BioLargo, Inc. (BLGO) Earnings Call Transcript & Summary

Greetings, and welcome to the BioLargo First Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this call is being recorded. I would now like to turn the call over to your host, Mr. Brian Loper, Investor Relations. Sir, the floor is yours.

Thank you, operator. Good afternoon, everybody. Welcome to the call. Glad to have you here. The 10-Q and 8-K reports are currently being filed with the SEC. This call is being webcast and available for replay. In our remarks today, we may include statements that are considered forward-looking within the meanings of securities laws, including forward-looking statements about future results of operations, business strategies and plans, our relationships with our customers, market and potential growth opportunities. In addition, management may make additional forward-looking statements in response to your questions. Forward-looking statements are based on management's current knowledge and expectations as of today and are subject to certain risks and uncertainties that may cause the actual results to differ materially from the forward-looking statements. A detailed discussion of such risks and uncertainties are contained in our most recent Form 10-Q, 10-K, Form 8-K and other reports filed with the SEC. The company undertakes no obligation to update any forward-looking statements. And with that, I now hand the call over to BioLargo's Chief Executive Officer, Dennis Calvert.

Okay, Brian, thank you very much, everyone. I appreciate you joining us for the call, and we're going to cover a lot of territory quick as usual. And so as some of you may not know our story, we're going to have a very brief introduction, of course. So we make life better, focused on sustainable innovation for human health, environment, very purpose-driven org. And of course, we have developed an innovation engine, and that innovation engine has been now inventing and developing technologies for almost over 16 years. We've covered the forward-looking statements. Of course, they are real. It's important to rely on the risk factors. You can refer to the Q, the K, the annual report, which was just recently published with a robust list of risk factors that are very worthy of consideration because, as we say, we overcome risk every day and the challenges can be daunting. Who are we? Innovators, scientists, entrepreneurs, engineers, passionate about making a difference for sustainability and human health, driven by this purpose, very much a purpose-driven organization. We focus on best-in-class solutions. If we don't believe they're #1 or have a chance to be #1 in their category, then we don't focus on them. So we invest in innovating transformative technologies. We focus on problems without a good solution, and we create a capital conserving strategy that's aimed on partnerships and spin-outs to capitalize on our IP and create value for our stockholders. At the engine, there's a parent company that's capital strategy, direction, sort of the glue that binds. Of course, we've got a great engineering group based in Oak Ridge, Tennessee. We still have the R&D group, of course, in Edmonton, Canada, and we're investing heavily in the operating units, which take products to market. ONM Environmental is focused on odor and VOC control. Clyra is a medical device company focused on the cutting edge of use of antimicrobials and products used for advanced wound care, wound care, infection control. The equipment group is primarily focused on PFAS, but there's a number of assets in that portfolio. Some are slow. Some are significant. They're finding their way to market, and we've been investing heavily there for a couple of years, and we're really, really excited about that. We're going to talk deeply about that. On the energy side, BioLargo Energy is focused on a sodium battery as an alternative to lithium. We're just in a validation stage. We're going to talk about that validation work that we're doing right now. And we're very excited about the potential growth and impact for that emerging technology as an alternative to lithium focused on non-lithium-based long-duration energy storage battery technology, one of the fastest-growing markets in the world, expected to be a massive industry, and we're right in the middle of it. It's pretty exciting. One of the things we talk about a lot is the unseen value, the unseen value of the BioLargo portfolio. We're building value every day. We're inventing things that will last, we can find a market. Some are very difficult, of course. Everyone's known that, but they're unmatched in their claim set, unmatched in their claim set. It's very important. And when you peel the onion, what you see is the transformative capability because the claims are unmatched. We focus heavily on intellectual property, that's trade secrets and patent work, and we focus on the capital conserving strategy. We have a team of about 50 people now, 20-something engineers, 12 to 13 PhDs, super smart people. I always say my job is to focus on something that really has impact in leveraging our capital strategy and then focus on things that we can get through the cycle, things that we're capable of doing with our talent set. In the underlying portfolio, the goals are very, very ambitious. We look at the future of Clyra, ONM, of course, we think is going to have an exit capability because of the work we've done. Clyra is knocking on the door of significance. And it's been a long 14-year development cycle, 14 years, invested almost $20 million. We believe that, that company will now spawn, grow big and have a chance for an exit through either an IPO or a sale to a strategic, both of which will further its mission to have a high impact for the advancements of human health, a big deal. The equipment group is slow and steady. It's much more organic, but we've got strategic partners now all around the world and projects coming to us in a very rapid pace. Got a couple -- nice couple of wins, more wins coming, big market, and we're right in the center of that storm with a solution for PFAS. And then, of course, battery tech is, we think, the most significant financial opportunity in the portfolio. It also is the earliest, which means there's work to do before we're really prepared. Next, I'm going to have Charlie Dargan address some of the results for the quarter and give a brief summary of that highlight, and then we'll break some of that down as well. So Charlie, are you with us?

Yes, I am. Thanks, Dennis. I appreciate it, and thank you, everyone, for being on our 2025 first quarter earnings call. And well, yes, it was a down quarter. Revenue dropped to about $3.3 million from $4.7 million, substantially all from a reduction in sales of the Pooph product. A bit of an offset there was that the engineering group had their sales increase by about $240,000. The net loss, obviously, from the reduction in revenue, mostly came in around $1.9 million versus about $800,000 again last year. Our SG&A increased by about $300,000, although all of that is noncash expense related from issuing stock options and replacing stock options for our employees and management. We did -- we say -- did the same amount in R&D. So that didn't change much, and so when you look at it, not a good quarter, but I want to reassure everyone that management is closely managing our costs and expenses. It's a bit of a silver lining, no question, but we maintained our gross and operating margins. And if you look at it analytically, our revenue was down by about $1.7 million, but our loss only reflected, because of our cost maintenance, $1.2 million difference. So when we look at our cash and cash from operations, it did -- cash used in operations increased to about $1.8 million. Last year, we actually had cash production of about $480,000. This year besides what we've just gone through on the net loss side, our receivables increased by about $1 million, again, related to the Pooph product and their operations. We did and have maintained equipment purchasing, but we've done most of that now and a lot of it is largely with Clyra. And so we didn't need to do any PP&E acquisitions for the quarter. We did raise capital, and we're very cognizant of the need to maintain our cash, which here we show about $2.5 million. So we are raising capital through equity and Clyra has raised money both from debt obligations and from equity issuances. And Clyra lost approximately $1.3 million net loss, again, much of which is stock option and stock option issuances, but the company is obviously preparing for product launches, and so ramping up to meet those is costing cash and money. So going and looking at our balance sheet, which kind of Slide 8 summarizes all of it, but let me give you a little bit more on what the balance sheet does look like. And we have about $10.5 million in total assets, $7.2 million in current assets. So we're positive with our working capital. Again, much of -- some of it has been from our receivables increase. And then when we look at the debt side of the balance sheet, the liabilities, our payables are up, but most of that increase in payables is again from Clyra, again, from them, getting ready for product launches and preparing the management team. So when you summarize it, you come down to what we're looking at in our stockholders' equity. It did decline by approximately $900,000 to $1 million, much of which, obviously, is from the net loss. And then we are and we're able to offset some of that through equity and capital raises. So that's it for a summary of our financial statements, Dennis, and I'm going to turn it back to you.

Thanks, Charlie. Just very briefly about these operating units. So Pooph has been a shining star for us. Of course, we love the product. It's got a great future. And the reduction in top line revenues is certainly not what everyone hopes for, it is a circumstance that we, as a company, have very little influence or control over. It's controlled by the management team in Pooph. We do believe that their success in marketing these products successfully has a real opportunity for continuance. But again, we just don't have a lot of information in how they're operating their business. And so we're anxious to see it continue forward. And remember that in our business deal, we have a basic financial arrangement in which we manufacture product. We receive a markup on the cost of the product. We receive a small royalty on sales at Pooph, and then we bargain for 20% of the exit. So again, great menu of products, an incredible performance last year, and we're hopeful that things can continue to -- back to the growth category or the growth mode that they've been in historically. And if history is any indication, we think that they're the people that can get that done. Okay. On Clyra, we've had a series of announcements. In fact, as recently as I believe, yesterday, and then about a month ago, about 4 or 5 weeks ago regarding the clearance of the review of the manufacturing capability. So let's just cover real quick. Clyra, again, I want to remind everyone it has a set of claims about the products here that are unmatched. It has a chance to be a transformative technology across multiple vertical segments in the healthcare field, med device, in particular. We do have 510(k) clearance. Our partner on the manufacturing has invested well over $3 million to build out production facilities that can scale. And scale -- our target, which we mentioned before, was to be in the manufacturing capability of doing 1 million units x2 SKUs. So that's been accomplished. That's very important to note. That was accomplished approximately 5 weeks ago. And then the final details surrounding some of the products are in motion, and they're in motion as fast as we can go. We've invested a little over $2 million in the CapEx associated with the production line itself. So major investments, big investments for our company, a lot of money, a lot of time. The team is also expanding at Clyra in a dramatic way. And then, of course, we made the press release describing a number -- a series of formalized relationships with wholesale distributors and sales. And the key takeaway from that communication is really driven to say the infrastructure is now in place to support significant sales and sales of multiple products in the portfolio. Now I know everyone wants a lot more detail. And we're at a moment in which this category requires a stealth mode. It's really demanded. So we're not going to be able to share a lot about the detail, but in the portfolio of products, we have some products that are available immediately, immediately as is in months, and we have some other products that are going to take more like 6 to 9 months or so to get through the development cycle to get those products in the field. And we believe that given the nature of the products and where we're at in the competitive field, it's very critical that we maintain a level of confidentiality. And I know that, that's frustrating for everyone, but we are extremely excited about these advancements, the milestones that have been achieved, the significant commitment that we've made to support these products, the manufacturing capability and infrastructure, and the company is really very well situated for significance in its future. And so 14 years, about $20 million has been invested. Don't forget it. It's a critical asset, and it's the culmination of what we believe has a chance to really be transformative in the field. So standby for more information. Cellinity. We're pretty excited about Cellinity. We talk about it as one of the most significant assets in the portfolio. That's the cell that you see right there. Just to remind everybody has a claim set that's unmatched, unmatched how, right? Well, number one, very high energy density. It's a safe battery, doesn't have really fire risk. All the components can be recycled, it's durable, lasts a long time, 20-year batteries, highly efficient, efficiency as a function of energy density and energy density out and C-rate, charge rate. This is a battery that has a lot of punch for the weight, high energy density, high voltage as well. And so in that claims set, recall that we purchased this technology and then we set forth to build out manufacturing capability at a pilot scale for sure and then revalidate all the claims associated with the technology. That's largely been accomplished. That doesn't mean testing ends. It just means the significant claims about the technology have been achieved. And so we believe this summary as it compares to other technologies, is true and accurate and we're anxious for third-party validation to confirm that for us, and that process is underway. Just to remind everybody, the target here, this is long-duration, grid-scale storage. So we're talking about big battery sets, 20-foot trailers full of cells, we can -- they can pull up to renewable energy, balance the grid as a place for loading and unloading off the grid. Great for data centers, one of the fastest-growing trends in the marketplace, estimated to be a multitrillion dollar market in the next 6 years. Big market, big place and recall that we're pursuing a franchise model. Franchise model, we think, has extraordinary value for both our franchises and our investors in the way that it can conserve capital and exploit high yield on our invested dollars. So this time line is very important. We're now at the complete third-party validation testing stage and noticed we have a little starburst there that says it's underway. We're going to admit a couple of things. When we first started, we said this would take about $1 million to get the validation work done and about a year. Okay. It took about $2.3 million, and it took about 2 years. And what you find, of course, is it's extraordinarily technical. The good news is it's been done. And so now we're in the spot where third parties can come in with technical expertise to help us from a third-party perspective validate. So we're expecting that very soon. Hopefully, a week or 2. It's in process with some wonderful experts that we think are adding value to us on a daily basis. Now I want to point out the valuation real quick. We're currently valued at around $43 million. We have about really 5 or 6 factory projects underway on the drawing board, right? Not done, done. It's discussions with real people and real money who want to be in the business of producing batteries. We anticipate that as some of that comes to bear, including the third-party validation that the valuation will push up to about $400 million. Now we currently own 96% of this project, this company, we own 96% of the equity. So if you round out those numbers on that kind of valuation, what we're really suggesting is that the valuation of this company is somewhere between that $43 million and about $150 million. We own 96%, okay? So the point is it's not really reflected in our value. That's one of those unseen values in the portfolio. The modeling, which is the franchise model really leverages third-party resources and partnerships to bring financing to bear to go out and build these large installations of manufacturing, When you run the net present value on the calculation of the model, it comes in somewhere around $1.5 billion. So this is a big, big deal, big asset, ambitious, of course, and there's a number of reasons we think that we can win here. But I think there's a couple of principles. One is it starts with a better battery. It's a better battery. Number two, a capital conserving strategy so that we're not in the bleeding red ink mode for years. In fact, it's the opposite. When we find a partner that wants to build a factory, we get paid to build it. We make money the day we start, very unusual, very good, good for our financial statements, good for our shareholders. The other is we have people, the people that are associated with this project internally are extraordinary. They have 30 years of field career, they've built $350 million projects. They know how to do this. And we also have special talent in the battery technology itself. And so really, the technical challenge is all about scaling, scaling the capability of producing a battery factory with replication so that you can stamp out sales and put them in packs, packs go into modules, modules go into containers like 20-foot trailers and they plug into the grid and the computer runs them. it's pretty basic. And the thing that really makes this business stand out is the cell technology, which we have acquired and now revalidated and are now seeking third-party validation. We anticipate that very soon. A lot of partners and a lot of money on the -- that have expressed high level of interest. And of course, it took us a little longer than anticipated, but now we're in go mode. So it's pretty exciting. And then lastly, we're going to talk briefly about PFAS. This is a very exciting and incredibly demanding field, okay? Now we've got, I don't know, 3.5, almost 4 years of direct marketing. We've got our first installation. One of the common questions people are asking is when is that installation going to actually go in the field. Right now, it's late August, September is what we're thinking, and that's per our customer. Remember that it's box created -- we're going to show you an image, box created, ready to go, waiting for general contractors, waiting for weather to break for the frozen dirt to thaw, light permitting, lots of things have gone on that we've basically have been waiting for. We've been on mark on the time lines and now waiting for other people to say, come on down and put this thing to work. Another important piece of that is we've got -- the New Jersey and the U.S. federal EPA has agreed to collaborate with us in this project as a field demonstration work that is a commercial site. I understand that it's a commercial site, but they've agreed to participate in such a way that we can secure federal and state validation for the work that we're doing, which is very important because it comes down to credibility. Now we have a backlog of projects, pipeline is a better word. We have a pipeline of projects that's astonishing. And the good news, I have a couple of stories for you just real quick. We have examples where some of our technology has taken a long time to get to market. And what happens is, as you build the channel and you establish your credibility, you become a volume purchaser. Some of the things that we've done just require volume purchasing, so like manufacturing, right? What's happening for us is because of the pipeline and because of the technical claim, we're becoming viewed as a tool -- designer of tools for a toolkit that can be used by the marketplace as a component in an integrated system. It's really good news. That means that we can touch multiple markets. We have a tool that's useful for many different markets and frankly, including competition. We actually have competition that wants to do business with us. It's awesome. And we have major engineering firms and regional engineering firms. We've got one engineering firm that has specified our solution in over 26 projects. So the volume is astonishing. And the -- what's the breakthrough? When did it happen? Well, somewhere along from where we're at to getting some market adoption and some installs and some third-party validation, it all breaks open. It's hard to predict exactly when that's going to be, but we're convinced it will occur and mostly because the technology is that good. And now we have the infrastructure in place and the credibility in the market because we spent a lot of time building that credibility. Here's the unit real quick. This is -- I was actually in Oak Ridge about a week ago, and I walked in and I saw this and I thought -- looked at that beautiful unit. That's an engineered design on the left. Those are the electrodes. They are like a plate and frame, and each one of those is a module that can be plugged in -- plug and play, need to produce more water, make more modules. It's really simple, and it works, and it works really well. And the regulatory -- I know there's been a lot of uncertainty. We'll talk about some of the Q&A, regulatory uncertainty around what is and what isn't with the new administration, with the EPA, a lot of changes in the governance, the R&D, all of that's in flux, makes everyone pause a little, but here's what we know. PFAS isn't going to go away, took 50 years to get there, and it's going to take 50 years to get it out. This is a business that will run for decades. And right now, we believe that we're still the technical innovative leader that has a chance to work with our customers and our engineering firms and our supply chain all over the world, and it's just a matter of time before it finds its way. The results we published are astonishing and again, the thesis we've talked about, they're unmatched, unmatched claims. Okay. We published this case study just recently. There's a lot of work to do that. That's one of the reasons it takes so long, but that case study has now been picked up for publication around the industry, and it's astonishing. And what we basically can say is on the recurring costs associated with installation, we have the chance to save a customer something like somewhere around 70% to 80% of their maintenance costs. The case study breaks it down so that we analyze transportation to handling the replacement of carbon as a comparative because the early adopters in the -- when the first mover started taking action to clean up PFAS, they use old technology. That all technology is going to cost like 9x what ours will be. And so what that means is they're going to change it out. They had to solve the regulatory burden, it's not the last. We also can work with some of those providers to make their systems more efficient. So this is going to be a big win. It is incredibly slow and demanding, it's demanding our staff and demanding our people. The good news is we've kind of now worked through most of the bugs. We're in the go mode. We've got a good selling proposition. We've got people selling our technology now mostly in the country. Some international work coming but we have a couple of global partners now, big giants coming to really partner with us and kind of hard to describe this but I'll take a second, and that is what's different? What's different today than it was before. Okay. Well, here's -- we've done so much work and we have so much technical data to support our claims, and we've refined our system so that when we enter into a discussion with a prospective client, we're perceived as credible when we walk in the door. Okay. So let me expand on that. We're technically credible, and we're scientifically credible, we're engineering credible. Okay. So in the marketplace where buyers or businesspeople and technical buyers buying on technology, we win, okay? Not every case, but we win, we win as an acceptance and adoption. Where the decisions are political, like water districts where elected officials are trying to make decisions that aren't trained for some of these questions, they're going to rely on their consulting engineers. And so as an early technology in the adoption cycle, a lot of those people just simply can't choose us. So we're having to battle through that. That's a credibility question that we overcome with time, overcome with third-party validation. It's a numbers game. You keep plugging away, but what I can tell you now is that what's so unusual is the consulting engineers who advise those people, a lot of them are recommending us. And so that's new. So that's new, okay? So I'm going to now quit for a minute, I just want to show you, right? Make sure you get my e-mail, welcome to reach out, we try to respond, [email protected], [email protected]. I'd love to talk to you any time. So let's open up to Q&A and see how we're going to do there.

Thank you, Dennis. I appreciate the presentation. And it's just a good reminder for everybody that Q1 has been rough for lots of companies. There's been a lot of volatility and uncertainty. BioLargo is not alone in this. So just keep that in mind as we move forward. Just a few questions today. I'll start with kind of a general company-based question. Has there been any further consideration being given to doing a reverse stock split specifically so that institutions can invest in BioLargo?

Yes. No, it's a great question. So we did file a preliminary proxy statement in preparation of our June 19 shareholders meeting. I hope you'll come. It's always valuable. Lets see everyone and we try to really spend the time so that people can understand where the business is at. The proxies asked for our stockholders to give the right to make the decision to the Board of Directors on certain conditions. And the big condition is not greater than the 10 for 1, not greater than the 10 for 1. Now this is really important, important to analyze that. What we're saying, when you say that, first of all, why would we do a reverse split. Well, we need to have a minimum stock value to qualify for a national exchange. And of course, often the preferred exchange is NASDAQ, and that number is now around $4, okay? So $4 at today's stock price, we wouldn't qualify for NASDAQ, okay? So it is really important. So what are we saying? If we don't have the momentum at the core of the business, including performance, we're going to do the reverse split. So hear me clearly, it's giving the Board the authority to make a decision if and when we can perform at a level that we believe our assets and our opportunities will perform at. And so that's the request. We've talked -- we've done this before. It's always been sort of the same thread, which is make sure that the company is well situated so that we have more forecastable revenues, less venture stage inherently in its portfolio, more validation work, more adoption. And so that's what we've been working diligently to accomplish. So that's the plan. If anybody has any additional questions, reach out to me. You can certainly put them in the Q&A now, happy to consider it. Next?

All right. Another general question. Are there any new iodine copper products in play?

Yes, it's a great question. The -- yes, there are. And it has such an extensive opportunity, especially in the medical field and the related fields around medicine. And we've done quite a bit of work, just -- I'll give you just a glimpse. One of the opportunities, of course, would be through an EPA route, which would be general disinfection. And it has the ability to meet that threshold. But the regulatory burden is pretty high, about $1 million, take about a year, and it's also a very highly commoditized category. So it doesn't mean you won't do it. It just means you do it when you have a channel. When you have a channel that will value the value proposition of this claim which is probably safer and more gentle and easier to use, right? That's probably where it goes. But we've done a lot of work in that field. In addition, in the medical field, there's subsets of combinations with gels and coatings and wound bandages. And there's also potential of therapeutic action, right, potential, that would be a drug route, okay? All of those are innovations that we continue to nurse along. And it really reflects sort of the strength of the core intellectual property asset. And what I can tell you from our experience is, we don't know of any company that's committed the kind of longevity to advance the intellectual property in this field. So we believe we stand alone in it, and our value proposition is unique. So as we get adoption in the medical field, especially when we talk about some of the major opportunities that are now right here in front of us, as those occur, we think the opportunity for expansion is pretty dramatic. So there you go.

All right. And on that thread of expansion, we have a question here. Could you give some detail on the growth of the company and what the recent hires are?

Yes. So sure, the engineers are still breaking records, which is awesome. So that unit is growing dramatically. We have projects that are significant on our plate, and we have more coming. We also have a hint of a significant future on PFAS, and it's so significant that it makes everyone nervous about infrastructure. And of course, part and parcel to our strategy is to be -- is to build the swell of demand so that we can become a volume purchaser as we reach back into the supply chain for contract manufacturing and components. All that's happened at the same moment. So the engineers have continued to grow. Clyra also is growing. They're adding professional sales organization, QA/QC, regulatory compliance, all the things that kind of come with the significance of taking product into a very competitive market. And so yes -- so in fact, when you look at the net loss and the SG&A, much of that expansion on the loss side is associated with Clyra because it's really pretty much pre-revenue, right? Now the difference in that versus the engineers, we always have a mandate. We say build it and they will come. We say no, they come then we build it. That puts a lot of pressure on our staff. I mean it's like everybody's operating with staff that needs more people, okay? And that's certainly true in the engineering side. And so we're thankful that they're resilient and capable of doing that, but they're going to have to grow. And some of the contracts, to give you an example, we signed these contracts with the U.S. Air Force and that's recurring revenue. So we had to add some people, of course. The same thing is actually happening on a number of fronts. And so we're going to need more people. No question. And -- but my mandate and everybody knows it is show me the contract and hire the staff, don't hire the staff and hope you get a contract. We can't afford it. And so that discipline is still permeating the company, and I think it served us well and it will continue to do so. We -- in theory, some of these assets are going to grow quickly and the volume is going to be pretty substantial. And so my attitude is worst case, we just slow down a minute and then shore up the infrastructure. But we have to get to that early adopter phase and until we're through it, we're not through it. And so that's the mission, get through it and then ramp up the infrastructure so you can go bigger. So that's the idea.

All right. This question came in, in kind of response to one of your answers, but are we ready for a national exchange without market adoption? Investors want performance over claims and potential?

Yes, I think so, too. Yes. So yes, I think that's exactly right. Yes, we agree, by the way, I mean, the OTC is hard place to get future value, right? Futures, right? Blue sky, it's hard to get blue sky on the OTC, no question. And when you combine that with the length of time it's taken, it wears everybody out. So we know, we understand and the good news is that management has never been a seller. We're long in the stock, continue to hold a long, long time. Why? Well, because we believe it's going to be significant. And some of the assets that we've advanced through adoption, they're meaningful. It's really great. We're thankful for them, but I still think we've just scratched the surface. Now it is different. We have a critical mass that we've never had. We've got talent that we've never had, a depth of talent that's pretty remarkable. We've also been tried and tested on some of these technical assets for their -- how real they are, right? The credibility associated with the claims. We've done so much work to validate them for adoption that it really pays off. So yes, right? So how do you sort of culminate in significance to support a national listing? Well, the answer is real simple. You got to get them done. So that's what we're doing. We're going to get them done. And they are significant. So as those come to bear, we think everyone will be rewarded. And we hope you hang in there for it because we think it's worth it. It's worth, rhetorically speaking, I say this all the time, but I really mean it. Each one of these assets that we're focused on is worth a career, every one of them. So we've got multiple, that diversity has saved the ship hundreds of times. And so now as a result of our core competency, science, engineering, strategy, those are coming to bear, so we think we're in a really great position to see those prosper. And that doesn't mean we don't take our knocks. We do. We take a lot of knocks. In fact, it's very difficult to do what we're doing. The good news is they're real, substantial, substantial in their transformative capabilities. So -- and if you look at the breadth of what we've achieved with so little, it's remarkable. And so of course, what's hard from the outside is to know that they're real and that these claims are going to find a market, we know this. Rest assured, we know it. Otherwise, we wouldn't be doing it. And again, we've had some delays. The AOS is a good one, if that question is not out there, I'll just talk about it real quick. AOS is just way ahead of the market, way ahead. We got all these rumblings now that Europe is hard charging after micropollutants, and just for the record, I look at that and I say, yes, sort of like ballast water, right? We took a lot of criticism for the ballast water and I get it, I get it. But thank God, we didn't overinvest. That's a market that got pummeled by regulatory, 25-year push down the road for regulatory. I watched 25 companies go bankrupt. We didn't. So this notion of trying to be a front runner in early adopter markets is very difficult to do. So we have now such a good deep portfolio that we can play that game. And so we need to get more wins, of course, and that's what we're doing. But I actually believe AOS will find its time in the sun and it's just not today. So again, I don't think we've wasted the money. I do believe though, timing can be everything, especially on the regulatory front. I hope that helps.

And on the PFAS front, have we secured any new AEC contracts with early adopters?

Yes. Well, a couple of things there. One is we've gotten some business -- incremental business around the AEC Where we've helped solve some problems with clients. I think the total revenue that's generated through that operation is about $1.7 million over the course of about 3 years. So it's not nothing, okay? And some of those went through preliminary and then stopped and went on hold, some were makeshift solutions in preparation for a big design, a lot of testing has gone on. We actually have some small accounts now where we're actually treating waste streams for a client. And so there's actually a lot of activity. Now in the contracting phase, some of these can be very long. You bid scope, price and wait. And then when the Trump administration came in with all the rhetoric about cutting through DOGE through the regulatory agencies, a lot of these regulatory agencies really froze. They just couldn't do anything. They didn't know what to do. And so that's had an impact for sure. It put a delay into the adoption cycle in the market, but what people need to realize is that while all that occurred, Zeldin has come in with the EPA and reaffirmed the commitment to the Clean Water Act and the removal of PFAS from the environment. He's pushed down some of the regs for some of the very small chain molecules, another 2-year adoption cycle, which is probably necessary because no one really has a good solution for those except us, and the world may or may not know it. So we need to get our word out, right, word out with adoption and scale up. Anyway, PFAS took 50 years to get there, it's not going to go away. And litigation continues. This is another important factor. Litigation continues. So what's -- so the thesis that we've put forth in PFAS still holds very true, which is what? The most efficient collector wins. When you super concentrate, destruction is manageable and easy. At 140,000 the waste stream, we win, and that's what's happening. And so I know it's hard. It's hard because you don't see it all, but we do. And we're sitting in the apex of attention. I'll remind everybody, too, that that's the reason we were invited to be part of the Environmental Technologies Trade Advisory Committee to the Secretary of Commerce. I'm in the meeting every month there. It's really good for BioLargo, it's really good for our technology. And we're in the mix with some of the leaders all around the country now, and it will expand globally. So we're in a very enviable spot. And because we've got such a nice pipeline established now, we get the attention of major partners and participants who want to see us win. So we believe we're going to win big, but it is slow. I'll admit, it's slow. For sure.

All right. And speaking of partners, what has been happening with Garratt-Callahan? Is the MLD product no longer viable?

No, it's very viable. It's just slow as it can be. Yes. So that product, remember, its key feature is to recycle water for cooling towers, things like data centers. And so let's give you some macro trends really fascinating. There's about 4.5 years of water in California in the reservoirs, 4.5 years, also the snowpack is probably thicker than it's been in a decade. And so there's a moment in which people kind of pause. And then with the Trump administration coming in and saying, we're trying to regulations stopping our economies. A lot of people put some of these projects on hold too. They kind of pause. Now the commitment to economic and environmental sustainability is still real. And so that's just a matter of time before people actually pull the trigger. And so this is an early adopter technology with a country's largest private held water company in North America, that would be Garratt-Callahan. We are still working through piloting and demonstration projects with customers, and you're correct. No one's landed one yet, they're actually quite large, and we're working with some of the significant players in the market that we're focused on. And so we're still optimistic. What I will remind everyone is very important is that our investment is done, now we're demonstrating and the demonstration is in our facility with the equipment that's already been paid for. So what happens now is the selling is up to Garratt-Callahan. We're there to support. We're technical experts in the field, and we continue to work that process with customers and they are ongoing, and they're continuing. So yes, so don't count it out, certainly frustrating and how long it's taken, not easy, but actually quite robust.

All right. Yes. Let's move on to our last set of questions here about the battery side, which I think something to be excited about. Just to clarify, what is the difference between the Cellinity battery and the other sodium ion battery management systems?

It's a great question. So sodium ion uses the mechanism. You can google it, you can do it on ChatGPT, ion exchange, right? So ion exchange membrane across the electrodes. We don't have a membrane across the electrodes. So what happens is as the electrons flow through the membranes, they have a process that's called the formation of dendrites. Dendrites actually are like minuscule microscopic corrosion across the electrodes. So one of the key features in our battery tech is de minimis, if any, corrosion internally, which means no internal degradation. So like a lithium ion, lithium ion, ionic exchange, they all have degradation, which means they have limited functional life. The sodium ion too is -- typically has some kind of rare earth in it, probably got a cobalt or a nickel component and doesn't have the same critical features that we talk about. Typically, it's also going to have some kind of limitations in the way energy can transfer across the cell itself. Ours is a hot. It's a hot battery. It runs about 200 C. You don't have to keep it cool. You like it hot and hot batteries move very quickly. Electrons can flow rapidly in this molten state. So they're quite different, right? They're quite different. So when people talk about the -- and there's been a lot of publication in the last month or 2 about how the tariff wars have spawned venture capital investments in sodium batteries. Yes, for good reason. I mean this reliance on the geopolitical hotbed of China's supply chain for lithium is a real problem and then manufacturing and the components. It's a real issue. And especially when you travel internationally like we are, we're doing business deals with potential partners all around the world now. And they don't like it. In fact, they'll do anything to get away from it. And so it's a hot driver. So we actually think the tariff wars push people towards sodium and they push people towards our technologies and alternatives. So it really bodes well for us. Now -- so anyway, it's a long answer, but the simple version is it's not going to match our stats. Look at the high energy density and look at the high voltage and the sodium ion batteries are really not doing that. So they're going to go through an evolution of R&D, and it is a good viable alternative to lithium. But most of those batteries are focused on traditional battery thinking like what, electric vehicle, EV, EV and portable, okay? That's not us. We're long-duration grid scale, 20-foot trailers, big batteries, big systems, big footprint, put them in place, don't move them, run them for 20 years. That's our model, a different market.

All right. Just final question here, a 3-part question. But is Cellinity superior? And then when will we have that third-party validation?

Yes. We're hoping to get that -- yes, that's a good question. I'm really excited. I've been excited about the battery tech for a long time, but my goodness, it took a lot of work to get through the validation stage. And fascinating really, what we learned a couple of things. One is you say, yes, we've got lots of people in the world that can come out and validate our battery tech. Well, it turns out that's not really true. There's not very many people. And the ones that are capable may not want to do it or you don't want them to for competitive reasons. So there's a lot going into that decision tree, okay? So we found a group that's technical experts, 20-plus years in the field and just bonafide experts. And so they're doing the validation work. And it's underway as we speak. I'm hoping that we can wrap that up in the next week or so. I mean, literally, something like that. Maybe it's 2 weeks, don't hold me to a week. But it's something like that. So we're in the final stroke. And what they've really -- what they're helping us do is to confirm the basic important data is matching what we thought we purchased. That's the mission, right? And we already know this, but we don't have a third party to say it. So we need the third-party validation to really advance some of the business dealmaking, and there's a lot going on in that. And what's fascinating is because of our business model, we're able to approach it with a very sort of cut and dry approach. Who wants to build a factory and do you have money? You just think about it. Who wants to build a factory and do you have money, because we're not writing all the checks. And so the good news is there's a whole industry of finance that's focused on this long-duration storage market. And the appetite is, as I always say, is insatiable. If you just think through it, you can't build enough factories to supply the world, okay? So what happens when it's like that? That means batteries that are just okay, you can sell all of them. Batteries that are exceptional can take a market. But you can only take the market to the extent you can manufacture. So can you actually supply the world? Well, no, you can't. So the franchise model is a good idea, right? We built the model on 10 factories, 10 factories on a net present value. Just think about a 6% royalty on 10 factories. That's $30 million of pop. They'll do about $0.5 billion each. That's $300 million positive cash flow on 10 factories. That's how you come up with a $1.5 billion net present value. It's pretty basic really, right? Because we've got free cash flow on the deal. That's what we're bargaining for. That's what we need. Okay. But you can't build enough factories to meet the demand. Okay. So is the model to do a factory? No. Is the model to do 10 factories? No. The model is to do 50 or 100 factories. Okay. Well, are we ready to do that? Not yet. It starts with 1, 1 becomes 3, 3 becomes 10, 10 becomes 40 and then you replicate and then you become a large volume purchaser of the supply chain and you've got distributed manufacturing around the world with local commitments for economic development, for workforce development, for the incentives that are rich for not only the states, but the DOE itself plus international. And so that's a model that scales. And so we just need to get through the process of third-party validation and then get the first big contract underway. Just to remind everyone, once we have a contract to build a factory, it's about 2.5 years. But here's the thing, we make money day 1. We make money day 1. So we're in the business of selling factories, not selling batteries. So I think it's going to be a big deal. And given the technology and the talent we surrounded it with, we think it's just a matter of time. So we're going to keep plugging away and get through some of those barriers.

Okay. Great. Those are all the questions. Thank you very much, Dennis.

All right. I'll just wrap up real quick. Thanks, everybody. Again, we're happy to talk to you. Thank you for the support. And we'll keep plugging away and look forward to talking to you soon. Thanks, everybody.

Thank you. This concludes today's conference. You may disconnect at this time, and we thank you for your participation.