Promissory Note @ 8% Interest
Promissory with 8% annual interest. Investors will also receive their pro rata share of the profit from any sale of Wind Harvest common stock issued under certain warrants that WHPP will own.
|1||Our turbines harvest turbulent, unused near-ground wind.|
|2||Your investment receives 8% annual returns plus a potential 3 to 50X upside.|
|3||Wind Harvest has $5.5 million in its 2021 project pipeline, and $50+ million in 2022/23.|
|4||If today's wind farm understory market were fully utilized, it would be worth $250+ billion.|
|5||We have a senior team with eight decades in wind energy.|
|6||The Pilot Project milestones can be finished before summer 2021.|
|7||Wind Harvest has raised $10M+ since started in 2012.|
Wind is one of the most cost-effective sources of energy; however, current technologies cannot be used in many exceptionally windy locations. The large, 300+ foot (100m) and taller wind turbines have an impact on views, wildlife, aviation, telecommunication, roads, and more that can prevent them from being installed on many otherwise profitable properties. These wasted locations alone are a $100 Billion market needing a much shorter turbine.
The most valuable unused resource is the gusting layer of near-ground wind that is too turbulent for large propeller-type turbines to handle. Twenty percent of wind farms worldwide sit on ridgelines and other places where the wind funnels and speeds up near the ground. Our analysis shows that almost 130 gigawatts (GW) of existing wind farms have good to excellent wind below the lower sweep of tall turbines' blades. Harvesting this rich layer of wind should, on average, double the land's energy output and open a $250 billion undeveloped market.
Our compact Wind Harvester H-type turbines solve problems tall turbines engender and have the durability needed for project financing. Unlike propeller-type turbines with blades attaching to horizontal drive shafts at a single point, Wind Harvesters have vertically aligned drive shafts with two connections to each blade. These characteristics are core to surviving the powerful gusts that hit blades rotating close to the ground.
Central to our engineering confidence in this durability is our proprietary fatigue, frequency, mechanical, and aerodynamic models. Our engineers, led by renowned Dr. David Malcolm with his 40 years of vertical and horizontal axis wind turbine experience, used data from prototypes to validate these models. We know Wind Harvesters can endure tough conditions for 40+ years, after a low cost refurbishing in year 20.
With funding, nothing should stop Wind Harvesters from achieving $1 billion in sales within five years. For example, wildlife experts predict birds and bats will avoid three dimensional H-type turbines better than they do two-dimensionally rotating tall turbines. Wind Harvest is committed to using 24/7 motion and sound detection systems to avoid harming birds and bats and to augment the science on wildlife and wind turbines. Once proven safe, many windy properties could use Wind Harvesters where wildlife concerns have stopped projects.
When installed close together, the "Coupled Vortex Effect" increases energy from H-type turbines by ~15%. Rows of Wind Harvesters also vertically mix wind layers and suck down faster-moving wind from higher altitudes into the rotors of tall turbines and increase their energy output.
Energy in the wind is proportional to the cube of its speed, so small boosts in its velocity significantly increase a turbine's energy production. The synergy between tall and short turbines should result in more profitable wind farms and more development of properties with lower wind speeds.
We make money from the 20-35% markup on each Wind Harvester we sell. In 2021-2022, that will range between $30,000 and $60,000 per turbine. Sale prices will vary based on a project's profitability which is determined by wind speed, Power Purchase Agreement, number of turbines ordered, etc. In 2021-22, we expect to net an average of $700,000 from each megawatt of Wind Harvesters v3.2 (14-70kW, 20-50kW) turbines we sell.
As the size of the order increases, our per turbine Costs of Goods Sold will go down as might our markups. But even if we made only $15,000 per turbine sold, a 100 MW project would net $21 million for Wind Harvest.
Turbine sales open other revenue streams. Most buyers will pay us for extended warranty protection. Additionally, many buyers will want our 24/7 remote fault monitoring and our unique placement modeling services for near-ground wind turbines. These services create savings and increase energy production for projects. The larger the project, the more the potential for service-generated income.
Making More Money
We think our most significant stream of income will come from an untraditional source. The vast near-ground market is too big, and climate change too real, to act conventionally, and try to limit competition. So we plan on licensing our patents to partnering companies that want to produce their own brand of H-type turbines.
We have our own projects and customers, and a two-year technological head start, so we aren't concerned about competition. We believe our patents can save manufacturers $20,000 per near-ground turbine they make. If paid $5000 per turbine, we potentially could net millions of dollars annually from licensing the use of our Intellectual Property over the 17-year life of the patents, in addition to profits from our own sales. Doing this would also result in many more well-built near-ground turbines helping to reverse global warming.
Next, we anticipate raising $50 million in 2021 from the sale of Wind Harvest’s Series B shares. We will use that to finance and own projects that buy our turbines (see below). A year or two later, after banks refinance these projects, we intend to use that freed up capital to put 30% down and leverage loans on a suite of new projects that we will own. In addition to the income we make selling Wind Harvesters to those projects, we will earn revenue from the sale of our projects' energy and use of our services.
Projects in Development
One of our key strategies has been to develop projects that buy our turbines. Below are examples of some of the sales we have in our pipeline. We expect each of our RD&D/pilot projects in 2021-22 to lead to 10 to 100 times more Wind Harvesters sold to that customer or into that niche market.
1. Simpson Ridge, Carbon County, Wyoming
One of our partners, Clean Energy Holdings LLC, is expected to secure a permit and a Power Purchase Agreement (PPA) for a 5MW solar and a four turbine (280kW) Wind Harvester installation in 2021. In 2023, they intend to purchase at least 360 of our turbines (25MW) for the understory of the 80MW wind farm they are developing. Near-ground annual wind speeds on Simpson Ridge average 20 mph (9 m/s), making it one of the world’s most energetic sites. It is an exceptional resource, just waiting for our turbines.
2. Frost Peak, San Bernardino County, California
In 2011, a local nonprofit, One Town at a Time, proposed installing a 1 MW, 300' tall (90m) turbine near the Frost Peak telecommunication towers above the Mountain High Resort. They did not receive a project permit because of the towering turbine’s impact on views from the Pacific Crest Trail and on military flights in the area. Now, One Town is proposing to use this 18 mph near-ground wind resource with four 59’-72' (18-22m) shorter Wind Harvesters in a demonstration project that should not be easily seen in the clutter of the taller telecom towers on the peak. Eventually, the project could add 30 more turbines with minimal impacts on views from the trail. Its success opens the door to thousands of Wind Harvesters being installed globally on other windy telecom sites and send energy down their existing 3-phase transmission lines.
This Caribbean island depends on costly diesel-generated electricity and faces more climate-change-induced droughts. But it has plentiful near-ground trade winds and a goal of 100% renewable energy by adding 600+ MWs by 2030. Here, Wind Harvest is developing projects that provide cultural, environmental, and economic information needed for cumulative impact analyses of much larger projects. For example, we can manufacture 2000 Wind Harvesters in Barbados and install them on farms in windy St. Lucy Parish for a 100 MW hybrid desalination-wind project. When wind power exceeds grid capacity, the project would produce potable water from seawater.
Use of Funds
Wind Harvest has everything ready to complete Technology Readiness Level (TRL) 7, the pilot project step in the commercialization process. NASA, the airline industry, wind turbine manufacturers and others use to guide the development of a new technology. This step-by-step process helps ensure that the product works flawlessly when it is launched. We are using that same process with our turbines.
To overcome the difficulties that capital-intensive products face with traditional investors, we formed Wind Harvest Pilot Project Inc. to tap the power of crowdfunding.
This new company secures ~7-year promissory notes from individual investors via the Wefunder platform. 90+% of this money is then lent to Wind Harvest. With the first close of almost $400,000 on Dec. 11, we ordered one Wind Harvester v3.1 for installation at UL's Advanced Wind Turbine Testing Facility in Texas scheduled for May 2021.
.With the new data the TRL 7 step produces, we will revalidate our computer modeling of Wind Harvester v3.2, our final version of the turbine in this series. It is designed to be 25% less expensive and 10% more efficient.
When $1 million has been raised, we will have enough to complete the engineering and manufacturing of our Wind Harvester v3.2. Installed 3 feet away from v3.1, this sleeker turbine will further measure and validate the Coupled Vortex Effect, achieve international certification and be ready for sales by the end of 2021.
Capital raised above $1 million (with $3M being the maximum), Wind Harvest can more rapidly advance the other steps needed to become very attractive to Series B round investors. These milestones include:
- make a second v3.2 and add it to the first two turbines to create a three turbine array
- use LiDAR to collect wake data and model the synergy that these turbines can create for tall turbines when installed beneath them.
- add to and advance more projects in our a sales pipeline
Our 7-year financials predict that Wind Harvest will grow from selling $5.5 million in 2021 to total sales exceeding $1 billion in 2025. Our core strategies include:
1. Launching a $30-$50 million Series B round in 2021. We expect that raising funds in this current offering and completing the associated milestones will put us in a strong position for our B round. Our sales margins and other income streams should make us profitable by the middle of 2023. This would set us up well for an IPO in 2024.
2. Pursuing non-exclusive licensing agreements. We should sell more Wind Harvesters sooner by sharing 20-30% of the sales margin with licensees who help sell our turbines and construction and development companies experienced in large projects.
3. Once our projects have operated for a year or so, we should be able to borrow against their revenue streams to leverage and capitalize on more projects starting in 2023. By then, traditional lenders should finance projects that use our Wind Harvesters.
4. We plan to float a $150+ million Initial Public Offering (IPO) and create liquidity for our shareholders in 2024. That new capital would allow us to leverage project loans and own another $500+ million in projects that buy our turbines in 2024 and 2025.
5. We will actively support the science and engineering needed to open new markets by proving that our Wind Harvester turbines can operate:
6. We will invest in developing and patenting larger H-type turbines that can capture more of the energy in these intensely windy but geographically limited areas. We intend to be the leader in near-ground turbine engineering and placement modeling.
Our success should stimulate a "gold rush" of competition. The GEs and Vestas of the world won't let us have this considerable market to ourselves. But any competitor will have to master the same prototyping, field-testing, and aeroelastic modeling steps we have already gone through. Each of these takes substantial time and expertise.
Any reputable company in the near-ground wind space is likely to become an acquisition target once we prove that the wakes from understory turbines won't cause harm to tall turbines. Wind Harvest should be sought after because our:
Our goal is to stay independent with the help of new capital from the Series B round and with new executives who have experience in IPOs and large projects.
Impact on Climate Change
By 2030 or soon after, more than 200,000 MWs of turbines could be producing energy in wind farm understories where land and infrastructure are already in place. At 14.3 turbines per MW, Wind Harvesters should produce 3000 MW hours (MWh) yearly in a 15.7 mph (7m/s) resource, the average near-ground wind speed in those locations.
200 GWs of our type of turbines can produce 600,000 GWhs of electricity, enough to supply ~120 million average global households (assuming each uses 5000 kWh annually). Electricity from fossil fuel produces 1000 pounds of CO2 per MWh. 200 GWs of near-ground turbines can stop over 600 trillion pounds (0.25 gigatons) of CO2 from being released each year, the equivalent to halting CO2 emissions from 200 large 500 MW coal plants plus all the other pollutants they spew and habitat destruction their mining creates..
Once turbines are available, the understory market should build out quickly. Land, roads and infrastructure are in place. Most importantly, high energy wind is there.
We are excited to be just a year away from sales. We are thrilled that the Wefunder platform allows you to invest $100 and more in Wind Harvest. It is not often that a company is at our stage in the technology commercialization process with a huge, untapped market before it. It is less frequent that the average person has a chance to invest early, before we become a household name, before a Series B round or IPO.
We intend to make our mark on the world by opening up its many near-ground wind markets to rapid development and to help reverse global warming. In the process, we'll sell billions of dollars of our turbines and services and do well for our investors while following principles that we hope other companies will emulate:
We hope you will invest and help us open a massive, untapped worldwide renewable resource for the benefit of all.
For More Information
The FAQs on our business plans, technology, sales and markets, our 7-year financial and valuation predictions, and our windharvest.com website provide more information on how we plan to get from where we are now to $1 billion in sales in five years. Another source of information is our Form C (a link to that is on this page). We also welcome your questions, help, and comments. And please remember, our forward-looking projections cannot be guaranteed.
Wind Harvest has financial statements ending April 7 2020. Our cash in hand is $100, 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 $0/month.
Please see the Management’s Discussion filed with this Form C in Appendix E.
As more fully described in Questions 13 and 31 below, Wind Harvest Pilot Project Inc. (“WHPP”) intends to loan the proceeds of this offering under Regulation Crowdfunding and the 506(c) Offering (which is defined in Question 13 below) to Wind Harvest International, Inc. (“Wind Harvest”) through the Wind Harvest Loans (which are defined in Question 13) and to use Wind Harvest's annual interest payments and final principal payment to make payments on the Notes issued to investors in this offering and the 506(c) Offering. (The Notes are defined and described in Question 13 below.) As indicated in Question 31, WHPP has no other means with which to pay investors in the Notes other than proceeds from the Wind Harvest Loans. The Wind Harvest Loans will be secured by turbines, as well as related equipment and power purchase agreements, but the value of such collateral may be less than the principal of and interest due on the Wind Harvest Loans. Accordingly, if Wind Harvest defaults on the Wind Harvest Loans, due to bankruptcy or any other reason, WHPP may not be able to recover the full amount it loaned to Wind Harvest and may not be able to fully repay investors in the Notes or pay them interest on their investments. Wind Harvest will provide an unconditional guaranty that it will make payments due under the Notes if WHPP does not. However, if Wind Harvest is unable to repay WHPP, it will also be unable to meet its obligation under the Guaranty. Further, the Guaranty is unsecured, so there is no collateral that investors in the Notes would be able to seize in order to receive principal and interest payments.
The Issuable Shares described in Question 13 below may not be able to be sold at a profit, or be sold at all, before December 31, 2027, and thus WHPP's ownership of the Warrants described in Question 13 below may not realize any value for investors in this offering. Wind Harvest may never have a future equity financing nor undergo a liquidity event such as a sale of the company or an IPO that would cause there to be a market for the Issuable Shares. Investors in this offering could thus receive little or no profit from the sale of the Issuable Shares, and investors' return could be limited to the fixed interest rate on the Notes they purchase in this offering. (The Notes are defined and described in Question 13 below.)
There is currently no, and there may never be any, secondary market trading in the Notes, and investors’ ability to sell their Notes is further limited by transfer restrictions under applicable securities laws. If the investor is able to sell their Note, there is no guarantee that the investor will be able to sell for a price greater than—or equal to—the price the investor paid for the Note.
External factors such as government policies on subsidizing fossil fuels, possible large increases in the cost of raw material, and trade embargoes could affect Wind Harvest's profitability and markets.
The future success of Wind Harvest and WHPP 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 Wind Harvest and WHPP. There can be no assurance that Wind Harvest or WHPP will be successful in attracting and retaining other personnel they require to successfully grow their business.
Investors in the Notes will have no voting rights and no ability to make decisions regarding the affairs or operations of WHPP or Wind Harvest.
Christine Nielson, Kevin Wolf, and Cornelius Fitzgerald are part-time officers of WHPP. As such, it is likely that WHPP will not make the same progress as it would if that were not the case.
The COVID-19 virus could cause Wind Harvest's or WHPP's key persons to become debilitated or even die. If lost, these people would be costly to replace.
Wind Harvest's existing debts and other factors may affect Wind Harvest's ability to close Wind Harvest's Series B round with favorable terms. Wind Harvest has incurred operating losses since its inception, and it has an accumulated deficit of over $10 million as of December 31, 2019. WHPP may not raise enough with this offering or the 506(c) Offering for Wind Harvest to complete the remaining technology development steps that are needed to have a commercially available Wind Harvester turbine.
Wind Harvest cannot assure investors that it will be able to achieve or sustain profitability in the future. To continue in its plans, Wind Harvest will likely in the future require additional financing, including equity or debt offerings, in excess of this offering and the 506(c) Offering. Funding from these sources may be limited, unavailable, or not available on favorable terms. There is no assurance that Wind Harvest will in fact be successful in the wind turbine distributed- or utility-class or other business lines, or that Wind Harvest will succeed in obtaining funds in sufficient amounts to proceed with its strategy when capital is needed. If such capital and financing cannot be obtained for any reason, Wind Harvest may not be able to proceed with its business plans and may be required to scale back its strategic initiatives or go bankrupt.
The projects in Wind Harvest’s sales pipeline may not materialize in a timely manner or at all. Customers and projects typically undertake a significant development process that can result in a lengthy sales cycle. Furthermore, they require land use permits, including environmental review of impacts on wildlife, grid connection permits, and Power Purchase Agreements that are outside of the project team's ability to control. Government decisions at the local, state and national level can affect the ability for these deeded project milestones to be achieved.
Wind Harvest’s pipeline of projects may face unanticipated changes or delays that could negatively impact the ability of these projects to be able to buy Wind Harvest’s turbines. The long sales cycles may require Wind Harvest to delay revenue recognition until certain milestones or technical or implementation requirements have been met.
Problems with quality or performance in Wind Harvest’s products or products based on Wind Harvest’s technology that are manufactured by Wind Harvest’s licensees could have a negative impact on Wind Harvest’s relationships with customers and its reputation and cause reduced market demand for Wind Harvest’s products. Though Wind Harvest will require component suppliers to meet and follow the IEC 61400 requirements for quality control in the manufacturing, installation and maintenance of Wind Harvest’s wind turbines, and Wind Harvest will conduct periodic inspections, including inspections of facilities, processes, and raw materials, there could nonetheless be problems with the quality or performance of the wind turbines that could adversely affect Wind Harvest due to warranty claims or other contractual damages in the future.
Wind Harvest’s customers’ inability to obtain financing to make purchases from Wind Harvest or maintain their businesses could harm Wind Harvest’s business and negatively impact revenue, results of operations, and cash flow. Most of Wind Harvest’s customers will require substantial financing to make purchases from Wind Harvest and complete projects. The potential inability of these customers to access the capital needed to finance purchases of Wind Harvest’s products and to meet their payment obligations to Wind Harvest could adversely impact Wind Harvest’s financial condition and results of operations. If Wind Harvest’s customers become insolvent due to market and economic conditions or otherwise, it could have an adverse impact on Wind Harvest’s business, financial condition and results of operations.
There are a number of risks associated with international operations that could harm Wind Harvest’s business. Wind Harvest plans to sell products and provide services on a global basis and plans to expand into all countries with near-ground wind resources. Wind Harvest’s ability to grow in international markets could be harmed by factors, including:
We believe Wind Harvest’s intellectual property rights are valuable, and any inability to protect them could reduce the value of Wind Harvest’s products, services and brand. If Wind Harvest is unable to protect its intellectual property, Wind Harvest’s competitors could use its intellectual property to market similar products, which could reduce the demand for Wind Harvest’s products. Wind Harvest’s success depends substantially upon the internally developed technology that is incorporated in Wind Harvest's products. Wind Harvest will rely on a combination of patent, trademark and copyright laws, trade secret protection and confidentiality or license agreements with Wind Harvest’s employees, customers, strategic partners, suppliers, and others to protect Wind Harvest’s intellectual property rights. The steps Wind Harvest takes to protect its intellectual property rights may, however, be inadequate. Any breach or violation of Wind Harvest’sintellectual property rights by any of Wind Harvest's licensees could adversely affect Wind Harvest’s competitive position and the value of Wind Harvest’s assets.
Intellectual property right claims are expensive and time consuming to defend, and if resolved adversely, could have a significant impact on Wind Harvest’s business, financial condition and operating results. In the event of a conflict between Wind Harvest's patents or future patent applications and the activities of other parties, infringement proceedings may be pursued by or against Wind Harvest. The legal proceedings necessary to defend the validity of patents and to prevent infringement by others can be complex and costly, and the outcomes of these legal proceedings are often uncertain. These legal proceedings might adversely affect Wind Harvest’s competitive position and the value of its assets, and there can be no assurance that the outcomes of the proceedings would be successful.
Wind Harvest may not be able to receive patents on all of its expected patent applications. Patent applications in the U.S. are maintained in secrecy until the patents are published or are issued. Since publication of discoveries in the scientific or patent literature tends to lag behind actual discoveries by several months, we cannot be certain that Wind Harvest is the first creator of inventions covered by pending patent applications or the first to file patent applications on these inventions. Accordingly, we cannot be certain that the patent applications that Wind Harvest files will result in patents being issued.
Wind Harvest’s business is subject to the risks of earthquakes, fires, floods and other natural catastrophic events and to interruption by man-made problems such as computer viruses or terrorism, any of which could result in system failures and interruptions that could harm Wind Harvest’s business. Although Wind Harvest’s systems have been designed to reduce downtime in the event of outages or catastrophic occurrences, they remain vulnerable to damage or interruption from earthquakes, floods, fires, power loss, rolling blackouts, telecommunication failures, terrorist attacks, cyber-attacks, computer viruses, computer denial-of-service attacks, human error, hardware or software defects or malfunctions (including defects or malfunctions of components of Wind Harvest's systems that are supplied by third party service providers) and similar events or disruptions. Despite any precautions Wind Harvest may take, system interruptions and delays could occur if there is a natural disaster, if a third-party provider closes a facility Wind Harvest uses without adequate notice for financial or other reasons, or if there are other unanticipated problems at Wind Harvest's facilities. Wind Harvest does not carry business interruption insurance sufficient to compensate it for losses that may result from interruptions in Wind Harvest’s service as a result of system failures. A system outage or data loss could harm Wind Harvest’s business, financial condition and results of operations.
Wind Harvest’s insurance policies and financial resources may not be sufficient to cover the costs associated with personal injury, property damage, product liability and other types of claims brought against it. Wind Harvest is exposed to potentially significant risks associated with product liability or other claims if Wind Harvest’s products or manufacturing activities cause personal injury or property damage, whether by product malfunctions, defects or other causes. If product liability claims are brought against Wind Harvest in the future, any resulting adverse publicity could hurt Wind Harvest’s competitive standing and reduce revenues from sales of its products. The assertion of product liability, personal injury or property damage claims against Wind Harvest could result in significant legal fees and monetary damages and require Wind Harvest to make large payments. Any business disruption or natural disaster could result in substantial costs, lost revenues and diversion of resources. Wind Harvest’s insurance coverage is limited for product liability and other claims against Wind Harvest, as well as for business disruption and natural disasters. Therefore, Wind Harvest may not have adequate insurance and financial resources to pay for its liabilities or losses from any such claim or cause.
Wind Harvest depends on highly skilled personnel to grow and operate its business, and if it is not able to hire, retain and motivate its personnel, Wind Harvest may not be able to grow effectively. Competition for talented senior management, as well as middle management and engineers, is intense, and Wind Harvest’s future success will to some extent depend upon the contribution of a small number of key executives and personnel. Moreover, Wind Harvest's ability to successfully develop and maintain a competitive market position will depend in part on Wind Harvest's ability to attract and retain highly qualified and experienced management. The failure to attract and retain necessary personnel could have an adverse impact on Wind Harvest's business, development, financial condition, results of operations and prospects.
Cornelius Fitzgerald, Christine Nielson and Kevin Wolf are part-time officers. As such, it is likely that the company will not make the same progress as it would if that were not the case.
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.
The Risk Factors included in this Form C or its Appendices are not intended and should not be understood as an exhaustive list of all risks related to an investment in this offering.
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