Water-Backed Tokens (WBTs) or “Water Bonds”
Before providing any further details about Water-Backed Tokens (WBTs), we would like to present the following legal disclaimer:
Legal Disclaimer: Relationship Between Section 10(b) and Rule 10b-5
Section 10(b) of the Securities Exchange Act of 1934 broadly prohibits manipulative or deceptive practices “in connection with the purchase or sale of any security.”
Rule 10b-5, enacted by the SEC under Section 10(b), specifically targets fraud, false statements, and material omissions in securities transactions.
These provisions form the cornerstone of federal securities antifraud enforcement, empowering both the SEC and private litigants to address deceptive practices and protect the integrity of securities markets.
Application to Water-Backed Tokens (WBTs)
We are confident that Water-Backed Tokens (WBTs) do not meet the definition of a “security” under the Howey test. This conclusion is based on the following considerations:
1. Current Status
No water extraction is presently occurring. What we are offering are fractional extraction rights, akin to mineral rights commonly traded in private contracts in Texas. Such rights are not considered securities, as the price of the underlying commodity being extracted (e.g., oil, gas, or spring water) is determined by the market, independent of managerial efforts.
2. Comparable Assets
Assets such as carbon credits, whose value is determined by supply and demand for emission offsets (e.g., by polluters like shipping companies), are also not deemed securities. Carbon credit exchanges are not SEC-regulated, as their value does not rely on the managerial efforts of others.
Proactive Measures to Ensure Compliance
To address any potential regulatory concerns, we proactively treat WBTs as though they were securities in all marketing and investor communications. This ensures compliance with the principles of Section 10(b) and Rule 10b-5, irrespective of their legal classification.
1. Accuracy and Verifiability
All statements regarding WBTs are independently verifiable for accuracy and factual correctness.
We ensure that no claims can later be deemed misleading or false.
2. Forward-Looking Statements
Any potentially uncertain or speculative statements are explicitly labeled as forward-looking to eliminate ambiguity.
3. Evidence-Based Assertions
Every claim regarding WBTs is supported by concrete evidence.
We actively encourage investors to independently verify all claims.
Commitment to Transparency and Trust
By adopting these rigorous standards, we mitigate any legal risks of misrepresentation under Section 10(b) and Rule 10b-5, regardless of how WBTs are ultimately classified. This commitment to transparency, accuracy, and regulatory compliance underscores our dedication to earning and maintaining investor trust.
Asset Description: Water-Backed Tokens (WBTs)
Water-Backed Tokens (WBTs) represent collective extraction rights to water sourced from 10 Farr Road, Pittsburg, New Hampshire, home to the state’s largest licensed freshwater spring. WBT shareholders are granted the exclusive, perpetual right to extract water from this spring under U.S. property law. Authorized by the State of New Hampshire for the extraction of up to 360,000 gallons per day, this glacier-fed spring is renowned for its exceptional purity, balanced mineral content, and low contaminant levels, making it ideal for both consumer and industrial applications.
A Renewable Resource with Growing Demand
Unlike finite resources such as oil, water is naturally renewable—barring rare force majeure events like severe localized droughts. As global demand for water continues to rise due to population growth, industrial expansion, and environmental stress (e.g., falling water tables in regions like India, Africa, and the Gulf States), the value of these extraction rights is poised for significant growth. This positions WBTs as a forward-looking investment in an essential and increasingly scarce resource.
Legally Secured Rights
WBTs are firmly secured under U.S. property law, with legally recognized extraction privileges documented in state deed registries. This legal framework ensures a high level of stability and protection for investors. Only extremely improbable events—such as a dramatic decline in New Hampshire’s water table or catastrophic acts of God (e.g., a hypothetical 1917-style communist revolution in New Hampshire)—could disrupt the water flow.
A Unique Fixed-Income Asset
Although a physical asset, WBTs function like a fixed-income instrument, offering payouts in commodity money—namely fresh spring water, which outperforms fiat currencies in terms of stability and intrinsic value. These water dividends, comparable to physically settled futures in commodities like oil, gas, or corn, are delivered directly from the underlying water asset.
Flexible Returns
Shareholders may vote to convert water dividends into fiat currency or other assets, ensuring adaptability to various financial needs and market conditions.
Lower Risk, Higher Sustainability
While all investments carry risks, WBTs’ exposure to force majeure events is demonstrably lower than that of many traditional options, including U.S. Treasuries. Water’s renewable nature, paired with its irreplaceable role in life and industry, makes WBTs a uniquely stable and sustainable investment.
Inflation-Resistant Value
Water, a resource immune to technological replication, is projected to outpace inflation metrics such as the Consumer Price Index (CPI). By aligning with an essential and universally valuable commodity, WBTs provide a sustainable “water-dividend” instrument that safeguards purchasing power while delivering tangible returns.
The Bottom Line
Investing in WBTs means securing access to a sustainable, income-generating asset underpinned by a critical resource with enduring global demand. This makes WBTs not only a reliable hedge against inflation but also a forward-looking investment in one of the most indispensable commodities on Earth.
Water Bonds: Valuing Water Extraction Rights
While equity valuations can be intricate, fixed-income instruments are easy to value, relying on the discounting of future coupon payments at a specified interest rate. In the case of Water-Backed Tokens (WBTs), these “coupon payments” are issued in gallons of natural spring water—a commodity with a well-established commercial market. According to [SOURCE], local wholesale water pricing ranges from $0.03–$0.05 per gallon, with premium branding commanding significantly higher rates. By tying coupon payments to a perpetual daily yield of 360,000 gallons, WBTs’ value can be precisely calculated based on the perpetual income stream generated from water.
This positions WBTs as an investment option, combining the predictability of fixed-income instruments with the inflation-resistant nature of an essential natural resource. By providing perpetual, tangible payouts in spring water, water bonds offer investors a dependable investment opportunity that aligns financial returns with growing global demand for finite, eco-critical resources.
Comparing WBTs to 30-Year TIPS
When compared to 30-Year Treasury Inflation-Protected Securities (TIPS), Water-Backed Tokens (WBTs) provide several notable advantages:
Feature
30-Year TIPS
Water-Backed Tokens (WBTs)
Backing
U.S. government promises (fiat)
Tangible, perpetual water rights
Inflation Adjustment
Based on CPI (subject to control)
Market-driven water pricing
Income Duration
30 years
Perpetual
Default Risk
Dependent on government solvency
Geologically stable water source
Sustainability
Linked to fiat stability
Environmentally renewable resource
Key Advantages of WBTs Over TIPS
1. Tangible Backing
While TIPS rely on fiat currency promises backed by the U.S. government, WBTs are secured by tangible, perpetual water rights—an essential, finite yet renewable resource with intrinsic value.
2. Inflation Adjustment
TIPS adjust returns based on the Consumer Price Index (CPI), which is controlled by the same entity issuing the bonds—the U.S. government. This introduces potential bias or manipulation.
In contrast, WBT payouts are tied to market-driven water pricing, reflecting transparent and independently verified commodity values.
3. Income Duration
TIPS have a fixed maturity of 30 years, while WBTs provide perpetual income through renewable water extraction rights.
4. Default Risk
TIPS rely on government solvency and the ability to repay debt in fiat currency. WBTs mitigate this risk by being backed by a geologically stable water source, with payouts derived directly from natural resource extraction.
5. Sustainability
TIPS are indirectly linked to the stability of fiat money systems, which are susceptible to long-term devaluation.
WBTs are rooted in environmentally renewable resources, ensuring stability and sustainability over time.
Conclusion
Unlike TIPS, Water-Backed Tokens (WBTs) eliminate reliance on government solvency and inflation metrics, offering perpetual, tangible returns and significantly reduced counterparty risk. By tying payouts to a vital and finite resource like water, WBTs provide a compelling alternative for investors seeking to preserve purchasing power and achieve long-term financial stability.
Given that TIPS are currently yielding around 2.5%, a 2% discount rate for WBTs is both reasonable and justified, reflecting their unique value proposition as a low-risk, inflation-resistant asset anchored in an indispensable natural resource.
Market Capitalization Estimation
To illustrate the market capitalization of Water-Backed Tokens (WBTs), we use the following assumptions and calculations:
Wholesale Price Assumption
Sample Pricing: Assume each extracted gallon sells for approximately $0.04 (subject to validation). This conservative estimate serves as a baseline.
Annual Revenue per Gallon: At $0.04 per gallon over 365 days, each gallon generates about $14.60 per year. Accounting for downtime due to maintenance or repairs, we conservatively use $14 per year.
Perpetual Capitalization (2% Discount Rate)
Value per gallon: Annual revenue per gallon divided by the discount rate: $14 ÷ 0.02 = $700.
Total Value of Water Rights: With a daily extraction capacity of 360,000 gallons, the total value is calculated as:
360,000 gallons · $700 = $252,000,000 (approximately $250 million).
Direct Consumption Upside
The above valuation assumes wholesale pricing for bulk sales to bottlers or distributors. However, if fractional shareholders consume their water dividends directly—replacing the cost of retail bottled water—the effective value of each gallon significantly increases. Retail water pricing often exceeds $1 per gallon, with premium brands commanding even higher rates.
Retail Delivery Replacement Example
Retail Cost Offset: A shareholder consuming water dividends directly offsets retail delivery costs (e.g., bottled water priced at $1 per gallon).
Implied Value: At 360,000 gallons per day, the implied value under retail consumption pricing far exceeds the $250 million wholesale valuation, showcasing WBTs’ significant potential for added value.
The Bottom Line
By investing in Water-Backed Tokens (WBTs), shareholders gain access to a secure, perpetual “water dividend” backed by an essential natural resource. In addition to stable, inflation-resistant payouts, shareholders benefit from the option to directly consume their water dividends, significantly enhancing value through retail cost savings. This unique structure positions WBTs as a low-risk, inflation-hedged fixed-income instrument with substantial upside tied to global water demand and retail pricing advantages.