World Tree Carbon Offset Program - 2018

World Tree COP ○

Offering Description

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The World Tree Carbon Offset Program (COP) is a sustainable timber investment based on the Empress Splendor tree, the fastest growing hard wood tree in the world.
 

World Tree COP is raising $1M CAD in Preferred Shares for its 2018 Offering. Investors purchase rights to the sale of lumber for one acre of Empress Splendor (ES) trees per 2500 shares, which are planted in the 12 months following the investment. Investors are then entitled to 50% share of the company profits upon harvest of the trees’ lumber in 10 years (the time which it takes the ES tree to grow to maturity).

The Empress Splendor tree is considered the fastest growing hardwood tree in the world, is non-invasive, self-regenerating, and produces high quality hardwood lumber. The trees also absorb 11 times more carbon than any other tree, making them a valuable tool in the fight against climate change.

World Tree’s primary objectives are to generate income from the growth and harvest of ES trees, and through the planting of these trees, help investors offset their carbon footprint for life (one acre of trees over 10 years roughly offsets the average individual’s carbon footprint for 50 years).

How it Works

  1. Investors purchase COP shares for a given year: For every CAD $2,750 invested (until Dec. 31, 2018, when it will increase to CAD $3,000), the investor receives 2500 preferred shares and WT COP plants and grows to maturity one acre of ES trees (140 trees on a 20 x 20 grid).
  2. Investors’ trees are added to the pool of all tree purchases in that year: This is done to diversify risk of tree loss for a specific plantation or plot (e.g. due to bad weather); each investor would lose a small percentage rather than a few losing all of their investment.
  3. World Tree organizes the planting of trees with certified farmers: Contracted and located in North and Central America.
  4. The trees are harvested: It takes 7-10 years until ES trees are mature and harvestable.
  5. World Tree brokers the sale of the lumber and proceeds are shared: The trees are harvested and sold for their lumber. This revenue is split 50/50 between the farmers and the company. The net company proceeds are then split 50/50 with the investors. Following this first harvest, all rights to the trees and resulting lumber in subsequent regrowth cycles go to the farmer. WT COP commits to offering its services to help the farmers broker the lumber for any ongoing cycles.

Partnerships

Investment Summary

Investment Offering: $1,000,000 raise (minimum investment: $2,750)

Use of Proceeds: Funds from each $2,750 invested are used to manage the plantations for the entire ten-year cycle, from propagation to harvest. This includes:

  • Purchase of Empress Splendor trees
  • Shipping, handling, and import permits
  • Tree ordering administration
  • Management salaries
  • Farmer support, education, and inspections
  • Commissions
  • Marketing
  • Legal and accounting
  • Lumber brokerage
  • Land leasing and labour
  • Office overheads
  • Contingency fund/reserve

Investment Structure: The World Tree COP offering is structured as up to 1,500,000 Preferred Shares.

Investment Opportunity: The offering matures in 2028 (10 year term). There are no interim capital calls and all principle are to be paid at maturity.  

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.

Revenue Model

Investors in the 2018 COP program receive 50% of the company profits from the harvest of the 2028 season trees. Revenue is based on the growth and sale of Empress Splendor Lumber.

ES lumber currently sells between US$3.00-$14.00 per board foot. World Tree uses US$3.00 in its forecasts to maintain a conservative approach. Each acre, which is approximately 110 trees when modelling for a conservative 25% tree loss, produces 30,000 board feet. 

revenue model

There may be expenses from the harvest, milling, and preparation of the lumber (although these costs are normally paid by the buyer).

Competition

There are a number of competitors, potential acquisition targets, and partners in the space, albeit none of these options offer a financial return for their carbon offsets. The closest comparable organization is iPaulownia, however it involves the purchase of land as well as ES trees. The company is based in Europe and World Tree has in fact developed a positive working and learning relationship with them (including purchasing a small portion of their Carbon Offset Program trees from iPaulownia).

There is a well-established market for Empress Splendor lumber in Asia. Platforms such as Alibaba appear to sell Paulownia for as little as $1.50 /board foot for some small vendors, however prices for bulk orders can rise to $6.50/board foot. In North America, there is currently no dominant, organized suppliers in the market. See here for a list of suppliers.

The Empress Splendor

The Empress Splendor tree is the fastest growing hardwood tree in the world. It achieves maturity in just 7-10 years, where it is then able to be harvested for lumber. The tree is non-GMO, non-invasive, responds well to organic farming methods, and regrows from the stump after harvest up to seven times. It also absorbs 11 times more carbon than the average tree. It produces a durable and light hardwood which is stronger than pine. Its lumber can be used for home and office furniture, wood finishing, marine products, musical instruments and more.

Where the Trees are Grown

North America

World Tree has planted 50,000 trees in 19 locations in USA and Canada, spread across various states including Texas, Florida, Georgia, Mississippi, Alabama, Oregon, and British Columbia.

Costa Rica

World Tree has identified excellent growing conditions in the mountains of central Costa Rica, especially in the coffee-growing areas. ES trees provide additional benefits for coffee farmers, with the shade proving advantageous for the growth and harvest of coffee plants. Further, due to their fast growth and deep root system, the trees provide cover for the coffee without competing with the plants for nutrition. The coffee farmers have high quality soil, well managed plantations and a year-round staff that work the land. 23,000 trees have been planted in 26 separate locations in Costa Rica with coffee farmers.

planting map

Impact

Environmental Impact

World Tree COP has a stated objective to offset the carbon footprint of its shareholders. One acre of ES trees sequesters 1,030 tons of carbon over a 10-year growth cycle, 11 times more than any other tree. For reference, the average North American citizen’s carbon emission’s per capita is approximately 20 tons. This means investing in one acre of trees will effectively offset the shareholder’s carbon footprint for 50 years (1030/20).

(World Tree is also taking soil samples at various plantation locations to measure carbon sequestration over time and intends to report on this data.)

In addition, growing large numbers of trees for purposes of eco-timber production helps protect natural forests from being destroyed to satisfy the world’s growing demand for wood. ES trees will also regenerate up to 7 times from the stump, avoiding the need to replant, and replenish depleted soil.

impact narrative

Economic Impact

World Tree is providing a new revenue stream for farmers, often in marginal areas. Farmers receive the trees, education and support for free, and share 50% of the revenue from the harvest. World Tree also partners coffee farmers in Costa Rica, who use the trees to provide shade on shared-grown coffee plantations. The trees intercrop perfectly with the coffee plants, improving the productivity and quality of the coffee, and provide a much-needed additional source of income.

Impact Metrics

World Tree collects and reports on the following metrics:

Environmental Impact

  • Number of trees planted
  • Total carbon sequestration

Economic Impact

  • Number of farmers planting by area
  • Board feet of lumber produced per acre
  • Income per acre

Industry

Carbon Sequestration and Tree Planting

The “restoration economy” is a new and emerging industry. Recent research showed that restoration and other land management improvements could provide more than a third of the emissions reductions necessary to keep global warming under 2°C. The Nature Conservancy recently showed that the economic benefits of restoring land are estimated at US$84B per year and deliver a range of financial returns. It concluded that this industry was at the take-off stage, with new business models, advancing technologies, and political will supporting growth and likely indicating investment sums may also rise.

Hardwood Lumber/Empress Splendor

Overall, the demand for lumber is rising while supply has not increased in step. Global population is consuming timber on increasing levels, fueled by economic and population growth.

Investment 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 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.

Management Team

Wendy Burton

Wendy Burton

Chief Executive Officer

Ms. Burton has over 22 years’ experience in growing Empress Splendor trees. During the early days of WTT, she travelled to Brazil, Paraguay, Australia, New Zealand and all of the states in the US where there are ES trees in order to learn how to successfully grow and manage them. She has been a longstanding member of the American Paulownia Association and has personally planted over 6,000 Empress Splendor trees as well as harvested 47 acres of mature ES trees.

Prior to World Tree, she has had years of experience in successfully managing Investor Relations of public and private companies. She has held roles as President of Corporate Communications of National Scientific, a similar role at Intercell (OTC-BB), and Halo Gaming Corp. In each case, share equity increased in the double digits during her tenure.

Cathy Key

Cathy Key

Chief Operations Officer

Dr. Key has been the source-person in creating the World Tree Carbon Offset Program, responsible for the creation of the business structure, legal framework, marketing and presentation materials. Dr. Key also oversees the farmer support team, management team, investment team, legal counsel and accounting.

With a PhD in Anthropology, specializing in the economics of cooperation, Dr. Key brings a diverse skill-set to the table. She has over 16 years’ experience in business development, marketing and sales and has worked with organizations that include Telus, McGill University, Johnson and Johnson, University of Illinois and the University of British Columbia.

Angela Nauta

Angela Nauta

Chief Investment Officer

Mrs. Nauta has a broad background of experience in sales, finances, customer support and coaching. Outside of World Tree, she is a financial advisor and coach with an expertise in exempt markets and real estate investing.

Angela has worked with WTT since 2006 and has been working full time on the development of the Carbon Offset program for the last two years. She has presented the program to audiences across Canada and has formed strong relationships with Exempt Market Dealers

Alex Jay

Alex Jay

International Plantation Manager

Alex Jay is a professional Forester and Resource Economist with over 30 years’ experience in natural resource management in a wide range of Australian and tropical environments. He has extensive international experience in Empress Splendor plantation projects and has grown large scale plantations all the way from tissue cultures to timber.

Alex manages the farmer support team and is responsible for selecting plantation sites and working with the farmers to make sure they have everything they need to be successful. Alex visits every farmer during the planting season for hands-on training and support.

Madhu  Bolton

Madhu Bolton

Marketing Director

Mr. Bolton has over 30 years’ experience in design, marketing, communications and technology. He began his career as a typographic designer working for some of the world’s top advertising agencies in London, England. For over 10 years he worked on World Series accounts including Rolex, Remy Martin, General Motors, Time-Life Books and Readers Digest.

Since 2001, Leslie has been helped to found and create several online software companies. He developed an online application called ‘Conference Company’ that is used by universities to manage academic conferences. He was the interface designer and creative director for MyArtChannel where, together with a team of 25 developers, he created a social platform for artists to share and sell their work. After these decades of experience in building and marketing companies, in 2013 Leslie formed Melting Point Media. This company provides business and marketing consulting to green businesses. It was in this context that he was introduced to World Tree and collaborated in the creation of the COP. He was so convinced by the merits of the program that he has become a permanent member of the World Tree team.

Michelle  Gordon

Michelle Gordon

Chief Financial Officer

Michelle Gordon is an extremely dedicated and accomplished CPHR and CPA, CMA. She also holds a Bachelor of Commerce from Thompson Rivers University.  Michelle began her career working in both municipal and provincial government, where she learned the importance of policies, procedures, and financial controls. Michelle later used those skills to take an opportunity as a Controller for a publicly traded tech company on the TSX Venture.  There she was able to cut their cost to a quarter, by streamlining and templating process, contract renegotiations, and eliminating duplicate costs. She also listed them on the OTCQB and worked with additional start-up companies building financial models for them to raise funds. Michelle has also worked as a contract Controller/CFO for manufacturing companies, a not-for-profit, several start-up companies, a native band, and was a Managing Director for a public accounting firm.

$455,750.00

Raised Of $1,000,000.10 Goal*

Days Remaining 103
Hours 10
Mins 10
$455,750.00
 
Preferred Shares Offer. Structure
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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.