text

Wello Oy –

Technology to Unlock the Power of Wave

Investor Presentation January 2018

The world faces serious challenges in energy production.

Currently more than 60% of electricity is produced from fossil

fuels. The growth of population and industrial need will worsen

the situation during the years to come.

The Paris Agreement strengthens the global climate effort by

requiring all countries to set climate goals and by establishing

new mechanisms to hold countries accountable and to build

ambition over time.

The wind and solar power address to that problem. However

wave energy has a wider peak range, less fluctuation and

fewer periods without generation and thus complements them.

Variety of different sources of renewables result to stable

production and thus increases the value of all of them.

Ocean waves provide an endless resource of clean energy.

The market is practically unexplored yet.

The Problem

Waves -Endless Resource

• Predictable• Constantly available• More stabile than

wind and solar

World Ocean Review estimate the annual generating potential to 1,7 TWh

Reliable renewable energy economically

Wave EnergyWaves provide higher stability in energy production

compared to wind and solar

• 1 waves and wind increase relatively linear. Waves have

a slower fade-out trend

• 2 demonstrates the constant source of energy that waves

traveling across the ocean represent

• Availability of wave energy doesn’t fluctuate as much as

availability of wind energy.

2

Win

d an

dw

aved

ata from

Orkn

ey station

• Wave energy compared to wind and solar has a wider

peak range, less fluctuation and fewer periods

without generation

• The combination of wave and wind represent a

strong and stable generation source

1

Wave Energy MarketsEurope in the lead, Asia follows and expected to overtake

North America has Canadain front with a roadmap for2GW by 2030

European market estimated to develop 100MW by the mid 2020’s

China has a desire to develop 3MW. Japan has an initial target of 350MW and long term target of 12GW

In south America Chile, Argentina and Brazil has a massive potential and demonstrated willingness to invest in renewable energy

Australia has a defined renewable energy target of 4GW by 2020 where wave energy will be a contributor. Pacific islands have a peak demand of 350MW of which 80% is supplied by diesel.Conversion to wave saves cost and emissions

Sources:Caprity Advisory research, ARENA ”2014 Clean Energy Week ARENA and Ocean Energy”, E&Y “Ocean energies, moving towards competitiveness: a market overview “, Ocean Energy Forum ‘ocean energy strategic roadmap building ocean energy for Europe’

Wave Energy Converter (WEC) and Power Module

Core technology enables two product lines

The Wave Energy Converter (WEC) Penguin – ready for commercialization

• The WEC Penguin will generate energy from

3000 to 6000 hours per year depending on site

• The Hull is shaped to optimize energy

conversion based on local site wave conditions

• All critical and moving components are safely

encapsulated by the hull and are not in contact

with water

The Power Module – development phase• The Power Module utilizes the same working

principles as the power take off in the Penguin

• Installed on a vessel the Power Module helps

stabilize the ship, reducing need for other

ballast/stabilizing systems

• It generates power. In favorable conditions

each 50 kW Power Module can generate up to

198 MWh1)

1) Depending on vessel operation area and hours of operation, 198 MWh is equal to 66 000 liter of diesel if generated with a genset

Wello target group

WEC Penguin• Customers are:

• site developers• utility companies• fish farms• governments

Power module• Customers are:

• ship-owners• ship yards• fish farms• oil and gas companies• algae cultivation companies• offshore mining

Customer project rewiew

Cefow project in Orkney, Scotland

• In 2015 the European Commission’s research and innovation program Horizon 2020 granted 17 meur for Clean Energy From Ocean Waves (Cefow) research project. Wello’s share is 13 meur, out of which EU funding is 9 meur.

• Cefow aims to demonstrate advanced ocean wave energy converter (WEC) technology to increase the speed of wave power development and decrease the levelized cost of ocean energy by 30%.

• The Cefow consortium spans the full value chain including research organizations, marine service providers and a large multinational utility company.

• The first of three Penguins was deployed in winter 2017, has survived very harsh conditions since then and is currently producing energy to the grid.

Customer project review

SME project to commercialize Power Module

• Wello received 2,5 meur EU funding for developing the Power Module.

• Two year project. First tranche received in 2017

SME instrument:EU funding and support for breakthrough innovation projects with a market-creating potential, which is rolled out as part of the European Innovation Council (EIC) pilot. The EIC SME instrument will boost fast company growth and market-creating innovation thanks to staged funding and ramped up business acceleration services.

Customer project review Commercial Co-operation Agreement with GEU

Commercial Co-operation Agreement worth approx. 20M€ was signed in

21.11.2017 with Gapura Energi Utama, daughter company of Bangun Tjipta

Sarana, Indonesia:

First phase:

• To establish and run a demonstration project in the coast of Penida Island,

Indonesia

Second phase:

• To deploy a power park of 10 MW in the coast of Penida Island, Indonesia

Other projects will follow.

GEU will act as a

distributor of Penguins in Indonesia.

The potential for wave energy in the coast of

Indonesia is estimated to be billions of euros.

Customer projects

Pipeline for WEC Penguins

Projects under negotiation 2018 2019 2020 (meur)

• GEU, Power Park, Indonesia 1,8 2,7 4,6• ESB, Power park, West Wave, Ireland 3,0 2,0 11,0• ENI Teknomare, Pilot & power park,

Adriatic Sea, Italy 1,0 2,0 10,5• Royal Caribbean Cruises, Power park,

Labadee, Haiti 2,2 5,2 8,5TOTAL PIPELINE 54,6 meur

Letters of intent: • BSR Korea • Royal Caribbean• Rolls Royce • Fjord Maritime

Sale and Distribution

Sales strategy is two-fold:1. Identifying the easiest markets where some of the following applies:

• Good wave climate

• Cost of energy is relatively high

• Challenges for other renewables (e.g. No cranes available to install wind mills)

• Favourable government policies to wave energy

• Feed-in-tariff or other support for renewables

2. Penetrate the other markets later once the competitiveness of the

technology has increased further.

• This is expected to take place in 2 years.

Distribution channels:Search for distribution channels is ongoing. Some partners have already been

identified in Asia: BSR in Korea, GEU in Indonesia.

Partners in USA are yet to be found. Europe is considered home market which will

be taken care of Wello itself.

• Other renewables, especially off shore wind, can

be seen as competitors to Wello.

• On the other hand all renewables benefit on the

existence of others.

• Together these sources form a continuous and

more valuable and important part of energy

production.

• Wello is the only wave energy technology

provider publishing LCOE (Levelized cost of

energy) figures.

• Other wave energy converter providers

(Carnegie, OPT, AW-Energy) have not yet

managed to prove survivability or realistic LCOE

figures unlike Wello.

CompetitionOther renewables, other companies

WEC Penguin superiorityWello's WEC has several advantages compared to competing solutions

• Ongoing multi-device pilot with Scandinavian utility company Fortum.

• Wello's technology is the only technology that has proven survivability in harsh

ocean conditions. It is the only full scale device that has been operational on

site with over 12 meter waves, and still, five years later has original

components inside.

• It is the only technology that does not have any moving parts touching sea water. This

guarantees durability.

• Wello is the only wave energy technology provider publishing LCOE (Levelized cost of energy)

figures.

• The nominal power of WEC1, that is currently

deployed in Scotland, is 600 KW (the average

nominal power for offshore wind turbine is 3,6 MW)

• WEC2 will be build during 2018. The nominal power

for that is 1 MW.

Wello Board of Directors and Management

Heikki Paakkinen CEOMSc Architecture Oulu University 1988

Timo LottiCOOBSc Engineering Espoo-Vanta and University of Sunderland 1999 eMBA Aalto University 2010

Antti Paakkinen CTOMSc Mechanical Engineering Tampere University 1984

Pia Ali-Tolppa CFOMBA Helsinki School of Business 1988

Board of Directors

Vesa Sadeharju, Board ChairmanVNT Management,Partner (Power Fund II)MSc in Electrical Engineering Tampere University 1982 MSc Economics Helsinki School of Economics 1990

Heikki PaakkinenFounder, Board member and CEOMSc Architecture Oulu University 1988

Martin Estlander BoardmemberEstlander and Partner, Founder and ChairmanMSc Industrial Management and Computer Science Helsinki University

Harri Ollila BoardmemberVNT Management,Partner (Power Fund II)MSc Electrical Engineering, Helsinki University 1982 MBA Helsinki University 1997

Janne JuholaBoardmemberInnovestor Ventures Ltd, PartnerMSc Industrial Engineering Lappeenranta University1998

Sebastian Johansen BoardmemberSenior Technology Expert,FortumBSc Electrical Engineering Swedish Institute of Technology 1994

Management

First phase:

• At the moment the cost of a Penguin WEC is EUR 2,6 M

• As the technology is new to the markets the margin will be zero or

negative in order to close the first deals and gain credibility

Second phase

• Industrialization and supplier development in combination with volume

effect reduce the manufacturing cost per WEC device from current EUR

2,6 M to estimated EUR <1 M in 2021

• Levelized Cost of Energy (LCOE) is expected to be under EUR 100

(depending on the site)

• The margin is estimated to be 15%

The Pricing Strategy

Appendix

There is increasing demand for energy in the world.

Paris climate agreement: Increasing need for renewable energy

and the need to take all forms of renewable energy in to use.

Technology to produce wave energy is ready and with serial

production it is possible to decrease further the cost of energy.

Wave energy complements solar and wind energy.

No solar energy during the night.

In certain sites the wave energy is less expensive than energy produced by oil.

After Fukusima Japan is shifting from nuclear power to other sources of energy, the energy is

expensive, also the cost of land is expensive (solar panels), wave climate is optimal for Wello’s

product.

In Norway there is a feed in tariff that supports renewable energy usage within fish farming.

China (and other non-oil-producing countries) wants to decrease the dependency of imported oil,

also the fast growth of population means increasing need for energy, severe pollution problems.

Several reasons why wave

energy is desirable right now

Case Royal Caribbean Cruises

Royal Caribbean possesses several holiday resorts on Caribbean. One of those is in Labadee, Haiti. Offer has been made for 40 Penguins to be installed there.

• The electricity produced with Penguins is less expensive than the electricity bought from the local utility company.

• Wave energy gives a very positive image to RCC.

• Power Modules can be installed to their cruise ships to reduce the consumption of diesel, and to add the green image.

Energy Converter System and SolutionA multi purpose floating power plant converting waves to energy on the grid

• The WEC Penguin can operate as a stand alone wave power plant, in a

cluster and / or in combination with other marine energy generators sharing

the subsea cable infrastructure

• Scalable (size / weight) to optimize power conversion to local site wave-

height and period patterns

• Additional market opportunity in combination with energy storage solutions

for micro grids (e.g. remote islands) and floating installations (e.g. fish

farms)

Array of multiple WECs

Transformer substation

Distribution toconsumer

Subsea junction

Subsea cable

Generator Frequency converter Power converter

Generator Frequency converter Power converter

Generator Frequency converter Power converter

Generator Frequency converter Power converter

WEC Penguin LCOE reduction roadmap

LCOE = Measures lifetime costs divided by energy production. Allows the comparison of different technologies by calculating

present value of the total cost of building and operating a power plant over an assumed lifetime.

Potential to improve output of electricity through innovation for WEC from 650MWh per year in 2017 to an estimated 1600MWh per year by 2019 and 2500MWh per year by 2021

The Wave

Energy

Converter

(WEC)

Penguin

concieved

• Hull design• Rotor• Controls

Innovation:

Scale trials

WEC1 built and deployed for

testing

Improvement:

• Hull design• Rotor• Controls

WEC2 with design improvement:• Hull• Ballast• Power take-off

(PTO)• Controls

Improvement:

• Hull design• Rotor• Controls

WEC3 (serial) conversion rate optimization• Hull• PTO• Controls

Continuous improvement

2008 2012 2017 2018 2020 20212019

Wave Pool testing of new generation of WEC 0

500

1,000

1,500

2,000

2,500

3,000

0

200

400

600

800

1,000

1,200

2012 2017 2019 2020 2021

MW

h/y

ear

LC

OE

EU

R/1

MW

h

Technology

WEC Penguin LCOE reduction roadmapManufacturing

WEC1 built and deployed for

testing

• Limited supplier development

Improvement:

WEC2 build

• Strategic sourcing

• Supplier development

Improvement:

Industrialization• Designto

manufacturing

WEC3 buildStart serialproduction

Continuous improvements

~25% cost reduction ~50% cost reduction

2010 2012 2017 2018 2019

Hull

Rotating mass

Generator

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

0

200

400

600

800

1,000

1,200

1,400

2012 2017 2019 2020 2021

Mat

eria

lco

stE

UR

LC

OE

EU

R/1

MW

h

3D section of WEC

Active sourcing, supplier development and industrialization to reduce material cost and

improve production and sourcing with over 65% by 2019

Power Module Product and SystemMultiple advantages for hybrid and electric marine vessels and installations (e.g. offshore fish farms)

The Power Module have two main applications on floating

marine vessels and installations (e.g. off shore fish farms)

✓ Vessel stabilization

✓ Power generation

• Modern ship propulsion systems are diesel electric with energy storage and combined with the Power Module can reduce fuel consumption.

Vessel

stabilizing

systems

comparison

PowerModule Ballasts Gyros

Performance

(weight,

damping,etc.)

Partial damping,

heavy weight,

medium space

requirement. Smooth

effect. Reliable,

simple and robust

construction.

High damping,

heavy weight, big

space

requirement

High damping,

low weight,

medium space

requirement

Power

demand

No external power

need. Generates

energy in good

weather conditions.

Externalpower

source, required

high energy need

Externalpower

source required,

high energy

need

Cost Medium Medium Extremely high

Fuel use No external

power/fuel is needed,

produces electricity

Increases fuel use,

does not produce

electricity

Increasesfuel

use, does not

produce

electricity

Maintenance Small needs Pumpingneeds

maintenance

Small needs

Risks No special risks leakage inside the

hull

No special risks

Dimensions and power PowerModule

Rotator chamber diameter, m 3,6

Total mass,kg 25 000

Nominal power,kW 50

Vessel stabilization (wave roll reduction) 10-40%

Marine Energy EvolutionLegislative emission requirements and the desire to reduce cost

and emissions open a market for the Power Module in ships

Color Line Plug-in hybrid ferry. Source: ColorLine

Norwegian Explorer Cruise Line hybrid vessel. Source: Rolls-Royce

• Local Government requirements for emission reductions push the ship designers and operators to develop and introduce technology reducing emissions and noise

• Color Line was awarded port access times from 2020 at the port of Sandefjord, Norwaywith a new ferry which is a plug in hybrid. It will run electric only on approach, while at portand on departure. Low emissions emphasized in award decision

• Norwegian Cruise Line, Hurtigruten, is building hybrid vessels to enable emission and noise free transport in vulnerable areas such as theArctic

• Siemens is constructing a battery R&D centre and factory in Trondheim, Norway to meet the increasing demand for maritime energy storage. Siemens expect that over time 80% of new vessels will have onboard energy storage solutions by 2024

• Any hybrid drive vessel with a battery solution can utilize The Power Module which reduce emission, bunkers costs and ballast needs for stabilization

Sources: Rolls-Royce, Color Line, City of Sandefjord – sandefjord.commune.no

Power Module developmentUtilizing the WEC Penguin technology to realize the

Power Module product for serial production in 2019

2017 2018 2019

Mid-scaledevice• Vessel mounted

demonstrator• Sea trials

Serial Production • Multiple parallel unit

build• LCOE<100EUR/MWh

Continuous improvement, volume and productivity gains

Innovation• Final design• Final sizing and

performance calculations

Supply Chain• Strategic sourcing• Supplier

developmentIndustrialization• Design to

manufacturing

Scale model• Bench testing• Tank testing

Innovation• Evaluation of

scale tests• Update

designs and calculations

Supply Chain• Mid-scale

model build

Mid-scale device

Supply Chain, Industrialization and Manufacturing Focusing on this part of the value chain will deliver 65% in

material cost reductions from WEC1 to WEC3

ManufacturingPurchasing and Supplier Development

Supply ChainStrategy

Supply

• Hull raw material• Deck outfitting /

auxiliaries• Generator• Frequency converter• Voltage regulator• Rotor

Outsource assembly to yard:• Hull• Deck outfitting/

auxiliaries• Generator• Frequency converter• Voltage regulator• RotorOwn manufacturing• Software

Inhouse functions:• Order handling• Customer care and supportProducts, systems, solutions:• Power Module• WEC Penguin• WEC Penguin & mooringServices:• WEC Penguin deployment(1)

• Monitoring systems and solutions in the field (1)

• Service and maintenance support(1)

• Consulting (site development pre-project)(1)

(1) Services are not currently offered pending actual customer sales

WelloNetaman (ship yard)

Protacon

TES (Generator)

Ampner

Intellectual PropertyThe core technology is protected to secure the business

Patenttitle Number of Applications

StatusEP = EPO member states, WO =World

Method for converting the energy of water waves into electricityby means of a wave power plant

1 EP GrantedWO Published

Gyrating wave power plant 1 FI Granted WO Published EP Published

Method and system for adjusting the torque of a mass and spinning wheel rotator in a wave power plant

1 FI Not published WO Not published

Rotor for a wave power plant 1 FI Granted WO Published

Wave power plant 6 FI 6/6 Granted EP 1/6 Granted US 3/3 Granted JP 1/2 Granted AU 1/1 Granted

EP 5/6 Published WO 6/6 Published JP 1/2 Published AR 1/2 Published

Securing link for anchor chain, cable or rope 1 FI Granted EP Published

Wave power plant with floats set asymmetrical to wave advancement and set into gyratory motion

1 AU, CA, CN, FI, JP, RU, US, ZA GrantedWO, EP Published

Source: European Patent Office – There is continuous development, information may have changed

Company HistoryMore than 10 years of development has delivered a robust and proven technology

1970 – Recognizing

the market desire for

wave energy and

formulating the idea

which became The

WEC Penguin

2008 – Wello Oy is founded

2009 – Venture capital funding

2009 – 2010 – Scale model lab

tests 35 weeks sinusoidal

waves in 1:10 scale

100 year storm wave tank

simulation test passed three

times for 1:8 scale device

2012 – First deployment of full

scale device at Orkney Islands.

Survives 12 meter waves

2014 – Cooperation with

Finnish utility company Fortum

2017 – Re-deployment at

Orkney for long term testing

(2017 to 2019)

Passed multiple storms with

wave peaks of 13.5 meter

1970 2000 2010 2014 2017

Technology DevelopmentCore technology enables the Wave Energy Converter

Penguin and Power Module leveraging R&D spending

2008-2012• 1:20 scale

models

developed

• Tests in lab

conditions

• Technology

ready for full

scale production

2012-2015• Algorithms and

conversion

improvements

• Mooring design

2015-2016• 2nd generation

technology

verified in scale

• Hull shape

optimization

2008 2011 2012 2014 2017

2017-2018• Validatiion of 2nd

generation

technology in full

scale

2018-2019• Technology

optimazation

(improved

conversion rate)

2016 2018 2019

2017 2018 2019

The Wave Energy ConverterPenguin

The Power Module

2017-2018• Power Module

technology development (including spinningwheel)

Wave Energy

Generation from calm to stormy conditions up to 1MW

• 1 represent waves from <1.5m to 2m with output 10kW – 65kW of power.

• 2 represent waves from 4.5m to 5m output 150kW – 240kW of power.

• The Penguin wave energy converter starts to generate energy in calm conditions (1.5m waves) and will increase output as waves increase inheight.

• There is no upper limit of wave height forcing systems to shut down for safety. The Penguin will continue to generate energy even in stormy conditions

Sig

nif

ican

tw

ave

hei

gh

tH

s(m

)

Peak wave period Tp (s)

1

2

Legal structure / organizationWello ownership shared between employees,

financial investors and industrial investors

Employeeownership21.25%

Financialinvestors ownership 62.57%

Industrial ownership 16.68%

Kurjenkellontie 5 B FI-02270 Espoo Finland

Shareholder Description Number of shares % ofshares

Employees The Founder and Employees 1087 21.25

Estlander Holding Oy A Finland based private investment group 267 5.22

Power Fund II Ky /VNT Management

A Finland based clean tech venture capital fund 1906 37.26

Innovestor Ventures Finnish venture fund 1028 20.09

FortumOyj Finnish power utility 828 16.18

5116 100

Wello Management and Organization

Technically focused organization

Technology & Product Strategy Business strategy & development Product Management

Supply Chain Engineering IndustrializationQuality

R&D EngineeringTools and systems

Finance HRIT

Ali Pekcan

R&DJohan Männikkö

Engineering

MariaKorppi

R&D

Eero Korhonen

Engineering

Rupert

(Consultant)

Engineering

David

(Consultant)

Orkney site mgm

Schengchen DongProduct Manager

Polina VasilenkoMarketingSpecialst

Heikki Paakkinen

CEO

Timo Lotti

COO

Antti Paakkinen

CTO

PiaAli-Tolppa

CFO

Laura Oksanen

Engineering

Rodrigo Prodol

Engineering

Moritz Alber

R&D

Heikki Paakkinen

Marketing Sales

WEC Penguin Customer ProjectAssumed timeline of a customer delivery project

• Material cost for a project payment to suppliers is assumed as following (with payment terms 30 days):

✓ 10% of material cost is paid 3o days after contractsigning

✓ 30% of material cost is paid 30 days after material procurement by supplier (within 30 days after order)

✓ 50% of material cost is paid 30 days after delivery (9 months after order)

✓ 10% of material cost is paid after commissioning (2 months after delivery)

Submittal of drawings 10% 30% 30 days after sub.Drawing

Readiness for dispatch 50% Comm. 10%

• Cash received for a new project is assumed as following (with payment terms 30 days):

✓ 30% of project income is to be received 30 days after contract signing

✓ 30% of project income is to be received 30 days afterorder

✓ 20% of project income is to be received 30 days after delivery

✓ 20% of project income is to be received 30 days after commissioning (2 months after delivery)

Month# Penguin 1 2 3 4 5 6 7 8

Typical Customer Project, WEC3 Outsourced Production Support (6m)Commissioning

(2m)

Signing 30% Order 30% Production support 20% Comm. 20%

# Penguin 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Typical Customer Project, WEC3 Selling Project (4m) Engineering (6m) Outsourced Production Support (6m)Commissioning

(2m)

Power Module ProjectAssumed timeline of a customer delivery project

✓ 20 % of project income is to be received 30 days after contractsigning

✓ 30% of project income is to be received 30 days after productionstarts

✓ 50% of project income is to be received 30 days after delivery

Start of production 40% Shipping 60%

• Material cost for a project payment to suppliers is assumed as following (with payment terms 30 days):

✓ 40% of material cost is paid 3o days after delivery for productionstart

✓ 60% of material cost is paid 30 days after the Power Module is ready for shipping to cstomer

Power Module

Month

1 2 3 4

Power Module Project Material Cost

Outsourced

Production Support

(3m)

Shipp-

ing

Signing 20% Production 30%

• Cash received for a new project is assumed as following (with payment terms 30 days) :

Shipping 50%

Month

Power Module 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Typical Power Module customer

projectSelling Project (3m) Engineering (3m)

Waiting for vessel readiness to receive Power

Module(s)

Outsourced

Production Support

(3m)

Shippi

ngWait

Commi

ssionin

g

Loan maturity profile and

interest payment

Confidential

Interest

Type Start Maturity Duration 2016 2017 2018 2019 2020 2021 2022 2023

Bridge Finance 3/31/2016 3/31/2018 2.0 2,000,000 2,395,740 1,250,000 937,500 625,000 312,500 - -

Loan 12/15/2009 4/23/2020 10.4 1,376,000 1,032,000 1,032,000 688,000 344,000 - - -

Loan 9/26/2014 12/17/2020 6.2 1,561,893 1,561,900 1,561,893 911,893 261,893 - - -

Loan 1/2/2013 3/20/2023 10.2 2,740,000 2,740,000 2,740,000 2,192,000 1,644,000 1,096,000 548,000 -

Convertible 7/24/2014 1/1/2019 4.4 1,062,500 1,062,500 1,062,500 - - - - -

Total: 8,740,393 8,792,140 7,646,393 4,729,393 2,874,893 1,408,500 385,000 -

Loan -installmentsGrace

period

Start

installment

Installment

AmountPeriod Total 2017 2018 2019 2020 2021 2022 2023

Finnvera 4,734,740 1,089,000 2,395,740 312,500 312,500 312,500 312,500 -

Tekes 1/7/1900 4/23/2018 344,000.0 annually 1,032,000 - 344,000 344,000 344,000 - -

Tekes 1/3/1900 9/26/2018 650,000.0 annually 1,561,893 - - 650,000 650,000 261,893 - -

Tekes 1/5/1900 1/2/2019 548,000.0 annually 2,740,000 - - 548,000 548,000 548,000 548,000 548,000

Fortum 1/0/1900 3/31/2018 1,062,500 - - 1,062,500 - - - -

Total Installments excluding Fortum Convertible 10,068,633 1,089,000 2,395,740 2,917,000 1,854,500 1,466,393 860,500 548,000

Interest

Payment

Total 2017 2018 2019 2020 2021 2022 2023

Finnverasemi-annually

257,947 71,691 86,256 50,000 37,500 25,000 12,500-

Tekes annually 44,720 13,760 10,320 10,320 6,880 3,440 - -

Tekes annually 58,595 15,619 15,619 15,619 9,119 2,619 - -

Tekes annually 137,00 27,400 27,400 27,400 21,920 16,440 10,960 5,480

Fortum annually 26,563 10,625 10,625 5,313 - - - -

Total Interest 549,825 139,095 150,220 108,652 75,419 47,499 23,460 5,480

Loan – Balance (EUR 000)

Marine Energy EvolutionSustained strong growth for offshore wind, floating offshore wind is ramping up, tidal is starting and wave will follow

Marine energy is fast becoming an increasing part of the global energy mix.

Offshore wind is followed by floating offshore wind, e.g. Statoil HyWind, and tidal developments, e.g. Atlantis MeyGen

Waves represent a massive global source of energy. Development of sites is still in an early stage, but expected to follow the trend of offshore wind

Offshore wind capacity increase 2000 to2016

Atlantis Resources deploying a 1.5MW tidal turbine to the MeyGen project in Scotland. The total project is 398MW by 2020

Statoil’s view on floating wind potential. The HyWind pilot project is 30MW starting power production in 2017

World Ocean Review estimate the annual generating potential to 1.7TWh

Sources: The European Wind Energy Association, Atlantis Resources Ltd, Statoil, World Ocean Review

Penguin Power Module superiorityUnique solution, unlike any other

• Power Module produces energy to ships and reduces diesel consumption

• The energy produced by the Power Module is less expensive than the cost of energy generally in

ships

• In favorable conditions each 50 kW Power Module can generate up to 198 MW. Depending on

vessel operation area and hours of operation, 198 MWh is equal to 66 000 liter of diesel if

generated with a genset

• Direct installation to vessel, new or retrofit

• No contact to water, Power module works on accelerations

• No external components required

• Power module has a damping effect to

vessel movements

• Competing technologies are sails, Norse

power generator and stabilizers.

Income Statement

Income Statement (t€) 2015 2016 2017 2018 2019 2020

Forecast

Net Sales 500 10 6 228 11 000 32 670

-Variable Cost 6 092 9 032 25 800

GM (Gross Margin) 500 10 136 1 968 6 870

+Other Income 3 396 4 755 2 098

-Personnel Exp. 251 212 264 391 665 926

-Other Costs 157 133 744 1 056 765 849

EBITDA 92 -345 2 398 3 444 2 636 5 095

-Depreciation 4 3 966 2 073 2 079

EBIT 88 -347 2 398 2 478 563 3 016

-Fin Costs (net) 69 112 139 185 249 206

-Taxes 0

Net Profit 19 -459 2 259 2 293 314 2 810

Net Sales growth (%) 62180% 76,6% 197,0%GM (%) 100% 2% 18% 21%EBITDA (%) 23980% 55% 24% 16%EBIT (%) 23980% 40% 5% 9%EBDA (%) 22588% 52% 22% 15%Equity ratio 62% 74% 83% 84%Equity ratio ex. Prepaid income 57% 69% 77% 78%Int. Debt /EBITDA 3,22x 1,91x 1,79x 0,56x

Int.Debt/EBDA 3,42x 2,02x 1,98x 0,58x

Net Fin. Expense/EBITDA 6% 5% 9% 4%Interest coverage 17,2x 18,6x 10,6x 24,7x

Funding plan

• Cefow project received Finnvera bridge loan of 3,5 Milj. in early 2016. Bridge loan is

fully paid back by 9/2018 via next Cefow grant tranche using an escrow account.

• We are looking for brdige funding for the EU grant cash flows as seen in the table

below

• We are currently negotiating with current owners and crowfuding platforms for a

possible small equity issue

• We are planning to raise 12 milj. of EIB funding in late 2018 or do an Series B funding

round

History

• Fortum• Innovestor• VNT

management• Finnvera

H2/2017-2018

• Bridge funding • Small equity issue from

current owners and/or crowdfunding

H2/2018

• EIB funding or;• Series B

Time

Gro

wth

Balance Sheet

Balance Sheet (t€) 2015 2016 2017 2018 2019 2020

Forecast

Non-Current Assets (intangible) 324 363 1 270 2 231 3 648 5 063

Non-Current Assets (tangible) 16 991 18 428 21 141 25 848 28 252 26 873

Shares and other investments

Inventories 1 335 1 980 4 948

Accounts receivable 512 904 2 148

Other receivables 84 52 80 498 550 1 094

Cash 915 2 127 218 396 2 999 1 575

TOTAL ASSETS 18 315 20 969 22 708 30 820 38 333 41 701

Equity (adjusted) 10 052 9 593 11 852 16 145 16 458 19 268

Subordinated Loans 1 063 1 063 1 063 5 063 13 063 13 063

Interest Bearing Debt 5 236 7 678 7 730 6 569 4 714 2 860

Accounts payable 36 629 50 501 742 2 474

Prepaid Income 1 744 1 844 1 844 2 180 2 970 3 057

Current Liab. (non int bearing) 184 163 170 364 385 980

Cash Flow

CASH FLOW (CF) 2015 2016 2017 2018 2019 2020

Forecast

EBITDA -345 2 398 3 444 2 636 5 095

-/+Change in WC 693 -579 -1 061 -5 -2 394-/+Other NWC items 11 -21 -224 -31 51

CF from Operating Activities 1) 359 1 798 2 159 2 601 2 752

-Taxes 0

-Fin Costs (net) 112 139 185 249 206

CF from Operating Activities 247 1 659 1 974 2 351 2 546

-Net Investments 1 478 3 620 6 635 5 894 2 115

CF after Investing Activities -1 231 -1 961 -4 661 -3 543 431

-/+Ch in ST Loans

-Amortization (LT) -1 433 -2 411 -1 855 -1 855+New Loans 2 442 1 485 1 250

+New Capital 2 000

-/+Subord. Loans 4 000 8 000

-Dividends

Change in Cash 1 212 -1 909 178 2 603 -1 424Cash at the end of Period 2 127 218 396 2 999 1 575

1) Before financing items and taxes