Climate Independent

Algae Production Systems

September 2012

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Current raceway technology is inefficient and

inadequate to provide for the growing algae

market demand.

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Old School producing at

15 grams / sq. meter / day

Efficient, climate independent, adaptable, closed-

loop systems that use very little water and energy.

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• 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’ long

30” wide

24” high

Anaerobic

digestion

Nutrasonics

Electromagnetism

Septic

tank

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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

PT

IMU

M

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

Food Thickeners

The 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.

Toothpaste

While 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.

Gelatin

Gelatin 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.

Sushi

The 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 Products

According 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

8

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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• 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

Macro

Array(Phase-1)

$300K

Capital

Prototype

Array(Phase-2)

$700K

Capital

1x Farm(90 Bioreactors)

3x Farm(270 Bioreactors)

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Algae Farming, Design/Build & Services

AlgaeFarming

• 130 metric tons per month (total)

• Spirulina @ $3M/month (current value)

• Haematococcus @ $18M/month (current value)

Design/Build

• 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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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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ITEM UoM Prototype 1x Farm 3x Farm

System Cost One time $492,000 $1,800,000 $3,000,000

Operating Cost Monthly $6,100 $37,500 $85,000

Metric Tonne

OutputMonthly 1.1 10 30

Spirulina1 Sales/month $27,500 $250,000 $750,000

ROI In Months 23.0 8.5 4.5

Revenues 12 Month ROI Basis $256,800 $2,550,000 $7,980,000

1 Spirulina Price / Metric Tonne $25,000

ROI. MONTH 12

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ITEM UoM Prototype 1x Farm 3x Farm

System Cost One time $492,000 $1,800,000 $3,000,000

Operating Cost Monthly $6,100 $37,500 $85,000

Metric Tonne

OutputMonthly 1.1 4.4 12

Haematococcus2 Sales/month $165,000 $660,000 $1,800,000

ROI In Months 3.1 2.9 1.7

Revenue 12 Month ROI Basis $1,906,800 $7,470,000 $20,580,000

2 Haematococcus Price / Metric Tonne $150,000

ROI. MONTH 12

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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One billion people will go to bed

hungry tonight

In developing countries, one

child in four is underweight

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Jeffrey Scott

President & Founder

Chandler, Arizona 85224

+1-303-589-7580

jeffreyscott@algalmicrofarms.com

algalmicrofarms.com

Brenton Brownell

VP Marketing, Sales and Corporate Development

Tucson, Arizona 85749

+1-520-975-7476

brentonbrownell@algalmicrofarms.com

algalmicrofarms.com

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