: Advanced Oxidation Process, Reverse Osmosis, Membrane Filtration, Ceramic Filtration, Ultrafiltration, Carbon Filtration and more.
If these technologies are being sold for billions of dollars they must work. If they work, why is there still such an enormous problem?
The answer is very simple and can be explained with just one word - "Cost"!
These technologies all work, but they simply cost too much. Demand for clean water may be "off the charts", but supply is unable to keep up because significant investment capital is required, and operational costs are high. An example of the high cost just for capital investment comes from the small community of Oceanside, California, where they are exploring replacement of an older water treatment facility that was built in 1949. Replacement today is estimated at close to $100 million. And that does not include the high cost of energy for operation and maintenance.
One example of the high cost of energy for operating water treatment is quoted from the American Council For An Energy Efficient Economy, "municipal water supply and wastewater treatment systems are among the most energy-intensive facilities owned and are operated by local governments, accounting for about 35% of energy used by municipalities."
It's logical that a more cost-effective solution is required to have any meaningful impact on the water crisis. Because they are the only options for solutions, current high-cost technologies will remain in big demand and will generate large sales, but they will not solve the lion's share of the problem. The fact that the magnitude of the unsolved problem is still so enormous; and that so many technologies are offered by so many companies; is a strong statement that they cannot solve the global water crisis.
The Global Water Picture Today
Eighty percent of infectious diseases are caused by contaminated water. Five million people die each year from lack of water or from contaminated water. One quarter of the world population has little or no clean water. By 2020, it is estimated that 76 million people will die from lack of water or from contaminated water.
China has 22% of the world's population, but only 7% of the world's fresh water.
Four hundred major cities in China have serious water shortages. Eighty-six percent of China's rivers exceed pollution standards.
Similar problems exist in Africa, India and the Middle East. Droughts combined with water pollution from agriculture, oil recovery, mining and industry are straining available fresh water in the United States, Europe and other developed nations and are constraining economic and social development worldwide.
Global Pollution Sources
Agriculture is the largest user of water swallowing up 70% of all available fresh water. Runoff water from agriculture is massive on a global scale and is known to pollute the groundwater, rivers and lakes with nitrates and pesticides. An example of what nitrates can do is the recent drinking water scare in Toledo, Ohio when it was discovered that nitrates were leaking into Lake Erie and causing toxic algae blooms to grow and contaminate the drinking water supply. Nitrate problems are expected to become widespread and more apparent as monitoring devices to measure for contaminants become more effective and in wider use.
The U.S Geological Survey Water Schoolclaims, "Before the mid-1970s, it was thought that soil acted as a protective filter that stopped pesticides from reaching groundwater. Studies have now shown that this is not the case. Pesticides can reach water-bearing aquifers below ground from applications onto crop fields, seepage of contaminated surface water, accidental spills and leaks, improper disposal, and even through injection waste material into wells."
Oil sands production creates the majority of oil but requires about four gallons of water to extract each gallon of oil from the sand. The wastewater, "produced water", from oil sands recovery becomes contaminated with toxins and is often stored in tailings ponds until a solution can be found to treat the water to safe standards. In Canada, there are over 170 square kilometres of "tailings ponds" containing about one billion gallons of wastewater. There have been reports of significant leakage from these tailings ponds back into the water supply raising concerns about safety. The large water requirements and produced wastewater are becoming serious constraints on oil sands production.
Fracking requires an average of 4.5 million gallons of water per well and there areseveral hundred thousand wells. The wastewater from fracking called "flowback", is toxic and is often injected back into deep disposal wells that are below the ground water table. According to an article in Scientific American, "Records from disparate corners of the United States show that wells drilled to bury this waste deep beneath the ground have repeatedly leaked, sending dangerous chemicals and waste gurgling to the surface or, on occasion, seeping into shallow aquifers that store a significant portion of the nation's drinking water." The difficulty obtaining the necessary water requirements and safely managing the toxic flowback wastewater are becoming serious constraints on fracking.
Mining operations require large amounts of water for recovering targeted minerals from ore and the wastewater tailings are also very toxic. Typically, these wastewater tailings are placed into tailings ponds where they remain for years with the potential to leak into the groundwater and rivers. Massive toxic spills into the water supply were recently reported in Canada, Mexico, and West Virginia.
Electric power plants are one of the largest users of water, and depending on the nation, coal-fired power plants contribute anywhere from 41% to 93% of electricity worldwide.
Coal fired power plants have been under scrutiny for decades due to the heavy carbon emissions they release into the atmosphere. They are required to use air scrubbers to clean the air, but the water used to clean the scrubbers picks up the toxic contaminants and carries them to the water supply.
According to the NY Times, Coal fired power plants are the biggest producers of toxic waste. Every year, they release millions of pounds of pollutants, including toxic metals like arsenic, boron, mercury, cadmium, lead and selenium, into rivers, streams, and lakes.
Current Water Treatment Technologies In Use
GE offers a number of water treatment methods that produce 1.7 billion gallons of potable water every day. ZEEWEED ultrafiltration membrane technology for oil refineries allows them to reuse up to 95% of their water from recycling. GE's membrane water treatment recycles 100 million gallons of wastewater every day for agricultural irrigation. GE's "EDR" technology turns raw water into drinking water for metropolitan water systems. This video clip by GE explains their role in water treatment.
Referring to the high cost of operating any water treatment technology, Yuvbir Singh, General Manager engineered systems at GE Water and Process Technology, said, "Over the last couple of years we've been really focused on reducing energy consumption in out wastewater treatment systems, because on a lifecycle basis, that's a big part of operating cost for our customers." In spite of high investment and operating costs, demand for GE water treatment products is expected to remain very strong because the need is so great.
GE is a giant conglomerate with diverse interests across a broad spectrum of the economy and the water division is not expected to significantly impact the company's overall, revenues, profits and valuation.
Veolia is a world leader in delivering drinking water solutions to municipalities. Veolia uses basically the same technologies as their competitors to treat water with their Berkal, Actiflo, Multiflo, Spidflow, Filtraflo and membrane technologies. Veolia's Opaline membrane filters are used to remove pesticides, total organic carbon, endocrine disrupters, and micro-organisms. Veolia's water treatment technologies serve over 150 million people with technologies that are similar to the competition, therefore, capital and operating costs are running high. In spite of the high costs of their products, demand for Veolia water treatment is expected to remain very strong because the need is so great. Veolia's overall business is focused on the water treatment industry and therefore will experience substantial changes in revenues, profits and valuation from its activities in this industry.
Dow Chemical Water Division is estimated to treat 15 million gallons per minute. Dow's technologies include Reverse Osmosis, Ultra Filtration, Fine Particle Filtration, Ion Exchange, Adsorbent Resins, Bio Chromatography and Electro-Deionization. Dow also delivers Reverse Osmosis Filtration for Desalination. In spite of high operating costs for their water treatment technologies, demand for DOW water treatment products is expected to remain very strong because the need is so great.
Dow Chemical is a diversified chemical company with broad interests in many sectors of the economy. Because Dow is not focused on water treatment, the company is not expected to experience large variations in revenues, profits and valuation resulting from water equipment sales.
American Water Works offers water and wastewater services to approximately 1,500 communities in 16 states. It operates approximately 80 surface water treatment plants; 500 groundwater treatment plants; 1,000 groundwater wells; 100 wastewater treatment facilities; 1,200 treated water storage facilities; 1,300 pumping stations; 87 dams; and 47,000 miles of mains and collection pipes.
American Water Works offers traditional filtration systems that have no significant competitive advantage over the competition. High operating costs for their water treatment technologies will be a constraint on sales, but demand is expected to remain very strong because the need is so great.
American Water Works is focused on water treatment and is expected to experience significant changes in revenues, profits and valuations from water treatment sales.
Promising New Technology May Offer Solution
An exciting new technology surfaced recently when an emerging company, BioLargo, Inc. (OTCQB:BLGO) announced a breakthrough in water treatment. This short video clip demonstrates the AOS Filter (actually an electro-chemical reactor and filter) that has been validated by the University of Alberta and proven to decontaminate water from recalcitrant contaminants in seconds versus hours required by current technologies, and at only 1/20th the cost of the closest competing technology.
On January 21, 2014, BioLargo issued the press release: "BioLargo Successfully Concludes Proof of Concept and Progresses to Pilot Phase for Its Oil Sands Decontamination Project With University of Alberta"
On May 15, 2014 BioLargo issued a second press release: "BioLargo's Patented AOS Filter Receives Additional Validation for Use in Water Treatment" Dennis Calvert, BioLargo's president, stated: "BioLargo's AOS Filter has been shown to reduce total acid-extractable organics in water at a rate never before demonstrated commercially. Based on proof of claim there is a belief BioLargo may have the lowest cost sustainable solution for the oil sands process-affected water. Having tested our technology, the esteemed University of Alberta is entering the AOS Filter industrial pilot-scale-testing phase, which we expect to confirm its commercial viability to treat oil sands tailings ponds and then eliminate the need for them on a go forward basis. Oil sands are commonly considered one of the most difficult water contamination situations. As such, this pilot project is expected to provide the groundwork for additional water treatment applications, including refining, fracking, remediation, agriculture and industrial waste among others."
Cash is always a big issue with all microcaps and BioLargo is no different. The company reported that cash increased from $92,457 on December 31, 2013 to $373,373 on March 31, 2014. Current Assets increased from $126,146 on December 31, 2013 to $446,459 on March 31, 2014. Current Liabilities decreased from $732, 157 on December 31, 2014 to $508,652 on March 31, 2014. The number of shares outstanding increased from 71,357,532 on December 31, 2013 to 76,409,578 on March 31, 2014 indicating the company may have raised capital in that period.
The company has multiple profit centers and is not reliant on the AOS Filter and has already reported beginning sales with the U.S. government that could become significant.
Risk tolerant investors will find BioLargo attractive because they have the potential to offer a game-changing solution that is needed to help solve the enormous global water crisis. If they are successful, the rewards could be enormous.
The current water treatment technology offered today by the world's largest companies cannot solve the global water crisis because their technologies are not cost-effective. The global leaders of water treatment have all of the tools they need to deliver massive scale to meet the massive global needs, but their high capital investment and high operating cost is holding them back. The industry yearns for low cost solutions.
In spite of the high costs of their products, Veolia, and American Water works are strong buys because their technologies are the only ones available and serve the purpose well enough to sustain strong and fast growing sales in a world desperate for clean water. GE and DOW are large conglomerates that will benefit to a lesser degree, but are very sound financially. BioLargo is a compelling investment consideration for risk-tolerant investors because the newly announced AOS Filter has the potential to revolutionize the way wastewater is treated and reward investors with exceptional returns.
BioLargo's new AOS Filter technology may be able to solve the global water crisis to a much higher degree than today's technologies because it is so much cheaper and cost-effective.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.
Thursday, 3 July 2014
Water is Liquid Gold: 'The hottest commodity in the world'- CNBC article- Points to how BioLargo's AOS Filter will play a big role in this future.
Water is one of natural resource required to sustain all life on the planet, making it already the most important commodity on Earth.
Although it has been fought over, sold, diverted, dammed, claimed by governments and overseen by authorities, Wall Street has never really gotten its hands in it the way it has with, say, oil.
Looking ahead into the next quarter century, clean drinkable water is expected to become more scarce as the human population grows and climate change shifts the shorelines and weather patterns.
So the question is, Will this most precious commodity become a traded resource that will be bartered for, and traded on a futures exchange, much like oil, corn or gold?
"It's intuitively appealing to talk about water as a traded asset. If you look at projections over the next 25 years, you'll see that global water supply and demand imbalances are on track to get worse," said Deane Dray, a Citigroup analyst who heads up global water-sector research. "The majority of the world population is living in water-scarce and water-stressed regions of the world. "
But Dray and other experts say trading water will be difficult, as water supply is ultimately a local issue all over the world.
"I don't see how you would do it. Water's regulated locally. It's regulated in every state. You can't put a pipe in a waterway and start selling it somewhere else," said Robert Kennedy Jr., president of Waterkeeper Alliance, which promotes watershed protection globally. "The waterways are owned by the people of the state."
History is full of examples where water diversion led to wars or environmental tragedies. The former Soviet Union diverted rivers for crops in the 1960s, ultimately drying out the Aral Sea in Central Asia, where fishing boats are now stranded on dry land.
"Anything that ships water as a commodity out of a watershed would be extremely disruptive environmentally, and it would be disruptive to democracy and the public trust. We've already seen water wars all around the world because of companies trying to do that and governments trying to do that," Kennedy said.
The Middle East has seen many conflicts over water, including in Syria. The Euphrates River has long been a source of conflict between Turkey and Syria, and in the last month Turkey turned off the tap, affecting water flow to Syria and Iraq.
Kennedy said Western law, dating back to Roman times and even the Magna Carta, stated that water belongs to the people.
"Water is a multitrillion-dollar industry now, according to the World Bank, and because it is a commodity that is vital for human life and we're experiencing global shortages because of global warming and population growth ... it's something [that] people will try to figure out a way to commoditize and sell," Kennedy said. "The best measure of how a democracy functions is how the government distributes the goods of the land."
That would include waterways, fisheries, wildlife and public land.
"Economists like the idea of trading [commodities] freely. The process increases economic efficiency," said Professor John Reilly, co-director of the Joint Program on the Science and Policy of Global Change at the Center for Environmental Policy Research at MIT Sloan School of Management.
"In terms of large-scale international trading of water, we already have bottled water moving around. I think its more likely we will see desalinization and other sorts of things—such as water reclaimed, cleaning up and recycling of water—before we see large-scale trading of massive amounts of water, because it would be expensive to move," said Reilly. He said a solution to lack of water may be to move activities that require water, like crop production and manufacturing, from dry areas to wetter regions.
Necessity the mother of invention
Richard Sandor, CEO of Environmental Financial Products, said he believes obstacles will be overcome, and he fully expects to see trading of water via financial instruments in the next five to 10 years—something he's been thinking about for quite some time.
Sandor was behind the creation of interest-rate futures while working as an economist at the CME, and he also was behind the Chicago Climate Exchange, a North American trading system for greenhouse gases, now owned by ICE.
"I think this one is going to require invention. The physical limitations of piping water is a problem that will require creativity," he said.
The more important issue is how to price such financial instruments. As Sandor explained, "The delivery from futures is very small. They're really meant to keep the pricing honest, not to change ownership. The delivery and the threat of delivery is what keeps a price honest and fair, at least on the derivatives side."
Sandor said water trading would have to based on the dynamics of regional markets, and he's been working up a plan. "I think we're going to have to invent something that takes into account the varying geographical differences. We'll have to figure that out," he said.
The U.N., in its 2014 report on world water demand, said demand is expected to grow significantly with the largest growth in the emerging world. Agricultural water consumption could grow by about 20 percent globally by 2050, not counting new efficiencies or conservation.
Water demand for energy could increase by about a third in the period between 2010 and 2035, with non-OECD countries accounting for 90 percent of the growth. The OECD projects fresh water will be increasingly strained with an additional 2.3 billion people living in areas that are highly water stressed, like North and South Africa and South and Central Asia, by 2050.
At the same time, the U.N. paper notes that climate change is impacting surface water, and dry regions should get drier while wet regions will get wetter. The U.N. notes there's also evidence groundwater supplies are diminishing, with an estimated 20 percent of world aquifers overused. Groundwater abstraction is increasing at a rate of 1 percent to 2 percent a year.
"Water is always a local issue. It's prevalent in areas you don't want it, and that's flooding, and it's scarce in areas you do need it, and that's overly populated areas and arid areas. Water is costly to transport. It costs more to pipe water than it does to pipe oil," Dray said.
As for pricing, every country values it differently, and there's no uniformity at all. For instance, Dray said, water is free in Ireland. "They consider it a right. That's part of what you have to overcome. Twenty-five years is a long time for some of these notions to change," he said.
In contrast, Danish consumers pay the most for water—at an estimated average $3.88 per cubic meter, and $8.45 when wastewater charges are included, according to Global Water Intelligence. In the U.S. the average is about $1.48 per cubic meter of water, and in Germany $3.08. Sandor points out that these are the prices of water and infrastructure, not the price of water alone.
Dray also noted that water is the only natural resource that is ingested. "Twenty-five years is a lot of time for things to change. Water demands will increase at a faster rate than supply. Some of the notions about and preconceptions about water being a right could change," he said.
"I do believe [water] will be the commodity of the 21st century."
-Richard Sandor, CEO, Environmental Financial Products
Mark Fulton, founder of Energy Transition Advisors, said the evolution of markets and the changes in the climate over the next 25 years could bring about new systems for trading water and other environmental rights. Fulton is an economist with a background in climate change and markets. He also is a senior fellow with Ceres, a nonprofit that aims to advance sustainability practices globally.
"Global warming is the key driver of climate change, but one of the key aspects of climate change is climate variability," he said. "In a sense, we're going to see more disruption to natural systems, and therefore the property rights over those natural systems are going to have to be properly managed."
Fulton noted there is trading of water rights in Australia and, to a lesser extent, in the Western U.S.
"There are plenty of trading-based water systems. There are versions of them. Will they make it to exchanges? The more this happens and the more it becomes accepted, the more it will become mainstream," Fulton said.
The new liquid gold
Governments may also provide the solution of pricing and distribution. "A couple years ago it was a big focus in China. There was the big question of Yangtze and Yellow Rivers, and they were managing by telling people who would get what and where. They took central management over it," Fulton said.
The drought in the West has put a spotlight on the problems of managing water resources. Climate change and overuse is making the Colorado River supply tight and could result in severe shortages. The Colorado River Compact was made between six of the seven river basin states in 1922, and while it's been revised, it still pits the southern agricultural regions of California, especially in the Imperial Valley, against residential centers in other states. The California farms are dependent on the Colorado River, and so is the rest of the country, since 80 percent of winter vegetables are grown there.
One of the reasons trading water like a commodity makes sense to some is that it is so tied to agriculture and energy. Water is not only used to grow crops, it is used to create hydroelectric power and for hydraulic fracturing. Energy is used to pump water and harvest crops, and water is critical in cooling power plants.
"I do believe it will be the commodity of the 21st century," said Sandor.
"We think we know how to do it in theory. We have a lot of details to work out. I've been hearing this for years. 'You could never commoditize interest rates. That's a stupid idea.' ... I think in fact it can be done," he said.