Feed Earth Now Draft[1] (072111)

8/3/2019 Feed Earth Now Draft[1] (072111)

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FEED EARTH NOWPresentation

(1) If necessary more

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SummaryBusiness Overview

} HQ is Chicago Illinois

} Business focuses on the manufacturing of organic andpathogen free products through recycling of food scraps.

} Founded in 2010

} Location: Chicago IL

} Each location working in a 3-5 mile circumference [tons]

} Almost any business can successfully divert food discardsfrom landfills. Businesses with record-setting food diversionprograms are recovering 50% to 100% of their food discardsand reducing their overall solid waste by 33% to 85%.

Confidential: Feed Earth Now

Market Performance(1)

} Growth in market:} The estimated growth for 2011, is 13.8% from 1,207.3

million in 2010 to 1,503.6 million.

Strategic evolution in market: Initial interest will be from municipalities, restaurants,

food preparation locations, agricultural sites thenfollowed by horticultural sales companies.

Growth expected in the food waste market for USmarket is forecast at a value of $31.7 bil lion, anincrease of 71% since 2009.

Projected growth in sales for the participant of thisagreement will increase over 10% year over year. Witha gross profit margin of 65%+ after 6 months.

What Feed Earth Now Is Looking For

} Feed Earth Now, needs a total of $1.5 million to complete itsRound One Funding

} The company is in the process of acquiring a 30,000 loan for withreturn in 30 days.

} Can be collateralized against the license

} The Company is willing to discuss a small ownership interest instead

of a loan for the sum of $30,000 .[Discuss budget, model]} Terms are negotiable.

} Feed Earth Now is currently in the running for several grantsincluding

} 750,000 SBCDIC

} 250,000 CleanTech

} 100,000 Techweek

} 25,000 Charles Barkley

} Among others

Financial Summary

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IndustryGrowth Potential(1)

} With returns on invested capital projected to reach almost 70% in 2013,this business represents a potentially highly profitable venture.

Target Industry by Segment(1)

} 2010-2014 growth expected to rise to mid tohigh single digits

Profitability

Dynamics/Trends(1)

3

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

'8 6-'9 0 '9 1-'9 5 '96-'00 '01-'05 '06-'10

23.5%

8.3%

18.8%

3.6% 4.0%

Global Consulting Market 5-year CAGR GrowthHistory

According to the research the addressable market segmentsFor this research will be:

Grocery Chains Agricultural Co-ops Hotels

Municipalities Restaurant Chains Mom And Pop Chains Aquariums Event locations Retail Breweries Farming institutions

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

'86-'90 '91-'95 '96 -'00 '0 1-'0 5 '06-'10

23.5%

8.3%

18.8%

3.6% 4.0%

Global Consulting

Market 5-year CAGR GrowthHistory

Half of all food produced globally is wastedaccounting for 1/3 percent of the overall wastestreaming the United States more than 50 million tons offood waste is sent to landfills annually.Organic non-food sales grew 9.7 percent in 2010, toreach $1.97 billion.Total U.S. organic sales, including food and non-foodproducts, were $28.682 bill ion in 2010, up 9.7 percentfrom 2009.Certified organic acreage in the United States reachedmore than 4.8 million acres in 2008, according to latest

data posted by USDA. U.S. total organic croplandreached 2,655,382 acres in 2008, while land devoted toorganic pasture totaled 2,160,577 acres.


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Company - OverviewCompetitive Positioning

Strengths} The ability to collect a large-volume of food waste on a

regular basis, allowing for the ability to transform into largequantities of EARTHCANDY and EARTHNOW Pulp

} The ability to establish long-term partnerships with localfarmers and restaurants

} A strong understanding the organic retail marketplace.

Weaknesses

} The lack of management around the collection of the foodwaste

} The lack of established laws requiring the accuracy andtimeliness of the collection of the waste and dissemination

of the soil amendment.

(1) Based on surveys This Company sends to clients.

Strengths &Weaknesses

0% 5% 10% 15% 20% 25% 30% 35%

% of Respondents Naming Top 5 Firms

Clients

Reputation(1)

4

8%

3%

, 9%

10%

12%36%

22%

No focus Non-bundled serviceproviders

Limited focus: R & D houses, in foodwaste recycling providers,

Universities, and governmentagencies

Primary focus: Hotels, RestaurantsBread Companies, Farming,

among others


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Company - ProductsBusiness Segments (% 2011 Revenues)

FEN Enviro

TYPE ANEROBIC AEROBIC

PROCESS FERMENT DECOMPOSE

CAPACITY 43t -175t day/ 1380t

- 4800t month

1.1t day / 33t

month

FOOD TYPE NONE NO LARGE BONES

END PRODUCT A) 1130k - 23,000ksoilamendmentday

B) B) 59,000ml -240,000ml agrotea day

3k compost day/90k month

PROCESS TIME 10 days 24 hours

Franchise Service Descriptions Select IndirectCompetitors (Revenues $M)

Segment Size (Revenues Millions of USD)

5

Segment 1

Segment 1 30 day on site help from headquarters

Segment 2

Segment 2 Marketing materials

Segment 3

Segment 3Design and Global Process Materials

Segment 4

Segment 4 Technology licensing rights

Segment 6

Segment 6 Online marketing including firm website

Segment 7

Segment 7 Financial Support

Segment 5

Segment 5 3 press releases per month

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000$100,000

2008 2009

Food Manufacturers

Restaurants

Bread Co

Hotels

Breweries


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Fermentation Analysis

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1. Collect all food scraps including meat, bone , and fats

2. Eliminates the need for Petro Fertilizer

3. Cleans Drains, Excellent for High Rise and Hotels

4. Deodorizes Septic Tanks and Sewer Systems

5. Removes Pathogens that otherwise would be present in Composting

Non-FermentedLots of Pathogens

Post FermentedPathogens Gone!


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Strategic Rationale} Th

e resea

rch

providedha

sa

number of critica

la

ssets} A person in US generates 2.9 pounds of trash every day} Approximately 1.5 tons of solid waste per year.

} Approximately 75 percentof solid waste is recyclable while only 30 percentof foods waste is actuallyrecycled

} Soil Depletion in the United States has increased over 60% in the past 10 years.} In the past 100 years United States currentoverall soil depletion has reached staggering numbers as high

as 74%.

} These assets can be utilized for..} Increased sales of manufacturing goods within an ever growing marketplace.} A better understanding of the needs of both Chicago and United States agricultural community as well as its

recycling and waste management communities} Soil amendment produced due to this fermentation process

} Increases the moisture in the soil} Increases the nutrients within the soil} Actually revitalizes damaged and dead soils} Provides a revenue stream while helping Chicagoland and US lands

} The organic marketplace} Certified organic acreage in the United States reached more than 4.8 million acres in 2008,

according to latest data posted by USDA. U.S. total organic cropland reached 2,655,382

acres in 2008, while land devoted to organic pasture totaled 2,160,577 acres.} According to Organic Monitor estimates, global organic sales reached $54.9 billion in 2009,up from, $50.9 billion in 2008.

} Organic non-food sales grew 9.7 percent in 2010, to reach $1.97 billion.} Total U.S. organic sales, including food and non-food products, were $28.682 billion in 2010,

up 9.7 percent from 2009.

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Example: Of Potential Clients

} Safeway

} SHEDD Aquarium

} Dominics

} Whole Foods

}

Tyson chicken} Intercontinental

} Swissotel

} All Hotel and Spas

} Five Star Restaurants

} Mom and pop restaurants

} Food Manufacturers

} Bread manufacturers

} Bakers

} Pastry Houses

} Breweries

} Home Depot

} Agricultural Depots

} Lowes

} Among others(1) If necessary more

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Key Value DriversReputation and Market Position(1)

Complementary Offerings (2010 Rev.M)

} The nations first commercial food scraps recyclingmanufacturer, utilizing a new patent pending technologycombined with age old proven technologies to createseparate lines of organic retail and agricultural products.

} The company effectively collects and recycles organic waste

} The company effectively manufactures organic retail productsacross multiple verticals

} FEN has created a market position of providing the end to endsolution in recycling

} FEN through long-time established relationships provides theability to collect our source materials while simultaneously

creating a high margin retail offering

Client Overlap

The two companies will be able to leverage our currentandfuture rolodexes to support growth within the partnership

The two companies will be able to co-marketand co-brandfor public relations purposes focusing on the same targetmarkets to better utilize our joint marketing/advertisingdollars.

Geographic Expansion

9

0%

20%

40%

60%

80%

100%

$0

$50

$100

$150

$200

$250

FEN Target

FENTarget


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Combined EntityPro forma Financials

Soil NutrientContent Value Geographic Footprint

Breadthand Depthof Product Offer

10

Base, Target

Insert practice area

FEN has exclusive rights to Ill inois combines withexclusivity it is granting to Turkey for the EU.

Chicagoland can franchise within its own bordersand provide pickups internationally for three years

Feed Earth Now will be al lowed to utilize this nextgeneration technology

FEN intends to expand to bordering Chicagolandareas and Eastern European countries as well asbordering states.

Feed Earth Now will focus on initial expansion inChicago, Wisconsin, Iowa, and Florida due tocustomer interest levels.


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Investment ThesisCommentary

Rational for Revenue -Client Growth

Confidence

} Took Management assumptions as given for Year 1 (2011), thenextended annual growth by 30% each year (2012 2014). Otherscenarios have more moderate growth expectations. [bottom-upmodel required]

} Salary, Marketing, and Legal expenses grown at inflation each year 3%.

} Research Expense depends on # of locations, technology growth,

and R and D expense. Monthly location interest continues to grow,but at a more moderate and decreasing pace.

} R and D location expense is broken down by region.

} Given business plan, it seemed reasonable to expect Receivablesto be on a 30-day period, and Payables on a 45-day period.

} Interest income at 3%

Rational for COGS &SG&A

11

Rational for ResearchData Expense

Cash

Working Capital

Description

Description

Desc

ription

Description

Description


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Stand Alone P&L [tons]12

Projected Income Statement for Feed Earth NowIn $'s, Inputs in blue

Management Scenario

Projected Year Ending December 31,Sales 2011 2012 2013 2014

Number of Restaurants 150 288 389 526

Restaurant revenue $931,152 2,700,341 4,374,552 7,086,774

Back End Soil revenue 2,232,143 16,741,071 66,964,286 1,004,464,286Agro Tea revenue 842,183 1,515,930 1,684,367 2,526,550

Total Revenue: 4,005,478 20,957,342 73,023,204 1,014,077,610

Cost of Goods Sold: 597,637 1,836,455 1,836,455 1,836,455

Gross Profit 3,407,841 19,120,887 71,186,749 1,012,241,155

SG&A Expenses

SG&A Expense 1,703,980 3,110,340 7,698,292 89,489,280

Marketing Expense: 100,000 103,000 106,090 109,273

Total SG&A Expense 1,803,980 3,213,340 7,804,382 89,598,552

EBITDA 1,603,861 15,907,547 63,382,367 922,642,602

Depreciation 92,800 92,800 92,800 92,800

Amortization 4,000 4,000 4,000 4,000

EBIT 1, 507,061 15,810,747 63,285,567 922,545,802

Other Non-operating Expense / (Income) 0.0 0.0 0.0 0.0

Interest Expense 26,025 26,025 26,025 26,025

Interest (Income) (10,529) (163,902) (910,129) (10,004,961)

Pretax Income 1,491,565 15,948,625 64,169,671 932,524,739

Income Taxes 447,470 4,784,587 19,250,901 279,757,422

Net Income 1,044,096 11,164,037 44,918,770 652,767,317

Margins

Gross Margin 85.1% 91.2% 97.5% 99.8%SG&A Margin 45.0% 15.3% 10.7% 8.8%

EBITDA Margin 40.0% 75.9% 86.8% 91.0%

EBIT Margin 37.6% 75.4% 86.7% 91.0%

Net Income Margin 26.1% 53.3% 61.5% 64.4%

Growth Rate Analysis

Sales Growth Rate 423.2% 248.4% 1288.7%

EBITDAGrowth Rate 891.8% 298.4% 1355.7%

EBIT Growth Rate 949.1% 300.3% 1357.8%

Net Income Growth Rate 969.3% 302.4% 1353.2%

Effective Tax Rate 30.0% 30.0% 30.0% 30.0%


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Financial Model Analysis and Returns DCF Perpetuity

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Discounted Cash Flow Perpetuity Analysis for Feed Earth NowIn $'s, Inputs in blue

Management Scenario Projected Year Ending Decem ber 31,2011 2012 2013 2014

Sales $931,152 $2,700,341 $4,374,552 $7,086,774

EBITDA 1 ,6 03 ,8 61 1 5, 90 7, 54 7 6 3, 38 2, 36 7 9 22 ,6 42 ,6 02

Less: Depreciation (92,800) (92,800) (92,800) (92,800)

Less: Amortization (4,000) (4,000) (4,000) (4,000)

EBIT 1 ,5 07 ,0 61 1 5, 81 0, 74 7 6 3, 28 5, 56 7 9 22 ,5 45 ,8 02

Less: Taxes @ 30.0% (452,118) (4,743,224) (18,985,670) (276,763,741)

Tax-effected EBIT 1 ,0 54 ,9 42 1 1, 06 7, 52 3 4 4, 29 9, 89 7 6 45 ,7 82 ,0 62

Plus: Depreciation 92,800 92,800 92,800 92,800

Plus: Amortization of Intangibles 4,000 4,000 4,000 4,000

Plus: Changes inDeferred Taxes 0.0 0.0 0.0 0.0

Less : Capital Expenditures 0.0 0.0 0.0 0.0

Less : A dditions to Intangibles 0.0 0.0 0.0 0.0

Less : Changes in Working Capital (448,930) (1,727,942) (4,800,045) (86,757,481)

Less : Changes in Other A ssets and Liabilities 0.0 0.0 0.0 0.0

Unlevered Free Cash Flow $702,813 $9,436,382 $39,596,653 $559,121,380

Unlevered Free Cash Flow Growth Rate 1242.7% 319.6% 1312.0%

A + B = C

Discounted PV of Terminal Value as a

Cash Flow s Perpetual Growth Rate of Enterprise Value

Discount Rate (2011 - 2014) 3.0% 3.5% 4.0% 3.0% 3.5% 4.0%

9.00% $435,258,759 $7,411,610,366 $8,124,642,607 $8,980,281,297 $7,846,869,124 $8,559,901,366 $9,415,540,056

9.50% 427,581,286 6,748,194,788 7,346,032,433 8,052,567,831 7,175,776,073 7,773,613,718 8,480,149,11710.00% 420,074,560 6,181,120,764 6,688,905,144 7,281,320,253 6,601,195,324 7,108,979,704 7,701,394,813

10.50% 412,734,020 5,691,087,027 6,127,193,210 6,630,392,652 6,103,821,047 6,539,927,230 7,043,126,672

11.00% 405,555,246 5,263,618,454 5,641,781,333 6,073,967,481 5,669,173,700 6,047,336,579 6,479,522,727

- D = F

Total Equity Value

Discount Rate Net Debt 3.0% 3.5% 4.0%

9.00% ############ $8,179,847,329 $8,892,879,570 $9,748,518,260

9.50% (332,978,204) 7,508,754,278 8,106,591,923 8,813,127,321

10.00% (332,978,204) 6,934,173,529 7,441,957,908 8,034,373,017

10.50% (332,978,204) 6,436,799,251 6,872,905,434 7,376,104,877

11.00% (332,978,204) 6,002,151,905 6,380,314,784 6,812,500,932


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Financial Model Analysis and Returns DCF Multiple

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In $'s, Inputs in blue

Management Scenario Projected Year Ending Decem ber 31,2011 2012 2013 2014

x Sales $931,152 $2,700,341 $4,374,552 $7,086,774

EBITDA 1,603,861 15,907,547 63,382,367 922,642,602

Less: Depreciation (92,800) (92,800) (92,800) (92,800)

Less: Amortization (4,000) (4,000) (4,000) (4,000)

EBIT 1,507,061 15,810,747 63,285,567 922,545,802

Less: Taxes @ 30.0% (452,118) (4,743,224) (18,985,670) (276,763,741)

x Tax-effected EBIT 1,054,942 11,067,523 44,299,897 645,782,062

Plus: Depreciation 92,800 92,800 92,800 92,800

Plus: Amortization of Intangibles 4,000 4,000 4,000 4,000

Plus: Changes inDeferred Taxes 0.0 0.0 0.0 0.0

Less: Capital Expenditures 0.0 0.0 0.0 0.0

Less: Additions to Intangibles 0.0 0.0 0.0 0.0

Less: Changes in Working Capital (448,930) (1,727,942) (4,800,045) (86,757,481)Less: Changes in Other A ssets and Liabilities 0.0 0.0 0.0 0.0

x Unlevered Free Cash Flow $702,813 $9,436,382 $39,596,653 $559,121,380

Unlevered Free Cash F low Growth Rate 1242.7% 319.6% 1312.0%

A + B = C

Discounted PV of Terminal Value as a

Cash Flows Multiple of 2014 EBITDA Enterprise Value

Discount Rate (2011 - 2014) 9.0x 9.5x 11.0x 9.0x 9.5x 11.0x

x 9.00% $435, 258,7 59 # ## ###### ### # ## ###### ### $7,189,856,084 $6,317,868,282 $6,644,679,922 ############

9.50% 427,581,286 5,775, 898,287 6,096,781,525 7,059,431,239 6,203,479,572 6,524,362,811 7,487,012,525

10.00% 420,074,560 5,671, 595,807 5,986,684,463 6,931,950,431 6,091,670,367 6,406,759,023 7,352,024,991

10.50% 412,734,020 5,569, 637,132 5,879,061,417 6,807,334,273 5,982,371,152 6,291,795,437 7,220,068,293

11.00% 405,555,246 5,469, 959,342 5,773,845,973 6,685,505,863 5,875,514,588 6,179,401,219 7,091,061,109

- D = F

Total Equity Value

Discount Rate Net Debt 9.0x 9.5x 11.0x

x 9.00% ############ ############ ############ $7,958,093,047

9.50% (332,978,204) 6,536,457,777 6,857,341,015 7,819,990,729

10.00% (332,978,204) 6,424,648,572 6,739,737,228 7,685,003,196

10.50% (332,978,204) 6,315,349,357 6,624,773,642 7,553,046,497

11.00% (332,978,204) 6,208,492,793 6,512,379,423 7,424,039,313


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ManagementRole Assessment

Mrs. Cathy Scratch, the current President and CEO of Feed Earth Now, isexperienced in project management and food waste recycling. Since 2008,she worked with the mom and pop as well as large scale corporations torestructure their current recycling needs, such as the Marriott Hotel inChicago, Whole Foods Grocers, among others. She also acted as consultantsfor green organizations for their communications and development providingspeeches and educational lecturers at consumer and corporate events. Priorto her Recycling consultancy she worked within the large scale interior anddevelopment spaces. Creating Feed Earth Now, Mrs.Scratch has managedto fulfill a dream, to create a provide a solution that will both make revenueand help to replenish soil throughout the world.

Ms.Gerlach has expertise in product marketing, product management andWeb design, internet marketing, and market intelligence. With experience inwireless telecommunications, B2B software, manufacturing, retail,eCommerce and HR,Gerlach is uniquely qualified to build the business planfor this organization. Previously,Gerlach reorganized market intelligence atWebsense, a global leader in internet filtering and web security solutions.Gerlachmanaged global market research and competitive intelligence,tracking security software vendors and re-sellers, as well as hardware v endors.She also played a central role in helping to close over $20 million in sales inone quarter alone. As the head of Channel Competitive Intelligence for theARS Division of Current Analysis,Gerlach created and managed the division.In addition to publishing retail and e-commerce company profiles, herresponsibilities included market intelligence, tracking retailers, providingconsultancy to all types of retail, e-commerce players and direct re-sellers, aswell as supporting component providers, retail buyers and Value AddedResellers on a daily and monthly basis. She was instrumental in providing M&Aand business consulting services to both SMB and sev eral Fortune 500companies. Prior, as the Senior Market Research Manager forKyoceraWireless Corp, Gerlach coordinated and managed intelligence for CDMA95a and 1X handsets, PDA's and current and future technologies includingPalm OS, Smart Phones and Bluetooth. She was awarded the Kyocera MeritBased Award and was named to the Board of the Consumer ElectronicsAssociation. Early in her career, she worked with Lucent Technologies andMid-America Research/FIF. While at Lucent, Lucents Terminal Partnership

Team, ru

n byG

erlach, forged lu

crative alliances between Lu

cent andcompanies such as Compaq. During her tenure she worked on accountsincluding RIM, Hyundai, Nokia, Motorola, Ericsson and Sanyo Fisher. At MidAmerica Research/FIF, she was Project Manager for the Northeast region,covering accounts such as Procter and Gamble, Milward Brown, AC NeilsonBases and Pfizer.Gerlach earned her B.A. from Drew University in Madison, NJ.She is presently a member of the Consumer Electronics Association (CEA),NASF, WBN, University Club, Mid America Club, RotaryOne, JobsOneCommittee, and a member of the ChicagolandChamber of Commerce. MsGerlach is currently on the Advisory Boards of Circle Urban Ministries, NationalJewish Health Foundation, Roosevelt University and the WCD of the CEA.

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BackgroundName

Mrs. Cathy Scratch

Ms. JenniferGerlach

President & CEO

Business Consultant

Documents

Feed Earth Now Draft[1] (072111)