Thursday, 30 September 2021

Letter to Stockholders: BioLargo Positions for Expansive Commercial Reach Through Strategic Partnerships

Westminster, CA – September 30, 2021 – BioLargo, Inc. (OTCQB:BLGO), a developer of sustainable cleantech technologies and full-service environmental engineering company, released a “Letter to Stockholders” discussing the development of several key strategic partnerships and other business initiatives aimed at expanding the company’s commercial reach. The Letter to Stockholders is available below.

Dear Stockholder,

I write to provide an update on the progress that BioLargo and its business units have made in positioning the company to be the go-to provider for innovative, effective, scalable solutions to challenging environmental problems. I also want to share some insights into the strategic partnerships under development and how they will help grow our top-line revenue and achieve positive cashflow in our future.

In this letter, we won’t be able to cover all the details that would meet the standards of our periodic reporting. That level of detail will have to wait for our next quarterly report, which will publish in November. In some situations, we are just now seeing the early launch of an important venture, and in some cases those ventures need to mature before they will become material. Nonetheless, these are important for you, as a BioLargo stockholder, to understand and be apprised of, as we believe they hold great promise for a profitable future.

For many of these initiatives, a common theme is that these partnerships are intended to create opportunities for revenue channels for our patented technologies without requiring dramatic expansion of BioLargo’s infrastructure and without requiring significant intake of new investment capital.

In many cases, these initiatives may require that our partner secure capital or dedicate financial resources to execute the plans described below. They are also subject to the inherent risk of execution, regulatory barriers, competition, and other customary business risks. Be assured that as each of these initiatives advance, we will update the information with more details.  

Let’s jump in:

Garratt-Callahan Product Launch

We are launching a new wastewater treatment product with Garratt-Callahan, the largest privately owned water treatment company in the United States, founded in 1904. In early 2021, Garratt-Callahan enlisted the help of our engineers to complete the design of a device, based on Garratt-Callahan’s patented process, that would salvage usable water from commercial facilities’ wastewater streams. Garratt-Callahan’s goal for the product is for BioLargo to provide manufacturing, and Garratt-Callahan to sell to its new and existing customers. 

Over the next few weeks, we will be finishing manufacturing the first units for final operational testing to verify its functionality before its full launch in early 2022. Garratt-Callahan aims to deliver 25-35 units of this new product to its customers in the first year alone, with each unit selling in a range that we believe will be competitively priced in the $100,000-$500,000 range.  Additional opportunities with Garratt-Callahan, such as product development, manufacturing, and the sale of other BioLargo products, are being discussed.

Garratt-Callan issued a press release about the partnership that contains this quote from their Technical Project Manager, Kelle Zeiher Ph.D: “Garratt-Callahan was delighted to partner with BioLargo on a liquid discharge and waste minimization project. The heart of the process — developed and patented by Garratt-Callahan scientists — needed the expert equipment and manufacturing capabilities that BioLargo adds to bring it to fruition. The resulting collaborative breakthrough, with its modular design, allows small- and medium-volume manufacturers to approach the industrial gold standard of ‘zero liquid discharge’ without the million-dollar capital investments often required by traditional technologies.”

PFAS Treatment Projects

Our PFAS chemical water treatment device, the Aqueous Electrostatic Concentrator (AEC), is making progress towards a commercial launch that we expect to occur in the first half of 2022. We recently launched a formal testing program (https://www.biolargoengineering.com/biolargo-pfas-testing-program/) that we believe will help develop market exposure for the AEC in advance of its commercial launch.

The PFAS testing program provides a valuable service to water agencies by testing their PFAS-contaminated water to help them identify, design, and optimize the best set of treatment equipment, typically including an AEC, for their specific PFAS contamination challenge. The service, which is the first stage of BioLargo’s multi-stage commercial process for its PFAS treatment business, assures clients that subsequent on-site piloting of the AEC and other PFAS treatment equipment will be successful.

Our first two client opportunities are with a leading municipal water agency in California and a U.S. federal agency. Additional client opportunities of similar magnitude are in the pipeline. As the first step in serving these clients, we have recently received the necessary quantities of their PFAS-contaminated water to begin processing through our PFAS testing program as the first step in our piloting and proposal process.

PFAS (per- and poly-fluoroalkyl substances) are a class of man-made chemicals that contaminate all types of surface and groundwater sources, including drinking water, across the United States. The chemicals have been linked to myriad health problems, spurring the Federal government to legislate new drinking water standards as part of their PFAS Action Act of 2021, which is currently in the Senate. Consequently, this market is estimated to grow to a size of up to $80 billion a year, and our technology could become leading solution in the market based on its claims of cost-efficiency and low waste production. The size of projects for this technology are expected to range from $500,000 to as high as $30 million.

To access this market quickly and effectively, we are bringing on board experienced water industry sales representatives, and will partner with other water treatment equipment and service providers who will act as distributors and re-sellers for the AEC. We intend to secure those partnerships after the next phase of our commercial launch, the execution of initial commercial trials, is complete.

We will soon be showcasing the AEC with a demonstration unit at the WWOA (Wisconsin Wastewater Operators Association) trade show in La Crosse, WI, as well as at the Pollutec wastewater conference in France, both of which occur in October of this year.

New Consumer Product Partnership

Over the past six months, we have developed a relationship with a company founded by highly accomplished industry executives from the consumer packaged goods industry who have executed successful launches of at least five blockbuster products, that intends to launch a new consumer product based on our patented BioLargo technology. Our partner, Ikigai Holdings, LLC, has completed preliminary testing, developed the brand, and is in the process of developing television commercials and other marketing materials. It intends to begin test marketing the first product in the coming weeks, and assuming that test marketing phase is successful, will launch the product with the goal to sell to the major retailers in the United States.

Our agreements provide that we will be the manufacturer of the new product (or products), and they will finance and manage roll-out, distribution, and marketing. We are excited about the potential for this partnership to create significant new revenue channels for BioLargo, but of course, at this point, as confident we are in our new partners, our legal advisors remind us that we cannot predict the future or whether the new product(s) will ultimately find success in the marketplace. With that caveat in place, our partners tell us that the initial television launch will provide highly reliable data indicating the size of the consumer market opportunity. Based on these results, a go-to-market strategy will be determined, and production will be planned. 

Jane Pak, Co-Founder of Ikigai Holdings, offered us this quote: “Creating a mass-market brand begins with finding superior products with unbeatable claims. Our research validated that the current leading odor eliminating products are inferior to the CupriDyne formula and we’re thrilled to have the opportunity to disrupt the consumer odor elimination category with such a compelling offer.”

Aquaco Partnership to Launch AOS in California Agriculture Market

We have signed a “memorandum of understanding” with Aquaco Resources, Inc., to sell water treatment equipment and provide engineering solutions for its customers. Founded by Pat McEntee, a former executive at Oracle, IBM, and ABC/Disney, Aquaco is dedicated to delivering best-of-class technical solutions to manage the water needs of agriculture and food processing industry clients. Its marketing strategy involves developing strategic alliances with leading universities, cities, industry associations, researchers and multiple technology and service companies to deliver modern, long-term, practical solutions for the issues of water scarcity, water quality, delivery and reuse which are crucial to every agriculture producer in California. Aquaco will also offer its customers flexible long-term financing options and dedicated local services to ensure customers’ water security into an uncertain future.

Aquaco is drafting a series of agreements that would ensure BioLargo and its engineers an important role in its operations. Aquaco anticipates that once the venture is operational, it will expand nationally and at capacity, its goal is to generate revenues in excess of $100 million annually after at least a 4-5 year ramp-up period.

Other Important Commercial Progress

While some of this has been reported in recent months, we think it prudent to highlight the ongoing organic growth of business and new relationships at BioLargo below.

South Korean joint venture: Our joint venture with one of the leading wastewater treatment technology companies in South Korea is beginning to make progress after experiencing delays during COVID. Our partners in South Korea continue to press ahead toward meaningful success with comprehensive client testing, commercial validation, and initial sales.

Cannabis industry: Our distributor’s work in the cannabis industry was likewise slowed due to the pandemic-related closing of trade shows, but our partners are confident that their investment in marketing and branding efforts will support expansion of their “Cannabusters” brand of our odor-control technology, especially as that industry returns to trade show activity, which is a key facet of marketing products such as this.

CupriDyne Clean: Very recently, ONM Environmental was recently notified of an award for a multi-year contract to be the exclusive supplier of air quality control chemistry to a major municipality. We did experience some slowdown in sales of our odor and VOC control operations (ONM Environmental) in early 2021, due in large part to the COVID pandemic, but we are now seeing that operation return to more consistent base-line revenues. Their work with some of the biggest customers in the industry shows signs of expansion with more bids, more third-party engineering firms specifying our solutions, and more big customers now realizing the depth of our capabilities and services.

Engineering division: We announced in June that our engineering division, BioLargo Engineering, Science & Technologies (BLEST), had secured over $1.2 million in new contracts with external clients. As you might imagine, BLEST is in growth mode and will require more team members given the significant business opportunities already under way. They are working to expand staffing and increase their revenues, and at the same time are hard at work helping to launch our AOS and AEC water treatment systems.

AOS pilot project: We are excited about our ongoing pilot for our Advanced Oxidation System (AOS) water treatment system at the municipal wastewater treatment pilot near Montreal, Quebec. Just last week, the scientists operating the pilot confirmed it removed pharmaceutical micropollutants and simultaneously disinfected the wastewater, while consuming minimal electricity - a remarkable and unique value proposition in the wastewater treatment world. We just recently produced a short film highlighting the AOS pilot project in Quebec, which is operating and collecting positive results. Watch here: https://biolargo.blogspot.com/2021/09/biolargo-aos-water-treatment-technology.html   

Our scientists have been invited by the Canadian Trade Commissioner Service to showcase our AOS and AEC technologies at the Pollutec international environmental conferences and trade show (https://www.pollutec.com/en-gb.html), in France this October, where our team will have the opportunity to talk about these breakthrough technologies and their role in water treatment to potential clients in the European market. In particular, the team will focus on marketing these technologies as solutions to emerging water contaminants like micropollutants and PFAS.

Clyra Medical: Finally, our subsidiary Clyra Medical Technologies, which is commercializing medical products based on our patented technologies pursuant to a license agreement, recently launched a new product, Bioclynse, the first efficacious, safe, and long-acting wound irrigation solution that can be used throughout the entire surgical procedure, with no need to rinse out. Clyra has recently landed its first repeat orders from hospitals using the product, and Clyra management is excited about its future. Help spread the word about this great product with medical professionals, as we believe this product and products stemming from it have the potential to improve best practices in surgeries into the future. Clyra is organizing resources and relationships to expand its marketing and sales efforts for this great product.

Financial Achievements

We have current financing in place to meet our short-term capital needs as we continue to grow our business and convert the projects described above into assets and partnerships that generate significant revenue, cash flow, and ultimately profits.

Our balance sheet has improved dramatically. As previously reported, we have continued to reduce our debt, including the payoff of $406,000 in convertible debt due in August 2021 through the payment of cash and equity, as reported on Form 8-K filed with the SEC on May 19, 2021. Since December 31, 2019, the company has reduced its debt by over $4 million.

Other than debt owed by our partially owned subsidiary Clyra Medical, and a $50,000 fixed-price convertible note due in 2023, only Small Business Association loans through the PPP and EIDL programs totaling $464,000 are outstanding, and of that, we’ve applied for forgiveness on $314,000, and the remainder is low interest and paid over 30 years.  

Concluding Remarks

The management team at BioLargo knows that to achieve its objective of being a go-to provider of environmental solutions and become a hub in the marketplace, we have to complement our technical and executive excellence with the right strategic partners who can help increase our commercial reach. The relationships that I have detailed in this letter demonstrate our capacity to implement this approach.

As a result, both myself and our management team have never been more excited and optimistic than we are today. We know that we have the talent (in our expert science and engineering team), the necessary tools (in our unparalleled technologies), and the opportunity (in market needs) to convert this company into a cleantech powerhouse.

With the formation of these new partnerships and the launch of the ventures you’ve read about above, we are very close to unlocking the potential of our technologies in our pursuit to make life better. We have other high-impact business opportunities that are in various stages of development, and we are excited to provide more information about each of these initiatives as they unfold.

Sincerely,


Dennis P. Calvert

President & CEO

BioLargo, Inc.

 

About BioLargo, Inc.

BioLargo, Inc. (OTCQB:BLGO) invents, develops, and commercializes innovative platform technologies to solve challenging environmental problems like PFAS contamination, advanced water and wastewater treatment, industrial odor and VOC control, air quality control, and infection control. With over 13 years of extensive R&D, BioLargo holds a wide array of issued patents, maintains a robust pipeline of products, and provides full-service environmental engineering. Our peer-reviewed scientific approach allows us to invent or acquire novel technologies and develop them to maturity through our operating subsidiaries. With a keen emphasis on collaborations with academic, municipal, and commercial organizations and associations, BioLargo has proven itself with over 80 awarded grants and numerous pilot projects. We monetize through direct sales, recurring service contracts, licensing agreements, strategic joint venture formation and/or the sale of the IP. See our website at www.BioLargo.com.

Contact Information

Dennis P. Calvert

President and CEO, BioLargo, Inc.

888-400-2863

Safe Harbor Act

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include without limitation those about BioLargo’s (the “Company”) expectations regarding the impact of the COVID-19 pandemic; anticipated revenue; and plans for future operations. These statements involve risks and uncertainties, and actual results may differ materially from any future results expressed or implied by the forward-looking statements. Risks and uncertainties include without limitation: the effect of the COVID-19 pandemic on the Company’s business, results of operations, financial condition, and stock price; the effect of regional economic conditions on the Company’s business, including effects on purchasing decisions by consumers and businesses; the ability of the Company to compete in markets that are highly competitive and subject to rapid technological change; the ability of the Company to manage frequent introductions and transitions of products and services, including delivering to the marketplace, and stimulating customer demand for, new products, services, and technological innovations on a timely basis; the dependency of the Company on the performance of distributors of the Company’s products. More information on these risks and other potential factors that could affect the Company’s business and financial results is included in the Company’s filings with the SEC, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

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