Monday, 29 August 2016
Why BioLargo Is Hot and Why Shares May Get Hotter
Investors have waited patiently as BioLargo, Inc. (OTCQB: BLGO) spent millions of dollars and many years developing a world-class water treatment technology that promises to impact the world for good. In much of the world, water equates to life, and the need for clean water has never been so critical as now. Supply challenges are exacerbated by drought, pollution from industry and agriculture, and in many cases from an aging or absent sanitation infrastructure. In developing nations, 80% of all infectious disease is caused by lack of clean water. Scores of new technologies attempt to address this issue; technologies like ultrafiltration, reverse osmosis, UV, and others help, but they are expensive and in many cases they are not sufficiently effective.
BioLargo recently showcased, to a group of stakeholders, the first pre-commercial prototype of its AOS Filter System, billed as the lowest cost and highest impact scalable clean water technology. BioLargo’s patience in positioning the technical claims for acceptance by leading researchers, grant agencies and industrial experts is paying off and the market has taken notice.
The following chart (Figure 1) illustrates that BioLargo shares had been trading quietly under the radar until August 8, 2016 when an unexpected wave of buy orders spiked the share price to over $1.00. The influx of buy orders began to build a few days before the company showcased their first commercial prototype of what could be the biggest breakthrough in the history of the $360 billion water treatment industry.
Figure 1: BioLargo share prices spiked in August 2016
On August 15, 2016, a team of BioLargo Water researchers unveiled BioLargo’s breakthrough AOS Filter, pictured here. The AOS Filter is sensor driven and harbors a cutting-edge monitoring system that enables the AOS Filter to disinfect and decontaminate polluted water more effectively and at lower costs than all competing technologies.
BioLargo Water researchers revealed the results of hundreds of studies showcasing the AOS Filter’s water purification capabilities. This robust technology eliminates water-borne bacteria and pathogens more effectively and at a lower cost than competing advanced water treatment technologies, and can boast a safe and environmentally friendly build and operation.
The company’s Chief Science Officer, Kenneth R. Code, commented, “I am particularly pleased with the expert data collection, and our presentations to potential strategic partners also help affirm scalability of the AOS technology to industrial and municipal scale.”
Dennis P. Calvert, the President & CEO of BioLargo, added, “We are marching forward to impact the world for good. Science confirms our scalable AOS Filter system is more effective at disinfection than any known competing technologies at less than < 1/20th the energy (cost). Now that the Alpha unit is complete, we are able to more fully demonstrate its scalability to meet heavy industrial and municipal client needs. We are thankful for the substantial support from the Canadian federal and provincial systems as well as industry members that continue to directly support our important work. We are also thankful for our shareholders that consistently support our mission to ‘Make Life Better’ and deliver value to our stakeholders. The best of times for BioLargo is ahead.”
Industry Sectors in Need of the AOS Filter System
Municipal Drinking Water
A New York Times analysis of EPA data on drinking water quality points to a tremendous need for improvements to current water treatment infrastructure, as suggested by the numerous violations of the Safe Drinking Water Act that have occurred in all 50 states American states. Shockingly, over the past 5 years more than 20 percent of the nation’s water treatment systems violated key provisions of the Safe Drinking Water Act. In the state of New York, 205 water systems violated the law by delivering tap water containing illegal amounts of bacteria since 2004. Many municipal water facilities in the United States use outdated technology and are need of considerable renovations.
Some of the large water treatment companies that provide water services to millions of U.S. residents are: American Water Works Company, Inc., (NYSE: AWK), American States Water Company (NYSE: AWR), Aqua America, Inc. (NYSE: WTR) and Veolia Environment S.A. (OTC: VEOEY).
Steve Mueller, CEO of Southwestern Energy Company (NYSE: SWN) estimates that water transportation, typically trucking, for a single well costs around $1.5 million, equivalent to 25% of the cost of an average Marcellus well ($6M). When oil was trading at $80-$100 per barrel, there was ample room to pay the high cost of water management, but now that the price has fallen dramatically, profit margins are upside down and high water management costs are exacerbating widespread industry losses.
The ability to recycle produced water on-site for major operators such as Exxon Mobil Corporation (NYSE: XOM), Halliburton Company (NYSE: HAL), Schlumberger Limited (NYSE: SLB), Chevron Corporation (NYSE: CVX) and Royal Dutch Shell plc (NYSE: RDS-A) could shrink transportation costs, source water costs, and disposal costs. Any technology such as the AOS Filter that could cost-efficiently enable water recycling on-site, could slash costs and greatly improve the bottom line for many producers currently suffering big losses due to low oil prices. Not only that, but it could also solve the difficult problem of pollution from Produced Water.
Increasing concerns over the detrimental transfer of invasive marine species across the world’s oceans through the transport and disposal of ballast water by large vessels have prompted the International Maritime Organization and the United States Coast Guard to impose regulations for the treatment and discharge of ballast water.
An estimated 65,000 ships, carrying over 400 gross tons, must be fitted with approved Ballast Water Treatment Systems, “BWTS”, within the next 5 years. The approved systems must disinfect seawater without adding any toxic elements to the discharged water. Global Water Intelligence estimates that the average cost for each system exceeds $750,000 and the total cost to outfit every vessel will be about $50 billion.
The AOS Filter is the highest impact and lowest cost technology capable of solving this problem, and is expected to provide the best solution to maritime operators such as DryShips, Inc. (NASDAQ: DRYS), Navios Maritime Holdings, Inc. (NASDAQ: NM) and Diana Shipping, Inc. (NYSE: DSX).
In an effort to reduce the incidence of foodborne illness, the U.S. Department of Agriculture’s Food Safety and Inspection Service, FSIS, announced strict new federal standards to reduce Salmonella andCampylobacter in ground chicken and turkey products, as well as in raw chicken breasts, legs, and wings.
The new regulations took effect July 1, 2016 and have the potential to impact sales of poultry processing operations of Tyson Foods, Inc. (NYSE: TSN), Pilgrims Pride Corporation, (NASDAQ: PPC), Sanderson Farms, Inc., (NASDAQ: SAFM), Hormel Foods Corporation, (NYSE: HRL), Perdue, Cargill, Smithfield Food, Inc., Conagra Foods, Inc., and every other poultry processor. Researchers at the University of Alberta confirmed that the AOS Filter could be highly effective in reducing bacterial cross-contamination at the chill-tank step of poultry processing, a common practice whereby poultry is submerged in cold water to cool it. The company is in discussions with large poultry processors.
The AOS Filter has broad applications to be a centerpiece of a complete water treatment system as well as a modular component of, or enhancing addition to systems that may already be installed that can also be used for:
BioLargo is no one-trick pony. The company has been busy developing its technology and products for nearly a decade and it has a number of huge business opportunities that are each finding their way to market and industry acceptance.
CupriDyne Clean™ provides Unsurpassed for Odor Control
Just this May this year, BioLargo announced that its patented Cupridyne Clean outperforms every product in the (considerably large) industrial odor control sector and that the company had secured its first customers. BioLargo is expanding its sales efforts and trials that are either soon to launch or are already underway with several industries voicing a sizable unmet need.
iSan And IoMax For Poultry and Livestock Drinking Water
BioLargo’s licensee, Clarion Water, announced EPA approval for the sale of IoMax for use in poultry feed water with plans to expand into all livestock production and other agriculture-based uses. IoMax™ is highly effective in killing pathogenic microorganisms such as bacteria, viruses, fungi and potentially protozoa in water. IoMax™ is supplied through Clarion’s patented iSAN™ delivery system that doses aqueous iodine into water systems with precision.
Advanced Wound Care
BioLargo is targeting 2017 for the release of its new Advanced Wound Care products. The $6 Billion wound care industry is fragmented, with several dozen companies competing for a share of this fast-growing market. Smith & Nephew (NYSE: SNN), Derma Sciences (DSCI), Osiris Therapeutics, Inc. (OSIR), Vericel Corporation (VCEL) and Johnson & Johnson (NYSE: JNJ) are some of the companies providing wound care products to this large industry.
With the seed capital already in place and a $5 million post FDA credit facility committed by its backers, BioLargo’s subsidiary Clyra Medical Technologies has the financial resources to complete its preparations and apply for FDA approval to market its Advanced Wound Care products. When successful, Clyra has the potential to gain a meaningful portion of this substantial market that is in need of better products and technologies.
Why Is BioLargo Hot and Will Shares Get Hotter?
Its technologies have an undeniable role to play in massive commercial markets. Commercialization milestones are rapidly being met for many of the company’s innovative products, and notably itsCupriDyne Clean Industrial Odor control product has decisively found its pathway to success. As Dennis Calvert stated in his most recent quote, “The future is bright for BioLargo”.