|1||Green energy innovation, producing a Zero Carbon solution for environmental sustainability.|
|2||We use yachts to drive H²-power innovation upstream into cruise and commercial shipping.|
|3||We have reservations (backlog) to build 12 H²/fuel cell powered yachts (proven demand)|
|4||Assets; 1.3 Megawatt solar facility, $300k molds & tooling for yacht construction.|
Clean energy is a passion of mine and Will Gassen has more experience in the ship and boating industry than anyone I know. Combining his extensive expertise with clean energy will set the stage to move the recreational boating sector toward clean energy, and if anyone can lead that charge, I know it's Will and his team. His plan is solid and it will not only create a dynamic company but hopefully clear the path for similar green energy projects.
Decisions are made on one of three bases: logic, economic, or vanity. There had never been an argument for building or purchasing a yacht grounded in economics or logic. Owning a yacht has always been a vanity choice, a misanthropic indulgence, until now. Today's superyachts are built with a purpose that answers an economic argument and a duty to serve a logical environmental cause. A new generation of superyacht buyers and their influencers see a world forming their views, and that world is changing. We are becoming more focused on environmental sustainability, and with that shift comes the Green "Zero-Emission" Superyacht.
Seagoing pleasure vessels that we today recognize as a "Yacht" can be traced as far back as the "Splendor of Aten" built for and named by Pharaoh Akhenaten, reigning circa 1351–1336 BC, the tenth ruler of the Eighteenth Egyptian Dynasty. The most famous Egyptian yacht, the "Thalamegos," was used by Cleopatra VII of Egypt to seduce Mark Antony and later to entertain Julius Caesar as they sailed up the Nile. As was then and as is now, these navigable structures are an extravagant fusion of technology and art. Yachts are beautiful and intriguing and compel a desire in humans like no other inanimate object. Vanity draws us to them; aboard your yacht, at sea, you are a sovereign. And again, as it was three millennia past, yachts remain to the exclusivity of the wealthy, elite, or privileged: the economically capable.
The notion of owning a superyacht just to have that experience is quickly becoming an old fashion concept. Owners today are wanting a yacht that delivers broader experiences.
Designers, architects, and builders must provide an excellent platform for their client's experience. They also must address the mandate for climate awareness and do so in a manner that compels this new breed of owner to engage and inspire others.
Bezos, Zuckerberg, Page, Brin, Colin Huang, Yang Huiyan, the Anderson sisters, Gustav Witzoe - any or all might self-effacingly ask; isn't it scandalous and profoundly vulgar that I am building this boat that is for me, my ego, my exclusion, and my own personal enjoyment?
The logic of purchase becomes complicated when multiple factors come into play. Benefits must be addressed, barriers must be identified, trade-offs, and price isolated. Wants are often emotional, and sometimes they appear irrational. Barriers can be as significant as the desired benefits. One highly motivating barrier is the fear of criticism, which drives us to the safest choice - or no choice at all. Compelling reasoning must be present to defend our decision.
Today logical arguments can be defended through the design and construction of green-hydrogen powered superyachts. These instruments of environmental sustainability are an immediate opportunity to affect the 'paradigm shift' that Prince Charles called for at Davos. The zero-carbon, zero-emission energy that green hydrogen offers is a vital component in this global realignment.
The yacht economy is often overlooked or undervalued. There may be as many as 250,000 land-based employees, building and managing superyachts today. At sea; another 60,000 to 70,000 crew and onboard ancillary personnel. Add to that, 150,000 contractors, maintenance, and seasonal day-workers, all drawing a handsome wage. The cost of a yacht, to buy or build, is just the cover-charge, the ante to get you into the game. The larger cost is owning, maintaining, and operating a yacht. Yachts are a labor-intensive undertaking and a massive business enterprise unto themselves.
To put context into the desire for, "economic sustainability", consider an Ultra-High Net-Worth Individual (UHNWI) with $500 million to invest. Does s/he put it in an intangible financial product that benefits a handful of people, or would you advise her to redistribute that money through a large segment of society by building a significant enterprise asset like a superyacht? A tangible asset that redistributes wealth as it is constructed and continues to redistribute prosperity throughout its existence as it travels around the world conceivably 50, 80, or 100 years forward.
From a legacy perspective, if a buyer or potential yacht owner is looking for exclusionary indulgence or similar motivations, then this is not the right endeavor. But if s/he is someone who wants to leave a legacy and profoundly change the world, then the opportunity is here and now.
The best way to predict the future is to create it.
To entice more people into the business and pleasure of superyachting, and if the industry hopes to remain relevant and compelling to future generations, it must respond to the changing priorities it currently faces in terms of design and innovation.
The globally conscious superyacht buyer is looking to create more of an impact that doesn't focus solely on revenue. They want to make lasting changes for the environment and lead with innovation and clean fuel on their yacht. Designers, architects, and builders must engage progressive technologies to deliver this unique client experience. They must address the perception and mandate for environmental sustainability and do so in a manner that compels this new breed of owner to engage and inspire others.
Net Zero ≠ Zero & Hybrid ≠ Carbon Neutral
A green hydrogen-powered yacht is the change needed for the industry to meet environmental sustainability goals and to create an opportunity to affect the 'paradigm shift'. Currently, liquified natural gas, or LNG, is being considered as an alternative 'clean' fuel for the yacht industry. In 2016, new environmental regulations were enacted in the USA to force boats over 24m and exceeding 500 tons to cut back on their sulfur and nitrogen oxide emissions by nearly 80%. However, while LNG is cleaner than diesel fuel, it is still not the most environmentally friendly option. It is still carbon, which means it is still pollution. Green hydrogen-powered yachts offer zero-carbon, zero-emission energy, making it the best choice moving forward. As a transportation fuel, it has the capacity for localized production and is produced using renewable sources like solar power, wind, hydroelectric and geothermal energy.
Yachts Lead the Sea Sector
Change must propagate from the yacht industry. The economic demand curve dictates that the cost of radical innovation can only be absorbed by the inherent premium of luxury yachting. History suggests that where a strong enough driver exists, shipping can make radical changes. Sometimes it is hard to visualize these changes. In the case of hydrogen, the driver for change is not performance or cost-benefit, but purely environmental. The most significant opportunity here is for the superyacht industry to lead innovation upstream into the commercial world to include cruise, cargo, and more.
The most significant barrier to the realization of a full hydrogen superyacht is not the onboard technology, it already exists, but rather the practical availability of green hydrogen within a global distribution network. Leading Shipyards; Lürssen, Feadship and Oceanco are routinely managing new build design-briefs calling for "future proof" propulsion technology and global sustainability measures. With a viable H² distribution infrastructure in place, these builders could and would satisfy these calls.
It is practical that a robust maritime Green H² supply chain can be built and operational within a two yacht-build lifespan, or about six to eight years. Land-based solar and wind plants producing Green H² as terminals to feed Bunker Ships and Barges, Bunker Ships themselves as solar plants producing and distributing H². Strategically positioned human-made islands and offshore platforms supporting solar, wind, and wave energy transformation into H² production and distribution.
These facilities are less complex, far less expensive, quicker to build, and remarkably safer from a human and environmental perspective than fossil fuel exploration, production, and refining. Hydrogen production creates a massive potential to recalibrate global energy markets. It appeals to a vast segment of new and incumbent yacht-climate-leaders, with the opportunity to affect a positive change and invest in something disruptive.
They stand in queue; superyachts to be built with a purpose that answers an economic argument and a duty to serve a logical environmental cause. They will be built by philanthropic thought leaders dedicated to making the world a better place. They will be legacy statements for generations to come. But let us not limit our vision to a small group of green yachts. Let us focus on transforming the entire green H² distribution and ecosystem.
Zeroc Energy Inc. has financial statements ending August 31 2020. Our cash in hand is $11,500, as of August 2020. Over the three months prior, revenues averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $10,000/month.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
We make hydrogen and use it as a green, zero-carbon fuel for the yachts and ships we build.
In 5 years, we hope to be managing Zeroc's global H² distribution infrastructure and providing H² to cruise and commercial shipping worldwide. These are future projections and cannot be guaranteed.
Given the Company’s limited operating history, the Company cannot reliably estimate how much revenue it will receive in the future, if any.
Zeroc Energy Inc. was incorporated in the State of Delaware in June 2020.
Since then, we have:
Historical Results of Operations
Our company was organized in June 2020 and has limited operations upon which prospective investors may base an evaluation of its performance.
Liquidity & Capital Resources
After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 12 months before we need to raise further capital.
We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.
We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. We plan to raise capital in 6 months. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.
Runway & Short/Mid Term Expenses
Zeroc Energy Inc. cash in hand is $11,500, as of August 2020. Over the last three months, revenues have averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $10,000/month, for an average burn rate of $10,000 per month. Our intent is to be profitable in 24 months.
Since August 31, 2020, there have been no material changes in our finances and operations.
In the next 3 - 6 months, the business will not generate any revenue, while expenses will continue to average around $10K per month. Over the next 12 months, we will continue to produce the raw hydrogen in the solar facility in Italy; we will also commence the construction of the prototype yacht. We will also continue to invest in R&D, as the overarching 'long game' is the construction of a distribution infrastructure to provide hydrogen to the yachts. Before we do that, we need to prove that hydrogen can be a practical source of fuel on the water.
We already have a backlog of reservations for around a dozen boats. Once the protoype is in the water and is functional, then we will go into full-blown production building the boats and when we hope to begin generating revenue. Our best estimate for when this will happen is ~18 months. We need an estimated $3M - $5M to go to market, depending on the terms we negotiate with Buyers. If we are unable to raise the funds necessary to go to market, we assume that investors will or would benefit from the Series A Preferred Round Terms & Conditions, not the least of which would be the seniority position upon any liquidation or winding down. However, this is part of the investment risk.
Additionally, the solar facility has the capacity to produce as much as $30K/month by pumping electricity into the local grid. We have diverted this energy to produce hydrogen. So, if we fail to raise the necessary funds to build our boats, we always have the opportunity to generate and sell electricity or hydrogen.
Zeroc Energy's CEO has been funding the operation to this point. This may continue but is not guaranteed. If the Wefunder campaign does not succeed, we will likely seek out funding from prospective buyers (those who have already put in their letter of intent to purchase hydrogen-powered yachts, and have expressed interest in funding the company).
Limited Operating History. The Company has commenced business on a limited basis, and to date has been engaged principally in organization and early business development matters relating primarily to the raising of capital to allow it to operate successfully. Reference should be made to the Section which describes the current business operations, business plan and agreements the Company has entered into. To date, the Company has had no revenues and anticipates significant expenses relating to the development of its infrastructure and business. The Company’s prospects must be considered in light of the risks, expenses, delays, problems and difficulties frequently encountered in the establishment of a new business in the Hydrogen as fuel, Climate Mitigation, Alternative Energy, and Yachting/Shipping areas, particularly given the volatile nature of the economic markets that we are currently experiencing, the limited availability of financing during these recessionary times, and the negative impact that changes in the financial markets could have on the ability of buyer’s of the Company’s products. There can be no assurance that the Company will achieve its objectives, or that it will be able to succeed in achieving its objectives. Given these factors, there exists a possibility that an investor could suffer a substantial loss as a result of an investment in the Company.
The Company may never receive a future equity financing or elect to convert the Securities upon such future financing. In addition, the Company may never undergo a liquidity event such as a sale of the Company or an IPO. If neither the conversion of the Securities nor a liquidity event occurs, the Purchasers could be left holding the Securities in perpetuity. The Securities have numerous transfer restrictions and will likely be highly illiquid, with no secondary market on which to sell them. The Securities are not equity interests, have no ownership rights, have no rights to the Company’s assets or profits and have no voting rights or ability to direct the Company or its actions.
Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.
Additional Financing and Capital Requirements. The Company will not use debt financing or any leverage whatsoever to acquire any Assets to operate the business. It is estimated, therefore, that the investor capital raised in the Offering (less expenses and costs as defined hereunder in the section entitled “Use of Funds”) will be used for operations. There can be no assurances that the Company will be able to raise additional capital or that the terms on which such capital is raised will be acceptable. Further, there can be no assurances that the Company will be successful in its efforts to sell any of the products that it intends to produce with the Offering Proceeds, or that the terms of any such transactions will be acceptable.
Reliance Upon Third Parties. To the extent the Company relies upon third parties to maintain and manage some of its interests, its ability to achieve its business objectives will be dependent on the efforts of others.
Management by Principals. The business strategy of the Company will be managed exclusively by the Board of Directors, CEO and other Executives. An investor in this Offering will not participate in the management of the Company. Accordingly, the success of the Company will depend upon the ability of the principals and other individuals employed by the Company to execute on its business plan. The CEO will have considerable latitude in its choice of strategies on behalf of the Company. The Company is highly dependent upon the expertise of its CEO in providing high level guidance. If the services of the company’s current CEO were lost, the Company could be materially adversely affected, and in fact may not survive such an event
Additional Issuances. The Company reserves the right to offer and sell additional equity and debt securities in the future, from time to time, at any purchase price determined by the Company's Board of Directors. There can be no assurance that the Company will not offer equity or debt securities for sale, even in the near future.
No Public Market for Our Interests. The Company has no class of publicly traded securities, and there will be no public market for the Securities for the foreseeable future. Further, there can be no assurance that an active trading market for the Securities will ever develop or be sustained.
Patrick McCarthy is a part-time officer. As such, it is likely that the company will not make the same progress as it would if that were not the case.
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