Sauer Energy Letter
to New Shareholders
November 16, 2010
Sauer Energy's successful transition into a public company this summer
was an important milestone in our company's history, and I would like to
welcome all of our new shareholders. Upon the change of our parent
company name to Sauer Energy, and new stock ticker symbol (SENY), this
is an opportune time to introduce myself, discuss our favorable industry
position and plans for the next year.
Sauer Energy develops and produces wind turbine systems that are roof
mountable on homes or small buildings. Unlike the 200 to 300-foot high
commercial scale horizontal-axis wind turbines you may have seen on
plains, deserts or off shore, ours are about five feet tall and designed
specifically for the individual home or small business owner's roof. To
see our new wind turbine photo gallery,
click here.
Sauer Energy: The Beginning
In 2007, about the time oil prices were climbing to $150 a barrel, and
gasoline reached $5 per gallon, we began developing the Sauer Energy
Vertical Axis Wind Turbine (VAWT) and filing patents to protect our
valuable intellectual property. Vertical axis means that our turbine
blades revolve around a rotor that is in the vertical position.
Wind is an ideal solution, especially if you can make it affordable and
easy to install. Sauer Energy is deploying multi-patented technology
that makes our turbines highly productive yet small and affordable. We
are targeting the individual home and small or mid size enterprise
because almost no one is working to help the family or small business
lower their utility bills.
Today, we have developed a pre-production prototype of a patented VAWT
that is being readied for commercialization and launch. With a growing
patent estate, its revolutionary design addresses a number of the
technology's known shortcomings such as noise pollution, minimum blade
speed threshold, bird endangerment and space limitation, while enhancing
its advantages. It is designed to provide at least one quarter of an
average home's electricity, economically.
Vast Wind Energy Marketplace
With energy prices spiraling higher, home and small business owners are
searching for ways to lower energy costs and reduce their carbon
footprint. Dependence on foreign oil is considered by many to be a
national security threat, while one need look no further than the Gulf
of Mexico and the recent BP disaster to understand oil and gas'
environmental threat.
The ultimate renewable energy target for the United States is to install
and generate 20 percent of our consumption by the year 2030, while we
are under three percent currently, according to a recent U.S. Department
of Energy report.
Industry experts forecast sales of small wind energy capacity to rise
ten-fold over the next five years. According to the American Wind Energy
Association (AWEA), "Despite an economic downturn, the U.S. market for
small wind turbines -- those with rated capacities of 100 kilowatts (kW)
and less -- grew 15% in 2009 with 20.3 Megawatts of new capacity... The
world's leading 15 manufacturers continue to predict exponential sales
growth in the U.S. market over the next five years, with projections of
over one gigawatt of cumulative installed wind capacity in the U.S. by
2015."
The Sauer Energy Turbine
The vertical axis design is a compact turbine design that can be sited
on location without being intrusive and may be integrated directly into
existing building structures. It is designed to be highly cost
effective, for a fast payback of its net cost, and for simple, plug &
play installation.
Each blade of the turbine is curved and approximately two and a half
feet wide by about three feet tall. The unit requires about a six-foot
diameter and is mounted about two feet above a roof line or about five
feet tall in total -- approximately the same height as a standard
chimney. You can paint it or have it custom made with different colors,
logos, names or even order it with landscape camouflage or a sky
pattern. People have become accustomed to seeing satellite dishes,
telephone poles and chimneys that burn and produce carbon with little
efficiencies. To see a short, casual informative video of me
demonstrating the ease of assembling a Sauer turbine, go to our home
page
www.sauerenergy.com and click on the "YouTube" screen/link on the
left side of the home page.
Competitive Advantage:
Compelling Economics
We fully expect our turbines' small size, robust electricity production
and low cost to offer a major competitive advantage. We anticipate our
initial turbine model will offer 1 - 3 kWh, using our innovative design
proven to outperform conventional turbines. It offers a low startup
speed with a higher threshold for capturing more mass to create more
torque and produce higher energy output. Its many benefits include no
electronic interference, no ground resonance, remarkably quieter than
the propeller types in operation and ease of operation.
Depending on configuration and output, our turbines are estimated to be
retail priced between $6,000 and $15,000. With average wind usage, our
preliminary test results indicate an approximate 24-month payback to the
consumer including the various federal and other rebates and energy tax
credits. After that, all the electricity produced is as free as the
wind. We are projecting that, in a windy area, the Sauer Energy Turbine
can produce about 25 to 50 percent of the electricity for an average
home.
Our turbine is designed to be virtually maintenance free. We plan to
provide an industry leading ten-year warranty. Additionally, Sauer
Energy turbine users may have the option of storing energy produced into
powerful compact batteries. If they are connected to the grid, the
turbine owner can be paid for all excess electricity produced that is
returned to the grid (net-metering).
Sauer Energy Product Roadmap
The Sauer Energy VAWT is presently in pre-production prototype stage. It
is under development and testing at world-class specialized engineering
facilities that include CADCAM, other computer modeling technologies and
wind tunnel tests to validate its design.
In the first quarter of 2011, we expect to submit our design to the
American Wind Energy Association's (AWEA) Small Wind Certification
Council, or SWCC. The SWCC will begin testing to certify that our
turbine meets industry standards of safety, durability, vibration,
noise, performance, power, longevity and more. SWCC will also test to
validate that our turbine meets its power and performance
specifications.
We estimate it will then take about three months to receive SWCC
certification of the Sauer Energy Turbine's power curve and validation
of its performance. The power curve is the amount of electricity
generated at various wind speeds. This prestigious SWCC validation is a
critical milestone, as it then enables the Company to print (validated)
sales sheets and begin selling to retailers and others.
At that time, we will begin to move into commercial production with the
completion of a new manufacturing facility with production molds,
manufacturing equipment, machinery, tooling, parts, inventory, warehouse
and distribution. SWCC will continue to test for additional industry
certifications as well as one-year durability.
At the same time, we will launch our sales and marketing campaign
targeting mass-market home and appliance retailers as well as wholesale
government and various direct sales organizations. We target full
commercial manufacturing and distribution ramping up in the second half
of 2011.
Sauer Energy 2011: Positioned
for Success
The Sauer Energy VAWT was met with much anticipation at the WindPower
2010 trade show in Dallas, Texas. Since then, various media publications
have interviewed management, reviewed our VAWT prototype and published
articles -- many of which are posted on our website. We have received
strong retail and government agency interest for purchasing and
distribution.
With continued ability to raise equity capital, our growth strategy
envisions a full commercial launch in the second half of 2011 with early
revenue growth driven by strong market penetration. In the year ahead,
our goals include:
* Raise Growth Capital.
We will access the public markets for our lowest cost of capital to fund
completion of development, commercial manufacturing and marketing to
generate strong cash flow and reach profitability.
* Advance R&D.
Our research and development continues to accelerate, and we plan to
file and receive additional patents increasing the value of our
intellectual property.
* Secure Top Industry
Certification. We plan to receive the prestigious AWEA
(American Wind Energy Association) Standard Certification from the SWCC
(Small Wind Certification Council) in early 2011, as well as UL, ISO
9000 and other safety and manufacturing designations.
* Reinforce Management Team.
As the Company grows, we will selectively add leading industry
executives to key management and board of director positions. As we are
tapping the public capital markets, we will announce the addition of a
veteran Director of Investor Relations soon. We plan to add a Sales &
Marketing Director and reinforce our management team in 2011.
* Build Manufacturing Capacity.
To ensure quality control and facilitate distribution, we intend to
manufacture in California and have already identified prospective
facilities and vendors for the required capital equipment and parts.
* Execute Aggressive Marketing
Strategy. While our VAWT addresses many market sectors
from government and military to homebuilders and retail, we plan a
focused, cost effective marketing strategy to maximize revenue and cash
flow. We will also pursue partnerships with utility companies, model
"green" cities and eco-friendly institutions.
* Form Strategic Alliances.
We will look to form strategic alliances with industry suppliers, key
customers and distributors that may include vertical integration,
distribution, co-marketing, private label, JV or other agreements.
In summary, Sauer Energy has a revolutionary, plug & play home &
enterprise-scale wind turbine that addresses vast unmet market demand.
It is cost-effective, consumer friendly and capitalizes on a growing
patent portfolio. Positive, preliminary third-party feedback increases
our confidence it offers great value.
As a newly public company, Sauer Energy has greatly raised its
visibility and increased its opportunities for growth. It is a privilege
to lead this company into what I strongly believe to be an exciting and
rewarding future.
Sincerely yours,
Dieter Sauer
President and Chief Executive Officer
Contact:
(888) 829-8748
www.SauerEnergy.com
Forward-Looking Statements:
This news release includes forward-looking statements made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. While these statements are made to convey Company progress,
business opportunities and growth prospects, readers are cautioned that
such forward-looking statements represent management's opinion. Whereas
management believes such representations to be true and accurate based
on information and data available to the Company at this time, actual
results may differ materially and are subject to risk and uncertainties.
Factors that may cause actual results to differ include without
limitation: dependence on key personnel and suppliers; SEI's ability to
commercialize its wind turbine technology; ability to defend
intellectual property; wind turbine material and component costs;
competition; economic conditions; consumer demand and product
acceptance, and availability of growth capital.
Additional considerations and risk factors are set forth in reports
filed on Form 8-K and 10-K with the SEC and other filings. Readers are
cautioned not to place undue reliance upon these forward-looking
statements; historical information is not an indicator of future
performance. The Company undertakes no obligation to update publicly any
forward-looking statements.