Development
Limited
Business Development Strategy
The following corporate phases accompany the technical development outlined on the previous page. The company has licensed exclusive rights to John Bergís patents in return for modest support and a share of the proceeds. We then need to raise sufficient funds to complete the development strategy, about $3 million. Following this stage, the company will proceed to full commercialization. John Berg remains as a trusted advisor to the company and will serve as needed.
The business model for the Waveberg technology has two components to generate returns: 1) construction and operation of installations which generate revenues from the sale of water or power to the customer, and 2) licensing of technology for royalties. In the first case, the company will be a utility company, delivering electricity under long-term contracts. Capital costs of $3,500 per kW yield equity returns of 20 to 40% per year in the immediate markets discussed in waves/wavenergy/bod03.htm ; borrowing money for capital expenditures increase returns proportionately. Even the unlikely extreme of a total loss of the Wavebergs every 5 years due to storms only reduces the projected IRR to 20% per year, since the onshore generator and infrastructure would survive. We anticipate engaging with local project developers as partners; they would be responsible for raising money, local permits and infrastructure. Waveberg Development would build and deliver Wavebergs for the projects using local toll manufacturing facilities for the massive frameworks and our own facility for the pumps, the heart of the system. There are a number of potential partnership structures, and the best one will be based on the tax needs and incentives locally, as well as the intentions of the local developer.
Royalty income is a second stream of potential revenue. There may be local or national companies that do not want a partnership, but simply want to install the technology and receive the benefit of lower power pricing. For example, we recently fielded an inquiry from a large mining company on the coast of Namibia. Since a Waveberg only costs two years of fuel costs, we cannot recover the true value by sales of equipment alone. On the other hand, such a customer is interested in stabilizing costs. A modest annual royalty, or even leasing them Wavebergs would realize savings and stability for them, with an enduring income stream for Waveberg Development.
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