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 it to make you aware of those risks before making an investment. A comprehensive list of investment risks have been outlined in further detail lin the Offering Memorandum. A selection have been identified and presented below:
Liquidity: The investment is designated as an illiquid investment due to the holding nature of 10-12 years prior to seeing any return or redemption. This redemption payment is further compounded by the existence of the sale of lumber to trigger investor payments, which is entirely dependent on the ES lumber market and the team’s ability to sell to the market at that time.
Underlying asset: World Tree’s success is dependent on the propagation of high quality trees, successful nursery growth and deployment to the farmers. To mitigate these risks, World Tree has secured access to a collection of 18 genotypes that are known for their high performance, and working with a range of propagators and nurseries in different locations to avoid dependency on one supplier.
Regulatory: It is unknown at this time if tree planting under the Carbon Offset Program will qualify as a carbon credit in the future.
Performance: World Tree must find and contract farms and farmers to plant its ES trees. They must properly care for the ES crop from planting through their growth cycle to maturity, a period of 10 years. World Tree will not be continuously on the farmer’s land monitoring activities, and should a negative issue arise, World Tree may not have enough time to take corrective steps or instruct the farmer to take corrective steps to save the crop. If a farmer defaults, the company may be unable to obtain access to that farmer’s trees. To mitigate this risk, WT works with many farmers so it is not dependent on any single plantation. Further, its plantation manager visits each farmer personally and the farmer support team conducts monthly calls. Farmers also complete questionnaires every six months.
Business: Company profits are dependent on the aggregate board feet of Empress Splendor lumber that World Tree is able to harvest and the price per board foot for which it can sell its Empress Splendor lumber, both of which are subject to numerous external factors beyond the control of the company.
Market / Adoption: The market for ES lumber in North America is unestablished. If the company is unable to develop the market or if the market does not expand on its own, or if WT is unable to sell successfully to the Asian market, the company may not be able to sell ES lumber for a profit or at all.
This type of investment has substantial risk. Investors should make an investment only if you are prepared not to receive any return on your investment and to lose your investment in its entirety.