Good morning, everyone. Welcome to day two of the Siddharti Micro Cap Conference. My name is Arshie Shah. I'm an analyst here at Siddharti. With me today, I have Beyond Oil Ltd. It trades under the ticker BOIL. I'm happy to welcome Robert Kinsman, Vice President, and Michael Nemiro, Head of US Operations. We have about 30 minutes today, including the Q&A. If you have any questions, please submit them at the Q&A section at the bottom of your screen. With that, you can take over, Robert.
Good morning, everyone, and thank you for joining us. We're pleased to be here. We're again with Beyond Oil. It's an Israeli company that's listed here in Canada. We're a food tech company that is dealing with a very serious problem in the fast food industry in particular. When you fry food at a restaurant in deep fryers, day after day, hour after hour, the oil begins to start getting black. It gets smoky. It gets smelly. The reason for that is because toxins are forming in the oil after the frying process, day after day after day, hour after hour. The problems with that, of course, are that the oil becomes very unhealthy. These toxins are leaching into the food. When you eat French fries, it's full of oil that's loaded with toxins. That's the health problem.
The economic problem is on the restaurant side, and they have to continually dump and replace the oil with new oil because it just gets so bad. There's also a negative environmental and sustainability issue in that it takes several thousand liters of water to make one liter of oil. It takes electricity, it takes diesel, and so on. Of course, you're dumping the oil, the used oil, somewhere a lot more frequently than you should. On top of that, you have bad food quality. You know, when you bite into a French fry or some other fried food, it has a smoky, smelly aftertaste to it, often on day two, day three, day four of frying the oil. The solution to all four of these problems is what we have in Beyond Oil. This is a powder. It's white.
It looks like flour, and it's in this packet that we have here. It is patented in the United States. It's patented in Europe, and it's patented in Israel. It has also been cleared by the FDA. It's been cleared by Health Canada and other health agencies across the globe. It's basically a filtration aid. This is not a food additive. Now, here's just a brief snapshot of the oil before, after, and during the frying process. You can see very clearly on the left, this is a jar of oil that was taken out of a deep fryer from a customer of ours that happens to be an American fast food chain that's operating in Israel. You can see how black it is in that left jar. What you cannot see, however, with this slide, is how bad that oil smells.
You can't see it smoking in the deep fryer when you're frying the food in the deep fryer. Now look at the jar in the middle. This is the same oil, same fryer, same restaurant, same food, same process, same everything. The only difference is it had been putting the Beyond Oil powder in at the end of every day for three days. That is the same oil after three days. In this case, the oil went on for 30 days, which you can see in the jar on the right. Sometimes the oil lasts for 10, 15, 20, 30, or plus. It just really depends on the context. In this case, you can see the significant difference. Just a couple of other pictures here. You can see the deep fryer itself, comparables in the top right at the restaurant, how much clearer that oil is with Beyond Oil.
Of course, the impact on the food, which you can see on the left. It is much clearer, crispier, fresher than the French fries on the left, which are treated and fried without Beyond Oil oil. Just a very brief moment on the science behind it. The core issue is that the oil is lasting longer and it's cleaner because we remove toxins. That's really simply what's happening here. You can see the chart on the top right. This is trans fats. I'm sure all of you have heard of trans fats. Very unhealthy, very bad for you, causes a lot of health problems. You can see two very clear things here with this chart. The first thing you can see on the yellow line is that the food and the oil get loaded up with trans fats after two, three, and four days of frying the same oil.
The oil gets dumped, in this case, on day four or day five. If you look at the green line, you can see that when you're treating the oil with Beyond Oil, the trans fat level, number one, stays very low. As a result of that, number two, the oil is able to be used much, much longer, in this case, for 30 days. I want to point out the other toxin on the top left, which is something you may not have heard about, which is called acrylamide. Acrylamide is a cause of cancer. It forms in the oil after a number of days when you are frying often potatoes. This is a huge problem that the public often isn't aware of. Look at the difference in the yellow and the green line here, how quickly the acrylamide levels spike when you are not treating the oil.
When you're eating French fries and oil that's fried day after day, you're loading it up. You're eating a French fry that's loaded up with acrylamide. With Beyond Oil, you can see how low we keep the acrylamide levels. In this case, it's pretty steady, near zero, all the way into 30 days. This is a tremendous, tremendous outcome. I think I want to just point out one other thing here in that we're finding, as we're now, you know, we've been commercialized now for over a year, and we're finding now that there are some other ancillary benefits that have come up that we weren't really expecting and that our customers are giving us positive feedback on. I'm going to let Michael Nemiro speak to the kitchen cleaning aspect and the food quality aspects as he's on the ground.
Actually, right now he's in New York doing some pilots with some pretty big potential customers, and he can speak to that for a moment.
Yeah, hi everyone. The product has a lot of health and environmental benefits. It saves the restaurant money, but at the kitchen level and at the restaurant, when the restaurant's looking at something, a big, big part of what we bring is improvement to food quality. If you think of a restaurant with a fryer and the fryer is getting worse and worse and worse, basically there's a quality threshold that they work within. When it's fresh oil, it's at their highest quality and it degrades pretty quickly until it becomes unacceptable. Because we reset the oil basically every day, we keep their food at their highest quality, which really is a big impact and they see it right there. The other piece that you need, you need the restaurant workers to be your fans too. The worst job in a restaurant is cleaning the fryer.
Without Beyond Oil, let's say they were cleaning it twice a week. That's a lot of labor costs, but it's got the most accidents. There's a lot of issues with cleaning a fryer. It's the job no one wants. With us, if you're just cleaning it once every three weeks or once a month or whatever it may be, the kitchen staff really likes it. One thing that you really can't see on the slide is the whole, certainly the kitchen, but the whole restaurant, the smell improves. We hear over and over again, I don't have to like jump in the shower, you know, get rid of everything, throw everything in the wash, the car smells better. It's a very positive part of the story is that at the kitchen level, they love using the powder.
Just before we get into our commercial operations and so on, just to summarize, we have a product that produces healthier food, has environmental benefits, gives food quality improvements, has, you know, labor improvements, all at the same time while saving the customer, in our case, the restaurant, money. This is a very rare situation to have all of those benefits wrapped in under a cost-saving umbrella. Now, just to jump into what we're doing commercially, we really just got going in revenue last year, but we've got a lot of exciting stuff going on. The first thing that we have is we are selling now to a major American fast food chain in Israel. In fact, we have three of them now as paying customers. One that we're working very hard on here is, you know, this one has over 30,000 restaurants globally.
We're selling to all of their restaurants in Israel, and we're taking the data and this positive experience and the positive benefits that we're producing for them and working on the parent company in the U.S. to eventually get global approval or even American approval in the next stage. We have three of those going on right now. We've also recently, about a month and a half ago, announced a new partnership that we have with Sodexo. I'm sure most of you are familiar with Sodexo. It's a major international company in catering. They provide food for weddings, for universities and colleges and prisons and so on. We are planning to extrapolate this commercial partnership we have in Israel again to go international with them in the western part of the world. We also have a distributor in Israel.
This is a company called Fandango, and this is a very interesting situation because Fandango is one of the largest food oil suppliers and used oil collectors for restaurants in Israel. They have over 8,000 customers, and they are now exclusively selling our product to their restaurant customers in Israel. You might ask yourself, why would a company that has as its core business selling oil and collecting used oil want to sell our product, which is harming their core business because it's reducing the demand for oil because we're extending the oil life. The reason for that is these people are very convinced that our product is going to revolutionize the food oil industry. They want to be ahead of the curve. In fact, their company has invested in our company in equity twice over the last two years. It's a very strong testimonial for us.
Similarly, in Canada, a company called West Coast Reduction, which operates under the Redux brand, is a very large collector of used oil, particularly in western Canada. They have also partnered with us. They're selling our product to the restaurant industry. They will also be, when we're ready, which we hope will be next year, selling our product to the industrial food sector. We're working on some R&D right now to get our powder ready for these big industrial frying factories, which we hope will be next year. Similarly, this company has also invested in us in equity twice in the last two years, just like Fandango has. Both of our larger distributors have also become shareholders. I also want to point out on the investment side, we had a very big milestone earlier this year in May.
After several months of due diligence, Clal Insurance, which is a major Israeli institution, has over $50 billion U.S. in assets. They invested in us in equity in May. They invested $10.6 million Canadian in equity with warrants that are exercisable at $6.775 per share. They did this at a premium to market. They also brought in another small Israeli institution with them in this investment. Importantly, at the same time that they closed this equity financing, they also participated in a secondary market investment where they bought almost 2 million shares from warrant exercises from other shareholders, which required them to put in another $7 million Canadian into that investment. They looked at putting in $17 million Canadian at a premium to market. This was a very strong show of support for our company to have such a major institution invest with us.
We are about to uplist to the Toronto Stock Exchange Main Board. We hope that's going to be done in the next couple of weeks. We've already publicly announced conditional approval in that process. We'll be able to attract a more sophisticated institutional audience to our stock in Israel, Canada, the U.S., and elsewhere. I want to just touch on one last point here on the competition before I ask Michael to speak on the American rollout. There are other competitive products out there. We have them anonymized here on this chart. Two things I just want to point out at a high level are that you can see on the bottom four rows, for example, Beyond Oil removes four toxin groups, including that very important acrylamide one that I mentioned earlier.
We remove those four toxin groups from the oil as part of the process, where the other competitors do not. As a result of that, our oil, the oil used with Beyond Oil, lasts much longer than the competitors do. We're seeing that out in the market. I know Michael will speak to that in a moment on what he's seeing on the ground in the U.S. With that note, I want to turn this over for a few minutes to Michael because we are now, after we attracted this major investment from Clal Insurance, and we also had $7 million warrants exercised earlier in the year, so we're flushed up with cash. We don't have market overhang. We're now taking that money and we are building and structuring the business in the United States for a commercial rollout.
If we don't conquer the United States, you know, that's what's going to make us a big company where all these head offices are. We've got Michael here, who's heading up that effort. I'm going to let him speak for a few minutes about what he's doing and what he's planning in the U.S. market. Over to you, Michael.
Great. Yeah, in the U.S., unlike in a lot of parts of the world, we're really building our own direct sales force, our own direct customer success team, along with adding distributors because at the end of the day, there's a very complex distribution network in the U.S. It will work in tandem and cooperatively. We've brought on very seasoned people in the sales process, people who bring decades of experience, contacts, understand the market, and most of them have a background with oil and understand those dynamics and selling at the large corporate level. You have your technical sales support to help with the initial rollouts and pilots, and I'll talk to that a little bit, and that's a team of ex-chefs. You have sort of these two dynamics working. The sale process in the U.S.
does take a little longer because of the nature of what we're trying to accomplish, where we go in and we're able to leverage our international experience, certainly the great successes in Israel. The value proposition, as I would expect most of you feel on this call, it's very compelling. Getting them interested in trying us, we're having a lot of success in that. You have to work through that process of establishing a location where you do a pilot. They'll do a pilot in one or two locations. We have many of those going on. From the pilot, you get into a more market test to a larger scaled pilot. We're doing some of that. The goal, of course, being that they roll it out broadly. We're having great feedback and a lot of that going on.
I think in the U.S., we're even learning as we work more closely, and Robert touched on it, I touched on it, the quality part is really a super positive part of the story. Of course, it's good that we save people money too. When we go through all of the stakeholders, as you, again, everyone on this call is probably pretty aware, you need to have stakeholder buy-in. We're finding we get great restaurant buy-in, customer complaints go down, delivered food is less oily, a big thing that they care about now in the U.S. A lot of % of food gets delivered. If you just think about dirty oil sitting for a long car ride out to somebody's place, and now you have clean oil, better smell. They're very aware of that.
All of our value proposition is ticking boxes for all the stakeholders, and we're in that sale process now. Robert, I don't know if you want me to elaborate any more than that about the team.
No, I think that about summarizes it, what we have going in the U.S. We're expecting, you know, good times ahead in the weeks and months ahead with the foundation we've laid. I think one other thing I'd want to touch on is there is a trend in the U.S. now with a lot of these restaurants that are moving into beef tallow oil.
Yeah.
Just so happens that our product works just fine with beef tallow oil as well.
It works great. Sometimes it's good to be lucky. I don't know that we had this strategy that beef tallow would be such a big trend when the company was started. Our product works amazing in beef tallow, and the value proposition in beef tallow, thanks for mentioning that, Robert, is even better because it's expensive. When you can extend it longer, that's a good thing. It's also really challenging, just cleaning it. The whole process with beef tallow ticks every box that we do even better, which is great.
To summarize for everybody, you know, there's only one question people really care about, I think, when everything boils down to on these calls, and that is how are we going to make you money. We have a company that is institutionally backed. It is on the precipice of scaling on revenue. We just did just over $600,000 U.S. last year. We did over $1 million first quarter this year, over $1 million second quarter this year. We are now doing pilots and demos with major American brands. We're expecting some results to come of that. At the same time, we have distribution deals in Israel and Canada. We're working on some deals in Europe to do direct.
We're going direct and distributors with a very tight share structure with no market overhang and building an American-focused company that we think is going to produce significant results for our investors in the coming weeks, months, and year ahead.
Can I just add one thing to that? I want to make sure everyone knows this powder, you put one bag of powder in each fryer every day. You don't put it in once and then it lasts 30 days. From a revenue standpoint, you know, when we land a customer, it's ongoing, recurring revenue, very consistent, very measurable. When you think of these pilots and things that we're doing in the U.S., they're sort of like each customer is its own hockey stick. You don't have to go find new customers every day. We will, but you want to go, they do a pilot, they do a market test, then as it rolls out, and all of that is recurring revenue.
Great. If we have any, I think we have about seven or eight minutes left here. We're happy to take any questions anyone might have.
Right. I would like to remind everybody in the audience, if you have any questions, please submit them at the Q&A function at the bottom of your screen. Can you tell us, like one of the questions is how much longer does the oil last when adding your product daily? Can you quantify the unit economic savings?
Yeah, I mean, it depends on a number of factors. The better the quality of the oil, the longer it lasts. In Israel, there's a lot of experience that restaurants, once they start using our product, they actually start buying better oil because the net savings calculate even better with more expensive oil. We tend to virtually always get at least triple oil life. If somebody was getting three days oil, we'd get nine. Generally, we do much better than that. We see, you know, we kind of target three weeks of oil life. Sometimes it's 30 days. We have some that go even longer. If you use three times, basically in every, I don't know, I'm sure there's cases I'm not thinking of, but you can almost assure yourself that when you triple someone's oil life, you're net saving them money.
Even with the cheapest oil, when you take the cost of the oil versus the cost of the powder and you triple that, when you do the calculations on just the oil, there's even more savings when you factor labor and other impacts. We save them money.
I'll just share with you a brief snapshot of one case study with an existing customer just to help quantify. Again, every restaurant has different numbers of fryers, different food they're frying, different processes. You can see here this case that we did over 60 days. There are four fryers. The annualized savings are around $7,000 U.S. per restaurant. It certainly adds up when you're dealing with restaurant chains with dozens and hundreds and sometimes thousands of restaurants.
Can you help us understand what sizes each lack? Once you put the powder in the oil, how do you remove the residue? Does it alter the taste at all?
Yeah, you pour the powder into the fryer and stir it. It runs through a filter process. The way the fryers work, the automatic fryers, they have a filter, like a piece of paper, that creates a filter cake. The oil runs through that every time they do through the day. It might cycle through there and remove the toxins. If it's a manual filtration, they'll pour it through, almost like a coffee filter. There's a roll-up filter. Basically, all the time it's going through this filter cake that's formed. It doesn't leave residue in the product. It's not an additive. It actually comes out in that process. The FDA does approve a certain small % to remain if it ever did because it's all food quality. It's generally recognized as safe ingredients, and it would be okay, but it's all out of it.
The quality doesn't have a negative or any noticeable impact on the taste other than it keeps it at their highest quality in taste. That is the impact.
Just for a pictorial for everyone to see, you can see on the left here, that is the sludge that's left over after the filtration process. We're removing that brown substance, some of which is our powder, of course, but we're removing that from the oil, which would normally leach into the food. Another positive just so you could see pictorially.
Right. What is the size of the bag you said, like the powder that you put in?
It's 250 grams. It's basically 1% of the volume of a product.
Okay. What kind of customers want or need to do the pilots? What do you think will be the turning point that the pilots are not needed anymore? Is it product recognition or any other reasons?
Yeah, I think there's going to be a shift at some point once we have more substantial evidence in the U.S. because people want to see it work in the U.S. The type of customers, it's anyone frying. We have efforts into these large fast food chains with franchises, the brands that people will recognize. That process is important, but complex because you're selling to corporate and you're getting into a franchise network. At the same time, we're going after large corporately owned chains. In the U.S., there can be hundreds and hundreds of locations all as a corporation. Some of them are more fast casual or all over the spectrum of type of restaurant. Virtually every restaurant fries. The question is, do they have one fryer, two fryers, four fryers, six fryers? For all of them, it matters. For all of them, it impacts their performance.
We're selling a whole cross section. I think there is a, right now, they want to prove it works. That's why the pilot and then the rollout. I think there will come a time that they want to just see how it works in their operation. I think that will really speed up the adoption cycle. I definitely think once we have a number of these brands, the kind of brands we're talking to, and once that starts to happen and people see it more in the market, in Israel, again, it's a very small place, but in Israel, people don't even want to work in a restaurant sometimes if they don't use Beyond Oil. Chefs will say, "Hey, I want Beyond Oil here because it makes it healthier for everybody and it makes it easier. It makes the food better." They pull us in.
That might take a little while. I'd like to see that soon, but that takes some time.
Just one quick last point I'd like to make on speaking to an American audience here. I should have mentioned earlier, we are uplisting to the TSX Main Board as we speak. We do have an intention to move up to a senior U.S. exchange once we're ready. Once we start performing commercially in the U.S., we certainly are of the mind that we would uplist to a senior exchange in the U.S.
Right. I'd just like to end by asking if you can sum up the value proposition for investors who might be looking in the industry, what's Beyond Oil giving them?
Absolutely. We have a unique product that produces results that nobody else can or nobody else does. We make fried food healthier with an environmental benefit while saving the restaurant money, maintaining food quality, and having a number of other ancillary benefits, including labor and so on and so forth. We're institutionally backed. We have an extremely tight share structure with a very loyal shareholder base. We're about to expand into the U.S. market very abruptly. We think that there is a lot of value going to be created for our investors in the coming months and the year ahead.
Thank you so much. It's certainly an exciting time, a market and exciting time for the company. With that, I would like to thank you very much for sharing your story and for everybody in the audience. Thank you for listening and spending time with us today. Thank you.
Thank you.