BioLargo Showcasing its Breakthrough Water Treatment System - Alpha Commercial Prototype At University of Alberta

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Source: Biolargo, Inc.

One year ago, experts from industry, academia, government, and finance were presented with what could soon be known as the biggest breakthrough in water treatment in decades. A team of researchers at BioLargo Water and the University of Alberta unveiled a working laboratory model of the AOS Filter along with the results from studies that demonstrate its ability to disinfect water 100 times more effectively and 10 times faster than any competing technology.  Researchers at the University termed its performance “unprecedented”. Results show that its energy requirements are less than 1/20th of the closest competing technology.

Figure 1 AOS Filter Lab Scale Model Presented Summer 2015

Naturally the next step was to produce a commercial prototype of this novel platform (referred to as the Alpha version) capable of meeting the needs of industry and manufacturing that can also be scaled up or down in order to deliver the volume needs of specific end-users, or to address contaminants of interest.

Figure 2 AOS Filter - Alpha Prototype to Showcase at BioLargo Technical Symposium August 2016

In April this year, BioLargo, Inc. (OTCBB: BLGO) announced it was moving forward with the Northern Alberta Institute of Technology, “NAIT”, to develop a fully automated, sensor-driven functional prototype. Dr. Richard Smith, President of BioLargo Water, commented, 'NAIT's expertise in sensor technology and process scale up is a critical component to a commercial ready AOS filter. We hope to have this prototype unit to showcase at our second annual technical symposium scheduled summer 2016.'

Dennis P. Calvert, President and CEO of BioLargo, Inc. said, 'Excitement for our AOS Filter's commercial future is expanding as the water industry searches for high performance and cost saving technical solutions to deliver clean water. Our AOS Technology is transformative and expanding in scope and importance. These next steps in our journey to commercialization will enable us and any of our future partners to begin manufacturing and large scale up efforts as well as to customize the AOS Filter to suit the special needs of larger customers.'

Calvert continued, “We are extremely proud of our accomplishments in water treatment that can have a significant impact helping provide affordable abundant clean water to a world in great need, and that can have a big impact on environmental pollution, not to mention breakthroughs in odor control, advanced wound care, and food safety. We are on schedule to showcase the Highest Impact, Lowest Cost water treatment system in the world at the University of Alberta on August 15th and are excited to show industry and government a better and lower cost way to treat water especially at a time when potable water is becoming scarcer and more costly.”

The Alpha prototype AOS Filter has been developed in collaboration with technical personnel at the Northern Alberta Institute of Technology (NAIT)'s Center for Sensors and Systems Integration and with NAIT's Applied Bio/Nanotechnology Industrial Research Chair.

Biolargo’s Steady March to Commercialization

BioLargo's AOS Filter combines a cutting edge carbon matrix, iodine, and electrolysis in a flow-through cell to rapidly and inexpensively eliminate bacteria and chemical contaminants in water. The company reports that it is at the ‘Generation 1 and phase 1’ of its development plan. Its first Alpha prototype, which will showcase at the upcoming technical symposium, delivers unprecedented rates[1] of disinfection against a wide range of pathogens including Salmonella, Listeria and E.coli.

The Beta version, expected soon after this August, will include optimizations for specific uses by target customers. In BioLargo’s case, that first target commercial target is the poultry industry. Management reports that it is working with industry partners, grant agencies, and financial supporters to pinpoint the focus within the poultry industry to accelerate success among a number of valuable opportunities such as process water recycling, livestock drinking water and wastewater treatment.

BioLargo management reports that the next phase (Generation 1 Phase 2) will focus on optimizing the system to remove soluble organic contaminants such as acids, solvents, sulfurs, algal toxins, pharmaceutical by-products and even oil and gas by-products while simultaneously improving ease of use and efficiency of the system. Following this, the company indicates it will optimize the system (Generation I Phase 3) for resource recovery of valuable waste stream components like nitrates, phosphates, nutrients, and heavy metals. There is also talk of future developments that will include a Generation II unit with high volume capacity, lower input costs, and gravity feed for high volume industrial and municipal applications, however the company remains silent on any details. Management adds, “Without the support of our various grant agencies within industry and the Canadian governments, we could never had accomplished such important breakthroughs”.

The Water Industry is Massive

According to GE the world's water market is worth $360 billion annually and growing at a rate of 6%, while Bank of America puts the number closer to $500 Billion and projects a growth rate of 6-7%. By all accounts, the water treatment industry is enormous; in the U.S. alone, the market spans over 16,000 municipal water plants, plus many thousands of large private industrial operations requiring improved and low cost water treatment for a plethora of uses.

As a result of last year’s symposium showcasing the early lab model of the AOS Filter, discussions with potential strategic partners have advanced. BioLargo is in discussions with potential users from the Oil & Gas industry, the Maritime Industry, and the Food Industry. Management is also in early exploratory discussions with potential partners to tackle home drinking water and emerging nations drinking water needs, but has no definitive plans in this area yet. BioLargo expects the upcoming showcase of their new sensor driven Alpha prototype to draw substantial attention that should soon advance the development of strategic alliances and commercial business opportunities.

Opportunities for the AOS Filter are enormous

Maritime Needs

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. Already enforced in U.S. waters as of January 1, 2015, universal ratification is expected in the near future.

An estimated 65,000 ships must be fitted with approved Ballast Water Treatment Systems, “BWTS”, within the next 5 years. The approved systems must disinfect the seawater without adding any toxic elements to the discharged water, which creates a sizeable new market for powerful water treatment systems. Global Water Intelligence estimates that the average cost for each system is more than $750,000 and the total cost to outfit every vessel will be about $50 billion. BioLargo estimates theirAOS Filter Systems will cost substantially less than its competitors for this market.

The article, 'International Maritime Organization Mandate Spawns $50B Dollar Clean Water Tech Opportunity' published by CleantechIQ mentions the BioLargo AOS Filter as the best solution to the newly implemented IMO requirement. It is a more effective disinfectant than UV or chlorine and is expected to lessen operating costs substantially for maritime operators over the long haul.

To put this in perspective, an average tanker carries 25 million gallons of ballast water, which is the equivalent to about 75 acre/feet, and this immense volume of water has to be processed on each voyage. At the lowest energy cost of $100 per acre/foot to operate the UV or electro-chlorination systems, this equates to roughly $7,500 per trip. These costs were determined by Anna Goi in her thesis at Tallinn University, “Advanced Oxidation Processes for Water Purification and Soil”, where energy costs to operate UV and ozone technologies to promote advanced oxidation were found to run in a wide range from $100 per acre foot to as high as several thousand dollars per acre/foot. Energy costs for the AOS Filter in a high saline environment is estimated to be less than 1/20th the energy cost of the nearest competing technology. Based on this ratio, if a vessel carrying 25 million gallons of ballast water makes 30 voyages per year, electricity costs to power the AOS Filter would be less than $11,250 versus a minimum of $225,000 for competing systems. This energy savings alone allows for significant profits for BioLargo Water while providing tremendous savings to maritime operators.

Oil & Gas Needs

Another large market need for improved water treatment systems is in the oil & gas industry, commonly known to be dependent on water. Steve Mueller, CEO of Southwestern Energy estimates that water transportation and primarily trucking for a single well costs around $1.5 million, equivalent to 25% of the $6 million that an average Marcellus well costs. 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 operations could substantially reduce transportation costs, source water costs, and disposal costs. Any technology such as the AOS Filter that could cost-effectively enable water recycling could slash costs and greatly improve the bottom line for many producers that are now suffering big losses due to low oil prices. It also has the ability to help eliminate Hydrogen Sulfide and improve safety for all operators.

Municipal Drinking Water

New York Times analysis of EPA data on the quality of drinking water points to a great need for improvement of water treatment as suggested by the large number of violations of the Safe Drinking Water Act that have occurred in all 50 states in America. Over the last 5 years more than 20 percent of the nations 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.

There is clearly a need to improve current water delivery infrastructure and to support new technology development, but local governments are being severely restrained by tightening budgets. The private sector, too, is capital constrained as it balances pressure to deliver short-term earnings versus long-term technological investment to change the water delivery paradigm. The National Association of Counties reports that 3,143 counties in the U.S. are scaling back or deferring spending in order to balance their budgets. UV and membrane technologies are improvements, but their high cost is a major barrier. Clearly, its low cost and unrivaled efficacy are the keys that give the AOS Filter a powerful advantage against the competition.

Poultry Industry

Over 200,000 poultry farms, producing roughly $50 billion a year in revenues in the United States alone, require new technologies and methods to defend against pathogens such bird flu and Salmonella. Just one single infected bird can cause an entire flock of millions of birds to be destroyed; and a foodborne outbreak ofSalmonella or Campylobacter can be devastating to those stricken with the pathogen and to the companies in the food production chain.

In an effort to reduce foodborne illness, the U.S. Department of Agriculture's Food Safety and Inspection Service, FSIS, announced new federal standards to reduce Salmonella and Campylobacter in ground chicken and turkey products, as well as in raw chicken breasts, legs, and wings. These tough new regulations will take effect July 1, 2016.

One of several applications for the AOS Filter that will be showcased next month is poultry well water treatment. Many poultry producers in the U. S. and Canada use local well water to feed their birds, since municipal water costs can be prohibitive. Unfortunately, well water use in poultry is often associated with poor health outcomes for chickens as well as lower growth rates. This effect is commonly due to bacterial contamination of the well water and/or contamination of the well water by toxic chemicals. The AOS Filter is a terrific solution for this problem, since its efficacy, low cost, and versatility make it ideal for both small and large chicken producers. This will be one of the AOS Filter’s first commercial applications, and by working with local poultry producers in Alberta BioLargo Water hopes to launch its first pilot soon.

The AOS Filter also has downstream applications in the poultry processing industry. It should not come as a shock to learn that, like other meat processing operations, poultry processing consumes enormous quantities of water. In particular, many poultry processing plants use large “chill tanks” to lower the temperature of chicken carcasses as they travel down the production line. These chill tanks must be emptied and refilled every day due to contamination with bacteria and organic matter, and thus incur large costs to poultry processing operators. The AOS Filter again offers a low cost and effective solution to extend the life of poultry chill water and increase the cleanliness of the chill process, thereby resulting in lower rates of cross-contamination between birds. This is thought to be an ideal market for the AOS reactor and discussions are ongoing with industrial operators in this area to address their needs.

BioLargo also offers iodine-based products that provide an arsenal of effective tools for the industry to build multiple lines of defense against bird flu, Salmonella, E. coli and other pathogens by protecting drinking water, bedding, and air as well as control odor.

BioLargo recently announced that the EPA approved its Clarion water (BioLargo’s commercialization partner) iSan system. The iSan system delivers BioLargo’s Iomax formula for use in feed water for poultry, and the company plans to expand the label’s uses soon.

Gearing Up For Commercialization

Considering the high level of interest at the first symposium last August and the readiness of a working large scale pre-commercial prototype, the stage is set for a big turnout at the upcoming second symposium this August. This highest impact, lowest cost Alpha prototype is exactly what several industries and municipalities are looking for, and this event could be the kickoff to commercialization and strategic alliance formation for this breakthrough technology.

BioLargo is a science and technology company that has developed a portfolio of disruptive technologies to help keep our people, animals, and planet clean, safe, and healthy.

The Company is now launching CupriDyne® Clean, its breakthrough odor control product for several industrial uses. Its odor products have demonstrated unsurpassed performance and are meeting a very strong response from industries anxious to trial and use a product that actually works. Management is pleased to report success with every trial and a growing network of agents to help serve this very large industry segment. “Every customer that has tried CupriDyne Clean, wants it,” says AJ Sexton, VP of Industrial Sales for Cupridyne Clean (www.CupriDyne.com). He adds, “It is priced right, easy and safe to use and incredibly effective at oxidizing odorous volatile organic compounds (VOCs) where other products simply fail to work. We guarantee satisfaction.” This success rate bodes well for strong sales developing from here forward.

Clarion water (BioLargo’s commercialization partner) recently had its iSan system approved by the EPA. The iSan delivers BioLargo’s Iomax formula for use in feed water for poultry, and the company plans to expand the label’s uses soon.

BioLargo is also preparing to file a 510k submission with the FDA in Q1 2017, with plans to begin serving the large multi-billion dollar wound care market with its novel advanced wound care products in 2017.

With every profit center addressing multi-billion dollar markets and targeting commercialization in 2016 and 2017, investors and shareholders will now be paying particularly close attention to BioLargo.

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