|Ocean Power Corporation Issues Letter to Shareholders|
EL DORADO HILLS, Calif., Feb 8, 2001 (BUSINESS WIRE) -- The following is a letter to the Shareholders of Ocean
Power Corporation (OTC: PWRE ):
A Letter from the President and the Chairman of the Board of Ocean Power Corporation
We want to take this opportunity to provide our shareholders with a progress report from Ocean Power and a commitment to provide you with this update on a quarterly basis.
As always we appreciate the great enthusiasm so many of our shareholders have shown in learning what they can about the fields of desalination, distributed power generation and renewable energy. We continue on our path to bring together a family of technologies that will allow us to integrate modular water and power systems with a goal of becoming a global distributed water and power company. Now, I would like to provide you with a brief update in the areas that are both critical to the company and to our shareholders:
In mid-December 2000 we received long-awaited comments from the Securities and Exchange Commission (SEC) on the revised Form 10 SB we submitted to the Commission earlier in the year. As of today, we have submitted our response to these comments and the amended Form 10 SB is available on the web at www.sec.gov or www.freeedgar.com .
The question we most often receive from a shareholder is, "How long is it going to take before this process will be over and you can get re-listed on the stock exchange?"
The only answer to this question is that we cannot predict or control how long this process will take, we can only assure our shareholders that it is one of our highest priorities, and we are making our very best effort to satisfy the SEC's requirements and bring this process to a successful conclusion. We have engaged Latham & Watkins, an experienced law firm, to assist us in this effort and as soon as the SEC is satisfied, Ocean Power can then seek to be listed on a major trading exchange.
On that note, I want to assure shareholders that the company is filing all other necessary documents to meet the reporting requirements of the SEC, such as Form 10, 8K and 10Q. Regarding the exchange the company will seek to be listed on, the company is weighing the merits of a NASDAQ or AMEX listing. Due to the growth of our business activities in Europe, we are considering a listing on a major European exchange as well.
We encourage our shareholders and the public to visit our website (www.pwre.com ) for new updates and other information items. We are now in the process of reconstructing the website to make it more useful to the public and our shareholders. If you forward your email address to us at email@example.com , we will be able to facilitate even better communications. If you do not have access to the Internet, please call our Investor Relations office at 212/618-1955, and we will be happy to fax or mail posted news to you.
Acquisitions, Licenses, Joint Ventures, Strategic Partnerships
As can be seen from prior announcements, Sigma Elektroteknisk AS, (www.sigma-el.com ) our Stirling Engine subsidiary, is moving forward on its commercialization plan. It has delivered its first test unit to Statoil, (www.statoil.com ) the Norwegian state oil company and has started the first phase of its manufacturing development program with Ricardo, Inc., (www.ricardo.com ) the U.S. subsidiary of Ricardo, Ltd. of the U.K., a leading developer of diesel and internal combustion engines for the automotive industry. In addition to Sigma's activities in the U.K., Holland and Germany, we have started to develop the marketing relationships necessary to introduce the basic Sigma product (a 3 kW electric/9kW thermal system designed for single-family homes) to the U.S. market.
Ocean Power has received and tested its first two monitoring units from EEM of San Diego and Moscow. The units permit the real-time monitoring of air and water quality, based on proprietary technology developed from air and water monitoring by the Soviet/Russian space program. The successful tests confirmed the basic performance of the units and the next step will be to have the full range of real-time gas and water sensors validated by an independent laboratory. Now that the preliminary data is positive, the Company will develop a definitive license agreement for the exclusive rights to this technology for water and power applications outside of the former Soviet Union. Our ultimate goal is to use this technology to monitor air quality in the exhaust of the company's Stirling engines.
Ocean power has signed a non-binding term sheet with Science Applications International Corporation (SAIC) (www.saic.com ) to license, on a non-exclusive basis, their next generation solar concentrator. This concentrator can be used with either Stirling engines or Photovoltaic (PV) concentrators. The down payment for this license will be an equity stake of 5% in a subsidiary company to be set up by Ocean Power to develop the utility market in the U.S. and Canada. In addition to SAIC's technology, Ocean Power will convey to the new subsidiary the exclusive rights to all of its power generator technology for use in the United States and Canada.
On Dec. 20, 2000, Ocean Power signed a non-binding MOU with Organic Power of Oslo, Norway (www.opas.no ) to acquire up to 50% of the common stock of Organic Power for a combination of cash and restricted stock in Ocean Power. The exact amounts will be determined as a result of due diligence investigation. Ocean Power's primary interest in Organic Power is their ability to convert municipal solid waste (MSW), bio-mass and many other waste streams into useable heat. The elimination of waste is a potential income stream in and of itself. The heat produced by these processes adds a second income stream as well as being able to drive Stirling engines to produce electricity. Many potential customers are facing increasing waste problems as well as power and water shortage.
In the course of negotiations with HyPerTec, Ocean Power concluded that the optimal business arrangement was to make HyPerTec a wholly-owned subsidiary. HyPerTec has agreed to this arrangement. The company will pursue the commercialization of Ocean Power's low-power, Proton Exchange Membrane (PEM) fuel cell technologies. HyPerTec will focus on passive, ambient-pressure systems for long-term power supplies for the military and commercial markets.
In addition to the PEM activities, Ocean Power has finished its first two lab facilities in El Dorado Hills for the development and testing of low-temperature hydrogen generators and high-performance alkaline fuel cells. Under the leadership of Dr. Robert Zhao, director of Fuel Cell Technology, these components and subsystems will be developed to support the goal of making fuel cell systems with electrical efficiency higher than 60 percent.
The Company is working with its regional partners in Greece, Mexico and the Caribbean to select at least two sites in each region for installation of H2OkW systems as revenue producing pilot plants in 2001.
In addition the Company is preparing bids for systems in two additional regions, while simultaneously assessing the best regional affiliation for each.
All of the initial H2OkW projects are anticipated to employ the high-efficiency SeaWater Reverse Osmosis (SWRO) technology to be built for the Company by Malta Desalination Services, Ltd.
A new business relationship is being developed with Water Services Corporation, Ltd. of Malta. This venture is intended to lead to a new subsidiary, Ocean Power Malta, which will manufacture, install and maintain SWRO subsystems for use in the Company's H2OkW installations.
Ocean Power is negotiating with both Aquamax/Keeran and Hadwaco Oy to develop a joint venture company (controlled by Ocean Power), that will own all intellectual property rights pertaining to distillation technology, of all three companies. It will also acquire the manufacturing facilities and selected staff of Hadwaco as well as its commercial business in the area of water remediation. This development will bring a secure manufacturing base for proprietary plastic heat exchangers as well as extensive system engineering skills that will be applied to the Company's core desalination business.
Through an agreement with the U.S. Department of Energy, Pacific Northwest National Laboratory, and its administrator, Battelle Memorial Institute, the Company has initiated a program to further develop and commercialize an ozone water treatment technology originally invented at the Kharkov Physical Technical Institute of the Ukraine.
A multi-year desalination product development program has been fully defined and selected projects have been initiated.
Since my last letter in August, our staff has increased dramatically. The Sigma acquisition and other recent hires has more than doubled the Sigma staff. We have added a number of key senior staff (see resumes on our website):
-- Philip Johnson, formerly managing director of National Power, of the U.K., has joined us as VP of International Operations;
-- Randall Peeters, Ph.D., former chief scientist of GenCorp Aerojet has joined us as chief scientist;
-- Tom Redmon, formerly managing partner of Wilke, Fleury, Hoffelt, Gould & Birney has joined us as corporate counsel;
-- Sergey Puzhaev, former head of the Russian Space Fuel Cell Laboratory has joined us as director of development, Alkaline Fuel Cells.
In addition to our current internal hiring, the Company has sought to identify and retain other professional support, such as:
-- Latham & Watkins (securities, corporate, transactions);
-- Darby and Darby (intellectual property);
-- First Union (investment banking and mergers and acquisitions).
We are in the process of selecting a top-flight Investor Relations/Press Relations firm as well as a search firm to help augment our management team.
Recent developments in California and elsewhere have highlighted the stress on the current domestic power system and a burgeoning market for new power sources. This coupled with further deterioration of water supplies worldwide has us convinced that we continue on the right track to create a Company that all of the shareholders can be proud of.
JP Maceda Gloria Rose Ott
President Chairman of the Board
CONTACT: Ocean Power
Blair Aiken, 212/618-1712