BioLargo, Inc. (BLGO) Shareholder/Analyst Call Transcript

2026-05-06 02:21:13 ET

BioLargo, Inc. (BLGO) Shareholder/Analyst Call May 5, 2026 4:00 PM EDT

Company Participants

Dennis Calvert - Chairman, President & CEO

Conference Call Participants

Julian Jakobi

Presentation

Dennis Calvert
Chairman, President & CEO ...

[Audio Gap]

Scalable, it's turnkey, that's reliable. So that's what we're doing. The work is well underway, and we're actually working with customers throughout the world to now engage together the solution to bear, which will incorporate both their technology and our technology, plus whatever resources we can muscle up to support that kind of resource. It's a pretty dramatic thing.

And I think we just got a couple of texts in the last hour. We've already got some articles that are being featured in the industry. So there will be a press cycle on this. The press cycle will occur because our technology is really good, right? It's really special. And now we're partnered with one of the top players in the world. I just want to make sure you really soak it in. That's what we're doing.

And partner is a funny word. Business guys use the word partnership loosely. I don't mean it to be a legal word. It's a strategic relationship in which we're going to serve customers together. That's what it means, okay? And there'll be multilayers of business dealings to square away. In the engineering field, it's pretty common to team up, if you will, and find a customer and work together. Everybody knows everyone has to make money and the customer has to get and receive products, services, solutions that actually work and are affordable. And so we've got to do that to fit our system into the market, combined resources.

The other thing about that is the market for PFAS is really shifting very dramatically. The way we say it is all regulatory events that are currently happening in the marketplace point towards us, towards our thesis, towards our value, towards our thinking about how we serve that market. It's really good. And the first really notable thing I just want to mention is that the first wave of capital that was deployed was out of sort of an emergency relief. And under the Biden administration, they released capital under the Clean Water Act. And if you think about that, that's the people that had drinking water, serving PFAS polluted contaminated water to citizens, they wanted to move quickly. So what do they do? The government gave them the money. That's how it works.

So the municipal clients deployed as a public service to make sure their constituents, their customers had clean water. Why is that important? When public agencies move, they go with the safest bet possible, regardless sometimes in the long-term economic implication. We're now watching the cycle shift because the predictions we made 3 years ago are now coming true. Well, if you got your CapEx funded by the federal government, the district is now responsible for what's called the OpEx. That's the operating expense. And all of a sudden, guess what, you got to replace carbon. You got to clean carbon. You've got to handle the collection and disposal. And carbon is a collector. It's not a destroyer.

Now what are you going to do? So the downstream costs are now well understood, and there's a dynamic occurring in the marketplace where customers that even installed carbon or ion exchange as the go-to solution are now realizing they need a better solution. And that entire market is now available. I shouldn't say entire. Theoretically, right, rhetorically, the entire market is available for attack as a new solution provider. Some will do it, some won't.

But we're already experiencing pretty sophisticated customers looking at the OpEx and the regulatory compliance and realizing that downstream the short -- the ultra-short -- the short chain, the long chain, the regulatory news, the handling of waste streams under CERCLA and RCRA will continue to tighten and the ability to handle ultra short chain molecules, which is not even regulated yet. Everyone knows it will be one day.

And so while there's money under settlements, which that's the second wave, if they can actually upgrade their solution to have a future compliance and save OpEx, they want to know about us. And here's the beauty. They want to know about us with our new strategic relationship, Aquatech. It's a really significant timing in the world, and this -- the whole industry is publishing.

Okay. Next. Engineering group less, right? In many ways, we could argue that they may be one of the most valuable components of the company. Really, you might say, right, really, well, they're the backbone of the engine. The engine is continuing to run, that innovation engine, right? And the market cap when you just consider Clyra is giving the most visibility for immediate significance, that's basically what everyone thinks, that's fine, I get it, they're not giving any value to the fundamental infrastructure that we've developed that allows us to innovate across multiple markets. They just got a $1.2 million contract, which is the design phase of a milestone gated multiyear program tied to our patents focus on mineral extraction, okay? That's a private client.

So what's up with that? How does that work? Well, this is the first of a 3-phase process. It starts out with a $1.2 million contract, and we're a vendor. We're not a partner. We're a vendor. And in that situation, we deliver a service. It's a high-value service, but it leverages our intellectual property. So what we're doing, right, is we're advancing to serve our customer who is capitalizing the journey, which is not cheap, okay? And of course, it's their land and it's their minerals. So that's it. That's how it works. And we say we'd love to be a partner. So that partnership, that equity stake, the profit share, that's TBD, to be determined. It is what it is.

The next phase is probably in the approximate range of about $10 million. That's a pilot, that's a commercial pilot, and that's design, build and function, the processing of these minerals into product that can be sold in the market. There's a significant derisking that happens in that stage. And then beyond that, assuming successful, you'd head into the build stage. That build stage could easily top $40 million, okay? So I want to make sure everybody has a perspective.

This is a project that's been coming a long time, a long time. In fact, we got a lot of criticism for even mentioning it, and we get it. We really do. What we've been able to do, though, is to maintain a relationship in which we focus on serving our customer, serve our customer, help them help themselves. And by so doing, we can earn a position. And that's what we've done. It's awesome. It's the -- in fact, from a leverage perspective, it's the most leverage in the portfolio. We didn't have to capitalize it. We took our brain power, our intellectual property, our know-how, frankly, our engineers' know-how, the team that's worked all over the world at the highest level. And we leverage that into an opportunity to create a solution that has direct and significant value that far exceeds the CapEx risk.

So the wise partner and the wise vendor, that would be us, they march together to make sure that, that technology becomes derisked and the opportunity naturally unfolds and the capital becomes increasingly available to our partner who's well to do and certainly capable of carrying the ball all the way into the end zone. It's awesome. It's a great example of how our company is leveraging its infrastructure as a core competency, intellectual property know-how and a solution mindset to help solve the problem for a customer. Okay?

Next, ONM Environmental. That's our odor and VOC. CupriDyne, right, the CupriDyne technology. Okay. CupriDyne is awesome. I mean everybody knows that, right? Talk about hard to get to market. So ONM Environmental is in a repositioning phase, right? And the industrial odor control revenue base is pretty much unaffected, right, by the Pooph license dispute that hit our financials in 2025.

So it peaked -- during that journey, it peaked out at $6 million in free cash flow and $14 million in sales. It's a big number. We missed it, by the way. Make no mistake about that. That's a painful hit. And we don't like it, okay? Obviously, filed litigation. We believe that in the normal course, that litigation is going to find a solution, okay? We're confident in our case. We're confident in our legal position. The problem is, basically, we're worried that we're probably not going to collect money from that company, okay?

So that brings up a whole another strategy question. I don't want to go into the details about it, but why do the fight? That's the rhetorical question. The answer is really simple. We need -- we must protect our intellectual property and protect the integrity of the claims that are associated with our technology that, frankly, was the meat on the bone that made their product successful, and we believe it will reemerge with a brighter and better future, a brighter and better future. So that dealmaking is going on as we speak. And so stand by, right? That's what we got for it. Stand by, as that shakes loose, we'll be coming out with some additional information about how we're going to reposition.

The way I would say it is really simple. We'll reposition with the assets that we control, partners that really can help capital that comes to the venture, okay? Those are awesome. We've got to do all that. That's in motion. And maybe a chance to pick up the old brand. I don't know for sure. If we do, great. If we don't, we've got a winning formula that we know how to win. Either way, we're going to reposition that asset for significance. Standby. Okay?

Cellinity, sodium battery. It's our pre-commercial subsidiary. There's some R&D still going on, as everybody knows. We're scaling up design, we're working on engineering work for scale manufacturing. Cellinity is a strategic infrastructure opportunity for national security of the United States of America. No matter saying it more clearly. This is opportunity to refashion the future. Remember my role with Secretary of Commerce's office as an adviser on ETTAC, just had a chance to really ingrain myself into the circles that have conversation about global strategy for the United States. And make no mistake about it. Energy storage is one of the top 10 in the category. So what's up? Well, there's 2 things that are up. I'm going to point them out to you real quick. The first is the Achilles' heel of battery technologies, #1, degradation. All the technologies that have gone to scale a significant degradation issue. I just want to point out one simple claim.

We make the claim that we believe we can support. It's a 20-year battery with no discernible, no perceptible, no measurable internal degradation on a cell. We believe it's a 20-year battery. We believe we can warranty a 20-year battery. Why is that important? Most batteries are 6, 7 years. They deplete over time. They degrade. They use rare earth elements. Even if you took the advancement in the field of sodium ion, it's not going to compete with the technical claims that we're making and it has a huge degradation issue. So #1 is degradation. #2 is what? Geopolitical, hot potato, where are these batteries coming from. If the United States wants to reposition itself in the future of energy, which, by the way, energy storage will grow 6 to 7x over 15 years. Energy is going to double in the next 15 years, energy demand, the demand for infrastructure to produce energy and wherever you're producing energy, you must include storage. It's the way it works.

Storage is one of the hottest trillion-dollar markets in the world, and we have a significant asset. So what are we doing? We're advancing it in the national interest. As you know, we've got partnerships with economic development, workforce development, high-impact investors. We're basically at that stage where you got a capital stack challenge, okay? How do you break it apart? How do you build a stool is one of the analogies, how do you build a 3-legged stool that can be sturdy and last for the next round? That's where we're at. We're working on that stool, whether it's capital, whether it's partners, whether it's offtake, whether it's the government, all of that is in motion. We've got a number of great projects that really become the template for architecting that, and we believe we've got a shot to pull it off.

It's a JV, joint venture, SPVs, special purpose vehicle financing structure, which allows the parent to leverage its core competency, just like we've done in everything else we've ever done, leverage our core competency to build out that capital and that incentive stack to be able to come to the marketplace with a turnkey financing solution. We're in active discussions now with capital funders, including the government.

Okay. Next, capital efficiency. I want to spend a minute on the topic that nobody really talks about. We should talk about it. Across the entire history of our platform, we spent roughly invested capital directly into BioLargo roughly $25 million. About $20 million outside capital also came into Clyra. There's about $5 million or so that's come into Cellinity. Remember, on ONM, we own 100%, right? And on the PFAS solution under equipment, we own 100%. So those are financed by the parent, right, the development cycle. $50 million built the entire company, 5 operating subsidiaries, 2 commercial, with a national distribution partner preparing to launch and one in active discussions with funders. Most pre-commercial clean tech companies, we would argue, burn that much getting into 1 product in the door. We have 5 in each of the platform. Each one is a platform. Multiple products spin out of this. That's what capital efficiency looks like.

And the operational efficiency should be just as obvious, limited corporate overhead, shared science, shared engineering across all platforms. We carry no toxic debt. We have about $3.8 million in cash as of the end of '25, plus we brought in another $1.7 million in Clyra. Clyra is spending money faster during Q1 that was disclosed, and we'll have our Q coming out soon.

So how do the parent company participate? That's one more thing on structural. I'll talk about real quick. There's basically 4 channels, right? First is equity. We own these ventures. We own a lot of these ventures. Have direct stakes in subsidiaries. 48% is the lowest. Well, it's also required the most money. That money came in the form of about $20 million from outside investors, $5 million from BioLargo, total invested capital of about $25 million. BLEST, we own 100%. Cellinity, we mentioned before, around 95% and 100% we own in ONM. Then there's a royalty that's equity. Then there's a royalty stream, 6% on gross assets. The wound care market is measured in billions. This is a meaningful license. Don't sell it short, okay?

Then service revenue, sure, our engineering group, they can earn those -- the cash flows as they grow. They're growing so fast, they're using a lot of working capital, but it's awesome. It's exactly what we want. The 98% year-over-year, and we expect that trend to continue. Even this $1.2 million for the design work on the minerals contract is a live example of the channel finding its way not only with services, but with intellectual property. That's our vision, right, is to create replication and margin.

So how do we make money? Equities, royalty, adjacent rights, service revenue, all the above. That's the beauty in the model. Okay. What did 2025 numbers reflect? Well, we got beat up pretty good on this Pooph thing. Revenue was way down, right? And the Pooph revenue was the #1. We had a big net loss because of a compounding effect that, that occurs, but we also had some dilution impact. We had to shore up our capital resources. It helps describe why the stock got hit the way it did. We still think it's way undervalued, especially given the diversity of our portfolio. And now we're sitting at the point where Clyra is ready for commercial launch. It's looking at the launch pad that's coming in.

As those events are completed behind us, right, we believe the Pooph dispute will be resolved in its normal course. We've already mentioned we doubt we're going to collect the money. First stocking order shipped in February, second distributor just signed and the big kahuna coming. Okay. So what's to watch for?

Well, these are targets, right? So Clyra, we'd like to get this major distributor, the big kahuna launched. Of course, we're doing everything in our power to move as fast as possible. Clyra, I believe, now has about 12 or 13 full-time staff. They're very well compensated, highly trained professionals in their field, and it's intense. It's super intense to prepare to make sure that, that product is pristine as it gets ready for the launch into a global market with a global partner. We've got [Audio Gap]. We're bidding contracts.

So what do we want to see happen? We want to see this partnership, not legal partnership, this relationship, the strategic relationship with Aquatech blossom into a venture that both parties can win and profit and do great services for our customers, and we think we've got a good shot at that. We're already in the bidding process. It's important to note. We're already there. We're already into the minutia, the fine detail of our opportunities being refined, plus the integration of not only engineering, but the various resources that they can provide to us and vice versa. We have services we can offer to them.

Environmental, ONM Environmental, well, we just said it. We're going to have a new commercial venture established. We believe that venture can be financed by itself without BioLargo becoming the funder of that venture, right? So we're going to try and get that done. And then the minerals, well, we know about that. We've got about a 6 or so months, 6- to 9-month process with the design phase. Then we'll head into a pilot process, assuming successful in the design. And then once that's complete, we'll head into the idea of then a full-scale deployment, okay?

Okay. All right. Here we go. I think that's it. A lot. Yes.

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