ALGAL MICRO FARMS, LTD  

Climate Independent

Algae Production SystemsBy Brent Brownell

September 2012

Problem

Current raceway technology is inefficient and inadequate to provide for the growing algae market demand.

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Current State The Open Raceway

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Old School producing at15 grams / sq. meter / day

Solution

Efficient, climate independent, adaptable, closed-loop systems that use very little water and energy.

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Future StateALGAL Micro Farm

• Scalable Farms (45’ Width x 140’ Length)• Multi-function Harvester• Nutrient Injection System• Recycled Water Purification• Climate Independent• Generates Electricity

• Bioreactor “cell”• 200 Gallon Capacity• Modular Design

Closed-loop, controlled bioreactor system

New School producing at 175 grams / sq. meter / day

6’ long30” wide24” high

Anaerobic digestion

Nutrasonics Electromagnetism

Septic tank

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Creating Algae Heaven

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Algal (singular) vs. Algae (plural)Microscopic Plants that Grow Without Roots in Water

Light

Temp

Water

Nutrient

CO2 FlowTH

E O

PTIM

UM

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Current U.S. Algae Market

Food and Food Supplements

Nutraceuticals/ Foods

Pharmaceuticals

$68B Annual

Demand

AMF’s Value Proposition

Supplying systems that grow algae In diverse geographical and demographic locations Through self sufficient, closed-loop growth systems

That generate energy, recycle water and produce nutrients$7B

$20B

$41B

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Estimates based on USDA and DOC data

Foods Containing Algae

Food ThickenersThe Hawaii Department of Education says algae is often added to liquids to make them thicker. For example, algae is put in shakes and malts to thicken them. It is also added to mayonnaise to prevent it from becoming runny. Alginic acid contained in algae acts as a stabilizer or emulsifier.

ToothpasteWhile toothpaste is not a food, it is a safely ingestible substance that contains algae. Without algae, toothpaste would be a runny liquid. Algae makes toothpaste into a semi-solid that then dissolves with the brushing action of cleaning teeth.

GelatinGelatin contains a type of algae called agar. It can solidify just about anything that comes in a liquid form. Agar was first used in China in the 17th century and is now found in hundreds of foods sold in grocery stores, such as pie crusts, pumpkin pie filling and flavored gelatin.

SushiThe green paper-like substance used to wrap sushi rolls is algae. This is a special "leafy" variety of algae grown on farms in Asia and shipped throughout the world. The leafy algae is grown on strings then dried in the sun. This type of algae is especially high in vitamins and nutrients.

Dairy ProductsAccording to the University of California at Los Angeles, a type of algae called carrageenan is commonly added to dairy products to give them a denser consistency. The most common algae containing products are sour cream, chocolate milk and cheese

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Go to Market Strategy

Expand deployment using Non-Governmental Organizations

Broaden into global market utilizing Certified Distributors

Establish domestic market first

Algae sales to generate initial income

Focus on nutraceuticals, pharmaceuticals and food

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Scale Up and Capital

• 6 bioreactors• prove proof of

concept• Basic system

• 40 bioreactors• Integrate

features• Begin producing

algae for profit

• Stand alone• Fully

operational• Demonstration

farm

• Mid-size farm• Increase algae

growth

MacroArray

(Phase-1)$300KCapital

PrototypeArray

(Phase-2)$700KCapital

1x Farm(90 Bioreactors)

3x Farm(270 Bioreactors)

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Algae Farming, Design/Build & Services

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Business Model Options

Algae

Farmin

g

• 130 metric tons per month (total)• Spirulina @ $3M/month (current value)• Haematococcus @ $18M/month (current value)

Design/Buil

d

• 1x Farm, 10MT/month, $1.8M inv >>> $2.5M/year rev • 3x Farm, 30MT/month, $3M inv >>> $7.9M/year rev• 10x Farm, 90MT/month, $15M inv >>> $36M/year rev

Services

• On-going Licensure, Maintenance, Support and Brokerage• 3% of product sold

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Financial Projections Summary

Months 1-3, Phase-1, Macro Array

• $300K Capital Raise, $155K Opex, ($155K) EBITDA, $90K Capex

Months 4-9, Phase-2, Prototype

• $700K Capital Raise, $160K Opex, ($160K) EBITDA, $525K Capex

Months 10-15, Adding 1x Design/Build and 3% Royalties, Selling 5 Farms

• $850K Revenue, $612 Gross Margin, $250K Opex, $362 EBITDA

Months 16-27, Adding 3x Design/Build and 3% Royalties, Selling 12 Farms

• $6.8M Revenue, $4M Gross Margin, $750K Opex, $2.5M EBITDA, $1.25 Capex

Months 28-39, Maintaining 3x Design/Build and 3% Royalties, Selling 20 Farms

• $14M Revenue, $7.8M Gross Margin, $1.3M Opex $6.3 EBITDA, $2.5M Capex

Months 40-51, Adding 10X Design/Build and 3% Royalties, Selling 25 Farms

• $37M Revenue, $17.4M Gross Margin, $2.5M Opex, $17.4M EBITDA

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Spirulina Financials Snapshot

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Haematococcus Financials Snapshot

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Conclusion

Algae as food has been around 2,000 years

Bio-reactors were first introduced in 1953

Algal Micro Farms is a vehicle to efficiently and productively grow algae for the masses

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World Hunger

One billion people will go to bed hungry tonight

In developing countries, one child in four is underweight

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