Oneka

Oneka Technologies ○

Offering Description

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Sustainable Freshwater from the ocean using All-in-One Wave-Powered Desalination Systems. Oneka technologies developped an autonomous, environmentally friendly solution with very low operation costs, which addresses the water crisis faced by a large portion of the world population.

Fresh water supply will be one of the greatest challenges of the 21st century. Many coastal regions rely on fuel-powered desalination for their water. Traditionally, desalination energy requirement limits its economic viability and adoption. To overcome this major drawback, Oneka developed a technology that produces fresh water using only wave’s energy. Resulting in an autonomous, environmentally friendly solution with very low operation costs.

The 4th version of their device has been successfully tested in Florida from May 2017 to June 2018, and the company is now preparing its commercial version of their device and ready to start sales. The technology provides a durable alternative to traditional desalination, perfectly suited for clients in coastal regions looking for new sustainable alternatives for their fresh water supply.

Capital raised figures include amounts raised both on and off platform.

Investment Highlights

Investment:

Total capital raise of $1.3M (Investment minimum: $25,000)

Use of Proceeds:

The Company shall use the net proceeds to commercialize the solution, for product improvement, working capital and business development.

Investment structure:

Oneka is offering Class A Convertible Preferred Shares at $ 2.1141/ share on a pre-money valuation of $2.9M (fully diluted).

Investment opportunity:

The following description is an extract of a more detailed term sheet proposed by a lead investor and signed by Oneka Technologies on June 1st, 2018.

  • Dividends: The Class A Preferred Shares have an annual cumulative preferential dividend of 6% of the initial purchase price.
  • Liquidation preference/automatic conversion: 1x liquidation preference, automatic conversion on a 30M$ IPO and 8x initial investment purchase price.
  • Board of Directors: Oneka’s board of directors will be composed of 5 directors of which  2 directors elected by the lead investors. 

Please note that this is not a complete investment summary. Investors should read all associated documentation including the investor package and associated securities agreements before considering or making any investment. Please contact us via email at info@svx.ca or fill in the Ask a Question box for more information.

Product Description

Oneka’s device gathers the movement of the waves to pressurize seawater and desalinate it through reverse osmosis membranes. Each Oneka unit produces approximately 10,000 liters (10 m3) of drinking water per day. It is made of three sections, a buoy at the top with the main components, a pumping device in the middle and an anchor at the bottom. Water is sucked in the pumping device, sent through filters and the desalination membranes.  The only fluid in the system is seawater (no oil). The desalinated water is pumped to the shore through an underwater pipe that lies on the floor of the ocean. No equipment or infrastructure is needed on the shore.

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Multiple buoys are connected together in a project. A commercial project would consist of at least 5 units.

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In June 2017, Oneka’s patent (PCT application), to protect its system and method for desalination of water by reverse osmosis has been granted. In the coming months Oneka plans to select key strategic countries to request a patent for each country. Oneka is also planning to expand the patenting of other elements of their solution.

Oneka continues to develop the product by enhancing certain features of its solution:

  • Connecting several buoys together;
  • Reducing maintenance level needed and facilitate maintenance process;
  • Building resistance to storms.

Traction

Oneka started to validate different market segments and identify the low-hanging fruits. The Company’s commercialization strategy is currently focused on the coastal golf opportunities and the off-grid and eco-friendly resorts . Oneka has built a pipeline of potential clients and is advancing on closing its first sale with a golf course based in Florida near their demonstration site and a gated community property owner located in the Caribbean islands. Sales to small and medium-scale water treatment facilities are also considered as strong potential verticals in the near term.

Engineering firms, integrators and project developers of renewable energy projects are showing interest to develop series of large-scale projects. The team met the Maldives's water utility company and has received a LOI. Though, for proximity reasons, Oneka will begin with the Caribbeans and possibly Chile. Recently, the Company signed an MOU with an established and experienced Chilean renewable project developer with a potential of 121 projects on the coastal area of Chili alone.

Impact Narrative

Oneka’s mission is to make the oceans an unlimited source of drinking water for the coastal populations at an affordable cost without any impact on the environment, in a sustainable manner.

Sustainable access to water:

Access to drinking water will be one of the greatest challenges of the 21st century. Due to water scarcity and the growing need for water, nations are turning toward desalination as a solution, which consists of turning the seawater into drinking water. Unfortunately, traditional seawater desalination is not a long-term solution to answer the growing needs of drinking water worldwide as it emits pollution and aggravates climate change which is one of the main causes of the water scarcity. More than 99% of the market currently consists of non-renewable-energy using desalination plants (Source: DesalData, REN21). Fuel represents up to 70% of the cost of the water produced, which essentially is a system converting fuel into drinking water. Furthermore, these plants pollute and could be expensive systems to operate with many components to maintain. This creates a vicious circle, where the lack water forces the usage of desalination with fossil fuels, which accelerate climate change that generates even more water issues. In order to address water scarcity, a solution that doesn’t pollute is required. Oneka has developed a solution that combines the resource (sea water) and its energy (waves) in a single device to make drinking water. This way, the drinking water is produced without having any negative impact on the environment.

Empowering people:

Water is an essential element. To be able to develop, a community and people need a durable and affordable access to it. Oneka Technologies bring autonomy and independence to their users as it produces drinking water from the ocean without any fuel. Traditional desalination plants are the equivalent of converting fuel into drinking water. Oneka keeps in mind the rural and isolated communities through their designing by keeping technologies simple to maintain with the minimal tools. To install and operate the units, small fisherman boats are sufficient. Usability-wise, as the technology has no electronics and only hydraulics, like plumbing, the units can be maintained by people with limited training. Too often desalination plants are being shipped out and left over because they needed specialized people to maintain them and because of special parts from the manufacturers. Oneka offers all-inclusive maintenance training to our users as well.

Impact Metrics

Oneka - B Corporation Score: 94

Oneka is working towards tracking specific metrics:

  • CO2 reduction
  • water access
  • fuel consumption reduction
  • cost of water reduction

Industry Overview

In 2015, the UN estimated that 800 million people didn’t have access to enough water. This water scarcity is mainly due to:

  • Rising population: According to the UN, the global population is expected to increase from around 7 billion to an estimated 9 billion by 2050, putting the world’s freshwater resources under considerable strain.
  • Higher standards of living: Associated with a rapidly rising demand for clothing and personal products, and a meatier diet, pressure on water supply increases 
  • Changing weather patterns: Rising temperatures fueled by global warming are accelerating glacial ice melt. The depletion of this freshwater source could have catastrophic effects on ecosystems and freshwater supplies.

The world’s oceans contain over 97.2 % of the planet’s water resources. The high salinity of ocean water, and the significant costs associated with seawater desalination, means most of the world’s water supply has traditionally come from fresh water sources: groundwater aquifers, rivers and lakes. However given the depletion of freshwater sources, desalination is gaining traction as one of the imperative methods to meet the growing requirement of potable water. Over 50% of the world’s population lives in urban centers bordering the ocean. In many arid parts of the world such as the Middle East, Australia, Northern Africa and Southern California, the population concentration along the coast exceeds 75%. Seawater desalination provides a logical solution for the sustainable, long-term management of growing water demand.

There are 2 main methodologies to desalinate water: thermal and reverse osmosis. Reverse osmosis is expected to witness the fastest growth on account of its lower energy consumption rates compared to thermal methodologies.

At the end of 2017, there are more than 19,000 desalination plants worldwide, with a total installed production capacity of 86.55 million m3/day. The global water desalination market is at $19Bn with 63% of the market being municipalities. The market is set to reach USD 27Bn by 2025 with a 9% growth annually (source: Global Water Intelligence). Close to one third (about USD 9Bn) of this market is the serviceable available market by Oneka's technology, as it requires wave energy. 

Oneka is targeting clients with the following profile at first:

  • Desalination is a necessity (only the sea is available as a water source)
  • Electricity is costly
  • Waves are sufficient
  • Relatively small scale (under 1000 m3/day)

By taking into account the scale of the actual unit and energy cost factors, Oneka’s obtainable market is assessed at $900M globally where $250M is in the Caribbeans alone. Most clients are hotels, private islands, distributors, and small public organizations.

Competitive Advantage

More than 99% of the desalination market is composed of desalination plants powered by electricity produced by generators that burn fuel. These plants have a lot of components to essentially convert fuel to potable water. Fuel represents up to 70% of the water produced of this costly and polluting system. They particularly are expensive for low volumes (less than 500 m3/day). Even when using solar or wind energy, they are limited by the space it takes to have the equipment in place, and capex is still very high.

To address the high energy costs of operating a desalination plant, a vast number of companies have been working at producing electricity using waves energy. Most are splitting their focus between producing energy and producing desalinated water onshore. Oneka sets itself apart by focusing solely on producing desalinated water offshore. Companies like Seatricity (UK), Carnegie (Australia), and Atmocean (USA) are developing devices that pressurise seawater to hydraulic pressures using the action of the waves. This pressurised water can be fed directly to a desalination system thereby eliminating the need for fossil fuel generated electricity to drive pumps. Water still needs to be desalinated afterwards. There is also competition from the combination of other sustainable energy sources and connected to desalination plants (solar, wind).

Oneka’s positioning related to its competitors is outlined in the table below. Only Saros is the closest competitors, with a prototype to also directly produce desalinated water offshore. They have a different market positioning (less than 10 m3/day), financial strategy focused on crowdfunding for US$15,000, small capacity per device (max 300L/day vs. 10,000 for Oneka).

Oneka has a unique positioning for enabling it to beging with smaller scale markets and also benefits from the following competitive advantages:

  • Desalination offshore, all-in-one: no need for other processes and facility to be built onshore. It also enables a much simpler system with less components and a pipe that is by an order of magnitude cheaper.
  • No recurring cost of fuel: the device is powered by the waves movement
  • No pollution: each device eliminates the pollution of the equivalent of 7 north american cars
  • Simple integrated device: few components leads to lower installation and maintenance costs: flexible capacity: devices can be plugged together to increase capacity cheaper than current solution: on a 15 year period, Oneka assessed that water price will be $2/m3, 4 times cheaper than regular public services in some areas.

Key Advisors and Partners

Oneka is now in the process of setting up a technical and market advisory board to support the management team in its strategic development activities.The Company is also supported by EspaceINC an accelerator of startup businesses in the region of Sherbrooke, Quebec.

Business advisors:

  • Jan Kral: commercialisation advisor, 40 years of experience with innovative technology commercialisation.
  • Shawn Meyer-Steele: desalination industry expert, President of the Caribbean Desalination Association (CaribDa) and CEO of H20 professionals.

 

Risks

All private securities listed through online investment platforms and Exempt Market Dealers (EMDs) like SVX are likely to carry more risk than those available on the public markets. Our goal is to make you aware of those risks before making an investment. For further details on the risks in the private markets, refer to the SVX Risks section. Some of the offering specific risks are identified below:

Product Performance/Reliability:

After successfully testing its prototype in Florida, Oneka is looking for its MVP to ultimately reach 100 connected buoys. Although it has proven that the technology works, the Company needs to industrialize its manufacturing process and perform cost reduction programs. Additional features will need to be developed, implemented and released.

Liquidity Risk:

This investment is illiquid given the stage of the venture. A liquidity event is unlikely to take place before the proposed exit as outlined by the Company. Investors should not expect to access their principal before an exit, which could happen on the fifth anniversary of this investment based on market conditions and capacity of the Company to buy-back investors.

Business and financial risk:

The planned business operations and revenues for the next phase of business at Oneka is dependent on customers adopting the product as well as for the Company to find the right commercial package formula related to the price, the features, the distribution and support required as well as the industrialization of its production to scale sales in large volume per customer.

Market – Adoption risk:

The Company will have to validation its commercialization strategy which will be confirmed through sales. This might require different approaches and could result into a higher investment cost to support sales and marketing efforts.

Venture risk:

Oneka is an early-stage company with limited underlying assets to secure or de-risk this investment opportunity. All of the capital invested in the company via this offering is at risk for loss. The company has no history of revenue generation and track record to meet their debt financing obligations by making the requisite interest payments. This type of investment has substantial risk. Investors should make an investment only if they are prepared not to receive any return on their investment and to lose their investment in its entirety.

Currency risk:

Oneka is a Canadian based venture with the majority of their customers planning to be coming from the US or the Caribbean’s. There is risk of the Canadian Dollar rising with respect to the USD creating a higher cost profile for the business.

Management Team

Dragan  Tutic

Dragan Tutic

CEO

Initiator of project Odyssée, university project prior to Oneka, and holding a Bachelor in Mechanical Engineering from the Sherbrooke University, Canada, Dragan is the manager of the team since its beginning. An entrepreneur at heart, Dragan has already carried out many projects. At the age of 18, he established and recorded his first business, a lettering company. A few years later, he launched EMUS 1, a project which built an electric racing motorcycle. The project was accelerated with by his personal electric motorcycle he built before that. Then in 2013, he put into practice his learnings in an internship at OTIS in Singapore, where he worked as a management consultant. This was in parallel with the management of the Odyssée project. Initially more a technical than administrative leader, Dragan developed his managerial skills with discipline and perseverance using precious insights from different business coaches and a part-time MBA..

Renaud Lafortune

Renaud Lafortune

VP & Technology director

A strong pillar in the creation of project Odyssée and also holding a Bachelor of Mechanical Engineering from the University of Sherbrooke, Canada, Renaud is a person with a lot of creativity and ambition. Possessing a strong technical intuition, he participated in several competitions in robotics and carries out several personal projects with 3D printers. He mainly focuses on the design and manufacture of the desalination units and the certification of the product. He has two years of experience in research and product development at Pratt & Whitney Canada, BionX International and the Center for Actuators and Motors (CAMUS) at Sherbrooke University.

$961,300.00

Raised Of $1,300,000.00 Goal*

Days Remaining 38
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$961,300.00
 
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*Capital raised figures include amounts raised both on and off platform. Amounts raised off platform or committed have not been independently verified by SVX.