Asia Reforestation Group Inc. - Paulownia planting -

Asia Reforestation Group Inc,. 1

REFORESTATION PROJECT

INTERCROPPING PAULOWNIAINTERCROPPING PAULOWNIA

WITH BANANAWITH BANANA


Asia Reforestation GroupAsia Reforestation GroupOverviewOverview

Asia Reforestation Group (ARG) – public company established in Nevada, US; and major shareholder of Viet A Joint Stock Company (VAC) – the first Vietnam private company specializing in great-scale reforestation reflected through 1,000 ha of Acacia with success.

VAC was granted the Certificate of Land Use Rights for the aforementioned 1,000 ha, and entitled to expand covering the surrounding 10,000 ha.

ARG management team of totally more than 50 years of experience in afforestation and 8 years fully of experimental research devoted to Paulownia planting trials across 15 provinces in Vietnam, including the areas under VAC’s management.

ARG is seeking capital to develop via VAC 400 ha of Paulownias (in which 100 ha intercropped with bananas) for sales of carbon credits and timber.

The expected 400 ha shall be carried out at Chu Rcam Commune, Krongpa District, in Gia Lai Province.

ARG expects to raise USD 1.5 million for 100 ha for private placement from US and Non-US investors; and USD 9.5 million for the remaining 300 ha from direct investment, with a view to profit sharing from sales of carbon credits and timber for 8-year cycles of planting and thinning trees.


ARG and Reforestation projectARG and Reforestation project

ARG takes part in agro-industrial projects involving plantation of Paulownia and bananas, or other appropriate trees (for the long-term target).

ARG’s objective is to create a platform for investors to directly or indirectly finance afforestation, which not only generates huge profits but also helps resist the global climate change.

ARG organises the afforestation based on the following structure: ARG shall act as a platform through which capital raising, carbon credit trading, business

collaboration or indirectly acquiring land for reforestation, shall be carried out in Vietnam and other Asian countries.

VAC shall execute afforestation as well as management of such process. PHI Group and PHI Vietnam Holdings shall provide advisory services as regards financial

structuring, and public listing for fund raising in the US and Europe.

ARG features a professionally fully-fledged management team with enriched practical relevant experience. The company is headquartered in Ho Chi Minh City and has got branch offices in Gia Lai, Kon Tum (the Project site), and the USA.


Strategic backgroundStrategic background

ARG and VAC include expert of high caliber, led be Mrs Chan Kim Pham and Mr David Nguyen with more than 30 years of experience in reforestation. Both of them have spent plenty of years on planting Acacia on a 1000-ha area, and Paulownias for trial on 15 sites whose areas totally amount to 40 ha, scattering in many provinces in Vietnam.

Given the natural conditions and especially the staff’s practical experience, Paulownia plantation is expected to succeed in the entire south of Vietnam in general, and in the 400-ha area in Chu Rcam District in particular.

With the experimental proof success of Paulownia planting in Vietnam for the past 8 years, the Project shows visible potential for reaching targeted revenue of the first carbon credit sale in 2013.

ARG, via VAC, has master-planned an initial 400-ha area for Paulownia plantation at Chu Rcam District with the best conditions as follows: The site is located in a region where rain is not so profuse though, the rain water is well

distributed during the 8-month rainy season, ensuring sustainable growth for the trees. The planting site is situated around springs, giving the area the ability to effectively deploy

natural watering sources, thereby minimizing cost of watering. The watering system for Paulownia in the first 3 years is also taken advantage of for the

intercropping of 20 ha of bananas of high quality meeting standard for export. The team that is currently in charge of forest management for VAC shall be deployed to

execute the plantation and management of Paulownia and banana.


Paulownia’s characteristicsPaulownia’s characteristics

The Paulownia is big fast growing deciduous wooden tree, with wide foliage and rich branching. After one year, a normal tree can grow up to 6-7 m and more than 10 m after 2.5 years, with stump diameter of > 25 cm, and after 8 year the respective height of 20 m and diameter of >70 cm

Paulownia is a well adaptive type of tree that can withstand climate harshness of -10oC to +40oC, and can survive where the annual rain level is 250 millimetres, and can really generate economic benefits where rain falls at 800 millimetres per year. Even during lasting drought, the tree still does not succumb. The tree can grow on terrain with steepness of up to 30o , on different sorts of soil including the austerely depraved ones. It grows best on land with pH level from 5 to 8; and requires at least 0.6 metre to sustain against strong winds or storms.

Paulownia is fast-growing which is suitable for early logging. Moreover, the huge biomass created by the tree makes it ideal for carbon credit sales.

Paulownia’s leaves and flowers are rich in protein, which can be used as animal feed.


Value createdValue created

Sales of bananas (after 12 months) continuously in 3-4 years

Sales of carbon credits (after 24 months) continuously during the remaining 6 years.

Sales of timber from thinning (after 4 years) and again from the re-grown trees after the following 4 years.

Sales of timber (after 8 years) with expected average diameter of 50 cm and timber product of 0.75-cubic meter volume.


Capital raising for investmentCapital raising for investment

Investing in ARG sharesFor US investors

Raising $1 million from institutional investors Expected issued price = $0.1/share Number of authorised shares: 200,000,000 shares Upgrading onto OTC Bulletin Board within 3-6 months after completion of capital raising.

For Non-US investors Raising from $500,000 to $1 million from individual or institutional investors Expected issued price = $0.1/share

Or Preference shares with fixed dividend of 10% per annum and convertibility to common shares upon upgradate

onto OTC Bulletin Board; price equivalent to 70%-80% of the traded market price on OTCBB.

Investing directly in afforestation Raising capital for planting 200 ha of Paulownia, 100 ha of Paulownia intercropped with banana. Investors: individual, or institutional. Minimum level of investment:

1 unit is defined as 1 ha, equivalent to USD 27,000 for investment in Paulownia plantation only. 1 unit is defined as 1 ha, equivalent to USD 35,000 for investment in Paulownia intercropped with banana. (Please refer to Appendix for estimated investment figures)


Profit from 1 ha of typical direct investment

1 ha of Paulownia Return on Investment (ROI) ≈ 526% Internal Rate of Return (IRR) ≈ 32%

1ha of Paulownia intercropped with banana Return on Investment (ROI) ≈ 386% Internal Rate of Return (IRR) ≈ 36%


Exit StrategyExit Strategy

Sale Share Exit can be executed through share trading on OTCBB and NASDAQ in the future.

Direct investment (investment in units of forest) Exit can be done in 2 ways:

Sale of units (each equaling 1 ha) of forest via OTC mechanism at www.asiaforests.com

Direct profit sharing from 1 ha of forest: sales of carbon credit, sales of timber from thinning and logging.


Solution for transparency

Afforestation process is updated by ARG on a quarterly basis with satellite images and information onto the company’s website and other social network sites.

Afforestation/reforestation and management activities are updated, recorded in pictures and video clips, then posted frequently on the website.

Quarterly report as regards growth status, size, magnitude, estimated added value, etc., to act as base for unit trading shall be strictly carried out.

Independent auditing shall be conducted upon profit sharing.


Applied standardsApplied standards

10 Principles of Forest Stewardship Council (www.fsc.org ; www.findochina.org.vn)

Voluntary Carbon Scheme (www.v-c-s.org)

Standards for forest certification www.sgsqualifor.com

All ARG’s activities in carbon trading and timber sales fully satisfy the above mentioned criteria.


APPENDIXVAC Management team

Chan Kim Pham – Chief Executive Officer cum Technical Specialist

Mrs Pham is also Chairperson cum CEO of Viet A Joint Stock Company – an enterprise specializing in afforestation and reforestation, forest management, industrial and agricultural plantation, cattle breeding, and environmental treatment. She has accumulated in her professional portfolio more than 20 years of practical experience in carrying out forestry projects of national level, and has, of late, completed growing more than 1,000 hectares of forest in Gia Lai.

David Nguyen – Chief Operating Officer cum Technical SpecialistHaving engaged in afforestation for than 15 years, of which 8 were wholly dedicated to Paulownia trials, Mr Nguyen is certainly a leading expert of this industry. So far, his experimental plantation has proved a remarkable success, resulting in 40 hectares of healthy and fast-growing Paulownias across 15 provinces in Vietnam. For the sake of activeness in planting, Nguyen also established a nursery facility in District 9, Ho Chi Minh City, where researches as well as seedlings propagation and nurturing are carried out. The growth stages of trees in all those sites are coherently documented and pictorially recorded for extensive research, close monitoring, and effective planning.

Dung Viet Luu – Chief Technical Officer

Mr Luu is a Master Degree holder specializing in fertilizer, with more than 10 years of experience in Paulownia plantation. He has successfully test-grown such tree in many regions within 5 provinces in West Highland.

Hai Son Nguyen – Chief Financial Officer

Given a solid background in accounting and auditing including his bachelor degree and CPA certificate, Mr Nguyen has rendered his service as a senior auditor to many major corporations in Vietnam for several years before joining ARG. Simultaneously, he is also Financial Controller cum Project Manager at PHI Vietnam Holdings, where he is in charge of M&A transactions, corporate restructuring deals, as well as listing advisory services focusing on the US and German stock exchanges.

Nhien An Thi Le – Senior Technical Specialist

A Master Degree holder in Plant Physiology, Ms Le has demonstrated an impressively brilliant academic and research track record in biotechnology and bio-engineering related fields. She has received several highly specialized training courses and seminars both onshore and overseas over the years as well, in addition to taking part in and leading many significant national projects. Le is also well-known for her expertise in insect and pathogenic fungi for which she has been kindly employed by ARG to make sure that the company’s Paulownias get taken good care of for healthy growth.

AppendixManagement track record


Chan Kim Pham – CEO

David Nguyen - COO


Appendix – Project site mapAppendix – Project site map

100 ha Paulownia


Appendix – 1/500 planning of afforestation400 ha of Paulownia of which 100ha intercropped with banana


Cost of investment in 100 Ha

Item Paulownia Paulownia + Banana

Seed 250,000 330,000

Fertilizer & Pesticide 1,080,000 1,450,000

Planting & care 700,000 970,000

Infrastructure cost 470,000 570,000

Administration cost 200,000 180,000

Total (USD) 2,700,000 3,500,000

Paulownia: Investing in plantation of 108,000 Paulownias, equivalent to 1.080 trees/ha.

Paulownia + Banana: Investing in plantation 66,000 Paulownias intercropped with150,000 banana trees equivalent to 660 Paulownia trees/ha and 1.500 banana trees/ha.


Pro-forma P&L for Option 1 (100 ha of Paulownia)

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9

INVESTMENT CAPITAL (2,700)

B. REVENUES

1 Carbon trading

Carbon credit 31 31 31 31 31 31 31

Unit price (USD) 22 25 27 30 32 33 35

Total 679 771 833 926 987 1,018 1,080

2 4-year old timber - - - 1,182 - - - 1,182 3 8-year old timber - - - - - - - 11,550

C. GROSS PROFIT (2,700) 679 771 833 2,108 987 1,018 1,080 12,732

D. PLANT CARE COST - (221) (225) (229) (252) (240) (245) (181) -

- - - - - - - - -

E. NET PROFIT (2,700) 458 546 604 1,855 748 773 899 12,732

F. PROFIT DISTRIBUTION

1 ARG (20%) - 92 109 121 371 150 155 180 2,546

2 Success fee for BOD 1,100 2 INVESTOR (2,700) 366 437 483 1,484 598 618 719 9,086

IRR 32%526% ROI

Unit USD 1,000


Pro-forma P&L for Option 2 (100 ha of Paulownia, intercropped with banana)

Unit USD 1,000

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9A. INVESTMENT (3,500)B. REVENUES

1. Carbon trading Carbon credit - 19 19 19 19 19 19 19 Unit price (USD) - 22 25 27 30 32 33 35 Total - 415 471 509 566 603 622 660

2. 8-year old timber - - - - - - - - 14,117 3. Banana - 1,587 1,587 1,587 1,587 - - - -

C. GROSS PROFIT (3,500) 2,002 2,058 2,096 2,153 603 622 660 14,117 D. PLANT CARE COST - (371) (378) (386) (250) (244) (255) (139) - E. NET PROFIT (3,500) 1,631 1,680 1,710 1,903 359 367 521 14,117 D. PROFIT SHARING

1. ARG (20%) 0% 400 412 419 431 121 124 132 2,823 2. Success fee for ARG 1,111 3. INVESTOR (3,500) 1,230 1,269 1,291 1,472 238 243 389 10,183

IRR 38% ROI 487%

Business

Asia Reforestation Group Inc. - Paulownia planting -