A COMMUNITY OWNED, INDEPENDENT RENEWABLE POWER PRODUCER
Disclaimer Watts Wind Energy Inc. Important Notice: This presentation has been prepared by Watts Wind Energy Inc. (“ Watts Wind ”). Some of the information in this document has been obtained from sources which Watts Wind believes to be reliable, we do not represent or warrant its accuracy and such information may be incomplete or condensed. This presentation may contain or refer to certain forward-looking statements relating, but not limited to, Watts Wind's expectations, intentions, plans and beliefs with respect to Watts Wind. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "does not expect", "is expected", "budget", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or equivalents or variations, including negative variations, of such words and phrases, or state that certain actions, events or results, "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements rely on certain underlying assumptions that, if not realized, can result in such forward-looking statements not being achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of Watts Wind to be materially different from the historical results or from any future results expressed or implied by such forward- looking statements. Although Watts Wind has attempted to identify important factors that could cause actual actions, events or results or cause actions, events or results not to be estimated or intended, there can be no assurance that forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Other than as required by applicable Canadian securities laws, Watts Wind does not update or revise any such forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events. Accordingly, readers should not place undue reliance on forward-looking statements. The proposed investment structure in this Offering Document is complex and may not provide investors with the same rights, information and protections compared to other offerings. Potential security holders may not receive information from the investments made by the Issuer. Investing under this offering will not provide investors with the same protections if the distribution was made using a prospectus. This document may not be reproduced (in whole or in part) to any other person without the prior written permission of Watts Wind. THIS CEDIF OFFERING MAYBE A HIGH RISK INVESTMENT. THE CEDIF OFFERING IS MADE THROUGH AN OFFERING DOCUMENT, WHICH CAN BE OBTAINED FROM AN AUTHORIZED SALES AGENT OR FINDER, BY CONTACTING 902-482-0920 OR INVEST@WATTSWIND.COM. THIS OFFERING CONSTITUTES AN EXEMPT OFFERING OF THESE SECURITIES ONLY IN NOVA SCOTIA BY AUTHORIZED SALES AGENTS. INVESTORS SHOULD READ THE OFFERING DOCUMENT BEFORE MAKING AN INVESTMENT DECISION. WATTS WIND IS SUBJECT TO NUMEROUS RISK FACTORS AND POTENTIAL CONFLICTS OF INTEREST AS DESCRIBED IN THE OFFERING DOCUMENT AND INVESTORS SHOULD CAREFULLY READ AND CONSIDER SUCH RISK FACTORS AND POTENTIAL CONFLICTS OF INTEREST.
Why Renewable Energy? NS renewable energy threshold requirements: • 25 percent by 2015 • 40 percent by 2020 Community feed-in tariff (“COMFIT”) program introduced to help achieve targets 3
Watts’ Current Operations New Glasgow (2015) 6.4 MW (4 WTGs) Watt Section (2011) 1.5 MW (1 WTG) Porters Lake (2016) 3.2 MW (2 WTGs) Ketch Harbour (2016) 4.9 MW (3 WTGs) Wedgeport (2015) Barrington (2015) 1.7 MW (1 WTG) 3.2 MW (2WTGS) 13 turbines erected across six sites 4
Watts Wind Energy - Overview • Generating operating cash flow since March, 2011 • Track record of consistent dividends • 14.2% and 10.2% projected average annual yield (1) over ten and 20 years, respectively • Structured as a “CEDIF” (2) to provide Nova Scotians up to 65% in personal tax credits (3) • Experienced board and management team Notes: 1) Assumes a top marginal tax rates for a Nova Scotia resident used and includes non-refundable provincial tax credits assuming an investor has sufficient taxes payable Additional conditions apply to the non-refundable tax credits. The 14.2% is comprised of cash distributions of 7.7% and 6.5% in non-fundable NS tax credits. 5 2) Community economic development investment fund 3) Tax credits are non-refundable provincial tax credits the applicability for which the Issuer and investor is subject to additional requirements.
Watts Does Not Bear the Risk of Speculative Development Activities… Speculative ‘Development’ Activities Watts Wind Activities Site Environmental Wind Securing Power Project Prospecting Project Impact Resource Purchase Operation and and Land Lease Construction Screening Assessment Agreement Management Negotiation • Prospecting for • Assessing the • Measuring the wind • Entering into a • Preparing the • Procuring the wind suitable project environmental data at the project PPA (typically engineering plans, turbine(s). sites which impacts such as sites (typically using with a utility) as specifications and • Final interconnection included finding wildlife, birds, a meteorological part of a Request contractor tendering studies and entering the basis resources, bats, vegetation, tower (MET tower) for Proposal documents into an including land, ground and and possibly a sodar process, a Feed- • Contracting with interconnection wind and a surface water, unit. (Land based in-Tariff, such as suppliers and agreement with the transmission noise and visual sodar units are the ComFIT, or subcontractors utility or systems market impacts. typically used in some other • Construction of the operator • Negotiating land conjunction with process. balance of plant, • Ongoing operations access agreements MET towers as a include roads and and maintenance of second source of power lines. the wind turbine(s). wind speed data, • Installation of • Obtaining all useful in turbines, including municipal and extrapolating 60m installing the building permits. wind data to 80m foundation, raising • Obtaining all turbine hub height). the wind turbines, necessary debt and electrical equity financing connections, utility interconnection, etc. …it only invests in projects with 20 year contracts with NS Power Inc. 6
Corporate Structure Watts Wind Energy Inc. (A Nova Scotia CEDIF company) Liverpool Watts Wind Watts Watt Section Wind Energy Wind III II LP Wind LP Storage LP Project Inc. Two turbines New Glasgow – 4 Watt Section Ketch Harbour – - 1 turbine turbines 3 turbines One RAES storage unit Barrington – 2 Porter’s Lake – 2 turbines turbines Wedgeport – 1 turbine 7
Revenue Projections Projected 10 Year Revenue By Project Group 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 - 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Liverpool Watts Wind II & III Watt Section 8 Highly predictable and stable revenues
Equity Raise History $5,000,000 $1.40 $1.30 $1.30 $1.20 $4,500,000 $1.20 $4,000,000 $1.00 $1.00 Cumulative $1.00 $3,500,000 Amount Raised $3,000,000 $0.80 $2,500,000 Price/Share $0.60 $2,000,000 $1,500,000 $0.40 $1,000,000 $0.20 $500,000 $0 $- 2010 2011 2012 2013 2014 2015 More than $4.5 million invested to date from over 200 shareholders 9
Dividend History $0.08 $0.07 $0.06 $0.05 2nd Half $0.04 1st Half $0.03 $0.02 $0.01 $0.00 F2011 F2012 F2013 F2014 F2015 Cash dividends of $0.26 per share distributed to date 10
Up to 61% in Benefits in Past Five Years for a Hypothetical Investment of $100 in 2010 $70.00 $60.00 $50.00 F2015 dividend $40.00 F2014 dividend F2013 dividend $30.00 F2012 dividend F2011 dividend $20.00 2011 tax credit (1) $10.00 $0.00 Hypothetical Shareholder Benefits Plus, an additional 20% tax credit (2) possible in March 11 Notes: 1) Tax credits are non-refundable provincial tax credits the applicability for which the Issuer and the investor is subject to additional requirements.
A $50k Investment Could Have a Hypothetical Net Cost of $2.5k, Assuming the Following: $50,000 Investment (non-RRSP) - $17,500 (35%) Nova Scotia Equity Tax Credit $32,500 Net Cost (non-RRSP) If new money to RRSP a deferral at the marginal tax rate (1) - $15,000 $17,500 Net Cost (RRSP) If held for ten years (2) (less discount for time value of - $10,000 money) If held for fifteen years (2) (less discount for time value of - $5,000 money) $2,500 Total cost of investment if held for fifteen years (less discount for time value of money and provided shares maintain their value) (1) For illustration, a 30% marginal rate is used and the assumption is that there is sufficient RRSP room available. In addition, please note that 12 this results in a tax deferral, not a tax credit. The above example may not be applicable to all investors. (2) The additional 20% and 10% non-refundable tax credits are subject to additional requirement s by the Issuer and the investor.
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