Dominion Aquaculture | 2015 Business Planosmosis.media/assets/pdf/DominionAquaBusinessPlan.pdf ·...

Business Plan2015

Contents

1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2.0 Situation Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Growing Global Demand for Protein 5

3.0 Business Opportunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

3.1 Species - Tilapia 10

3.2 Location – Southwest Virginia 10

3.3 Impact Investment 11

4.0 Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

4.1 RAS Background 12

4.2 AquaMaof 12

4.3 RAS Technology Advantage 13

4.4 AquaMaof Design Advantages 15

5.0 Research & Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

6.0 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

7.0 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

8.0 Management Team. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

9.0 Financial Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

9.1 Overview 26

9.2 Capital Structure Design 26

9.3 Model Assumptions 27

9.4 Cost Analysis 28

10. Current Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

10.1 Milestones to Date 32

10.2 Time-line 33

Schedule of Appendixes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

Appendix A Financial Statements – P&L 35

Appendix A Financial Statements – Balance Sheets 36

Appendix A Financial Projections – Cash Flow Statement 37

This document is for information purposes only. Information disclosed within should be considered proprietary and confidential. The document is the property of Dominion Aquaculture and may not be disclosed, distributed or reproduced without express permission.

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1.0 Executive SummaryCompany OverviewDominion Aquaculture (the “Company”, or “Dominion Aqua”) is a Southwest Virginia based, vertically

integrated aquaculture company established to develop a transformational multi-species aquaculture industry

in the United States. The Company’s first facility is designed to produce and deliver fresh tilapia fillets to the

domestic US market.

Dominion will build fully integrated, best-in-breed, environmentally friendly and bio-secure Recirculating

Aquaculture System (“RAS”) production and processing facilities, designed by our shareholder and strategic

partner, AquaMaof Technologies, Ltd. to annually produce up to 30,000 metric tons of tilapia (live weight). Our

locally grown product will be ultra-fresh, tasty, contaminant-free, hormone-free and with superior nutritional

values compared to competing products. The aquaculture production complex will be fully integrated with

hatchery / nursery, feed mill, fish processing, and fish meal rendering, all on-site, ensuring the bio-security of

the project.

The Company’s location in Southwest Virginia gives it excellent access to transportation infrastructure, a

trainable workforce and, with over 400 jobs required for the year-round operation of the facility, local support

(political and financial) is very strong.

Business OpportunityApproximately 92% of all seafood consumed in the United States is imported. These import programs offer

relatively little control over growing conditions, feed rations and traceability. The opportunity to tap the

growing US tilapia market with sustainable and competitively priced, domestically- produced tilapia fillets

is extraordinary. US tilapia imports increased to 1.3billion pounds (live weight) in 2012 and are expected to

continue growing. In addition, there are no major tilapia fillet producing facilities operating in the US today,

so virtually all fresh tilapia fillets currently sold in the US are imported from Central and South America

(Honduras, Ecuador, Costa Rica, Mexico and Colombia). Additionally the fresh tilapia supply from Ecuador

has decreased in recent years as some production has been shifted to meet the growing demand of shrimp.

Dominion Aquaculture’s production will meet the growing supply gap in the fresh tilapia market and offer

locally grown, sustainable and ultra-fresh import replacement program to across the major US trade channels.

Tilapia is a mild flavored white fish with delicate taste and texture. It has developed a broad and growing

market appeal to the US consumer that has propelled it to become the 4th most consumed seafood in the US

after shrimp, canned tuna and salmon.

InvestmentApproximately $135 million in capital is required for the buildup and initial operational working capital.

Substantial, non-dilutive grants are available from various parties given the significant impact (employment,

economic development, etc.) the project is expected to have in the region. With some grants already awarded,

we estimate that $40 million of the Company’s capitalization will be based on such funds. Accordingly, we are

seeking $50 million in equity capital, and $45 million in debt. The preferred target return to equity investors

is >6X.

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Management Team The Company has assembled an executive team with deep experience in aquaculture, food, manufacturing and finance.

Tal Kimmel – CEO Investment banking and private equity executive with extensive experience in global impact investments, economic development and public/private partnerships.

Yoav Dagan – Board MemberAquaculture expert with over 20 years’ experience in building and operating fisheries worldwide. Currently VP of Marketing & Sales at AquaMaof Technologies in Israel

Hillel Milo – Chairman of the BoardA pioneer of the VC industry in Israel with over 20 high profile exits. Founder and managing partner of the Aquagro Fund, a clean-tech VC firm in Israel.

Gary Myers – Senior Technology AdvisorRenowned aquaculture expert with over 35 years’ experience in aquaculture project design. Specializes in intensive aquaculture project design and environmental impact analysis. Currently Senior CTO at AquaMaof Technologies.

Harley L. (Mike) Rollins III – CFO (Proposed)C-level executive for private and public companies for over 17 years. Extensive cross-border transaction and tax expertise.

John Schiering – COOAccomplished operating executive with over 20 years’ experience in the food sector. Deep contacts with buyers across all food service channel.

Summary Financials5 Year Projections – Key Financial Metrics

2015 2016 2017 2018 2019

Revenue $ - $5,169 $32,586 $68,469 $108,905eBITDA $(1,668) $(4,398) $13,835 $19,020 $35,886neT Income $(3,948) $(8,336) $2,841 $10,528 $15,614cApITAl InvesTmenT $73,824 $10,323 $22,625 $23,992 $2,464

This business plan details both the establishment of the largest RAS facility producing tilapia fillets in the US and a “blue print” and road-map for our future facilities.

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2.0 Situation Overview Growing Global Demand for ProteinGrowing world population, urbanization and the rise of middle class have resulted in a growing global demand for protein. The United Nations Food and Agriculture Organization (“FAO”) has projected that by 2030 the average person will consume about 99 pounds of meat a year, a 55% increase from consumption levels in 1980.

According to the FAO, fish and fishery products represent a very valuable source of protein and essential micro-nutrients for balanced nutrition and good health. In 2009, fish accounted for 16.6 percent of the world population’s intake of animal protein and 6.5 percent of all protein consumed. Globally, fish provides about 3.0 billion people with almost 20 percent of their intake of animal protein, and 4.3 billion people with about 15 percent of such protein.

Aquaculture is one of the most resource-efficient ways to produce protein because, in general, fish convert more of the food they eat into body mass than land animals. “Feed Conversion Ratios” indicate how many pounds of feed it takes to produce a pound of protein. As can be seen in the figure below, salmon is far more efficient than other forms of protein production. The Figure below illustrates the superior efficiency of fish in converting feed into body mass.

* Hereford ratio; ratios for other cattle breeds vary**Salmon ratio; ratios for other �sh slightly higher

Exactly how much feed is needed varies, depending on the quality and makeup of the feed, the health and age of the animal, the environment, and other factors.

Di�erent sources of animal protein in our diet place di�erent demands on natural resources. One measure of this is the “feed conversion ratio”: an estimate of the feed required to gain one pound of body mass. By this measure, farming salmon is about seven times more e�cient than raising beef.

6.8Cattle*

2.9Pigs

1.7Broiler Chickens

1.1Fish**

Pounds of feed needed to produce one pound of body mass.

Pounds for Pound

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Current Seafood ProductionThe world is increasingly turning to aquaculture to meet the growing global demand for seafood, as most of

the stocks of the ten most consumed species, that account for about 30% of world marine capture fisheries

production, are fully exploited. As illustrated in the figure below, aquaculture production grew dramatically

over the past 30 years and currently accounts for almost 50% of total fish production.

5BA4DC0

20

40

60

80

100

120

140

160

50 55 60 65 70 75 80 85 90 95 00 05 10

MILLION TONNES

AQUACULTURE PRODUCTIONCAPTURE PRODUCTION

World Capture Fisheries And Aquaculture Production

Source: State of World Fisheries, 2012, FAO.

Global Increase in Aquaculture Production

Because the ability of the world’s oceans to increase output, based on the current environmental realities, is limited, the growth in aquaculture production is expected to continue. It is generally expected that the increase demand for fish-based-protein will come mostly from aquaculture and will meet 62% of the world’s production demands by 2030.

U.S. Aquaculture In comparison to other nations, the U.S. is considered a minor aquaculture producer, despite being the world’s second largest importer of seafood. Over 92% of seafood consumed in the US is imported, making the case for growing more seafood in the United States exceptionally compelling. The US imports over 15 billion pounds (live weight equivalent) of seafood annually, offering the US consumer very limited ability to verify the methods, quality and environmental impact of the source of production. US demand for aquaculture seafood is expected to grow, driven by a combination of:

A. Increase in US population;

B. A dwindling supply from wild fisheries; and,

C. An increase in per capita consumption due to the perceived health benefits of consumption.

This creates both a significant balance of payments gap and similarly, a significant opportunity to develop a new, US based, manufacturing industry with legitimate competitive advantages. At present, the aquaculture industry in the continental US is minimal, and focused on mollusks (clams, oysters etc.), catfish and trout. This is despite the opportunity that technology advances, changing economic conditions and changing consumer demands has created.

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US Tilapia Market The tilapia fillet market currently comprises 523,000,000 pounds (1.3 billion

live weight equivalent) of the total US demand for tilapia and is growing

rapidly. In financial terms, the US tilapia market is in excess of $1.04 billion

per year with average per capita consumption of almost 1.5 pounds per year.

While annual consumption of seafood over the last decade has been stable,

around 16 ± 0.5 pounds per capita, tilapia consumption in the US over the

same period has more than doubled. Notably, this has occurred during a

period when seafood prices in general have increased significantly. Tilapia is

now the fourth most consumed seafood in the US after shrimp, canned tuna,

and salmon, with demand growing at 6% per year. This trend is expected to

continue for at least the next 10 years, given the high demand for tilapia for

its recognized health benefits, affordability when compared to other protein

sources and its mild taste and texture.

The US tilapia market includes four segments:

• Live fish: This is a small market mainly serving the Asian and Hispanic-American ethnic populations and is estimated at 18 million pounds of tilapia per year;

• Frozen fish fillets: The US frozen tilapia fillet market is mostly supplied by imports from China and is estimated at 350 million pounds of tilapia per year.

• Whole frozen: This is also a smaller market with 92 million pounds in 2013.

• Fresh fish fillets: The US fresh tilapia fillet market is mostly supplied by aquaculture farms in Central and South America and is estimated at 60 million pounds of tilapia per year. This is the segment of the tilapia market in which Dominion Aqua will enter.

As noted above, the majority of US seafood is imported. The lack of consistent

standards and limited production oversight across all imports has resulted in

questionable quality, limited traceability, taste differences and environmental

contamination. While labor and other production economics were the original

impetus for tilapia aquaculture originating in foreign locations, the current

requirements and opportunities of the tilapia market have reduced this

advantage. The cost of securing feed, air transport, growing local awareness

of the environmental impact of the production methods currently used and

the decision by some producers to focus on higher revenue products such as

shrimp have resulted in a current import supply shortfall for tilapia, particularly

in the fresh fillet market.

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3.0 Business Opportunity Despite growing demand for fresh seafood and the advantages of a locally grown, domestic production program, no such facility currently exists in the United States. Dominion Aquaculture was established to develop a transformational multi-species aquaculture industry in the United States. The Company’s first facility is designed to produce and deliver fresh, locally grown tilapia fillets to the US market. Our state-of-the-art facility in Southwest Virginia will meet the existing demand of domestic consumers in an environmentally responsible manner.

By employing best practices, advanced technology and adhering to US food regulations, our tilapia will be:

• Locally grown

• 100% traceable and bio-secure

• Contamination, hormone, antibiotics, free

• Environmentally friendly with minimal water usage and zero discharge

• Dramatically reduced carbon footprint due to low transportation cost

• Ultra fresh – Our seafood will be on grocery shelves within 24 hours of processingOnce complete, our facility will be the world’s most technologically advanced tilapia production facility. It will be a scalable facility that can expand to meet product demand with an output of up to 30,000 metric tons. The facility will have an immediate effect on the US tilapia market and is targeting the following 3 specific areas to impact: locally by impacting the community through the creation of jobs, nationally by providing healthy and affordable protein for mass consumption and globally by improving the environment.

The US Department of Commerce tracks the import of various seafood species by country of origin. A summary of tilapia imports, by category and by country of origin is presented in the next table. Fresh fillets, our focus category, is highlighted. (next page)

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* Countries are ranked by the sum of their trade for all full years shown. The last two columns contain data for the previous and current year to date. Source: Department of Commerce, Bureau of the Census - Date run: 10/6/2014 9:43:22 AM

Product, country code and name* 2008 2009 2010 2011 2012 2013 Jan-Aug 13 Jan-Aug 14

ToTAl 5700 chInA (mAInlAnD) 262,908 287,527 349,479 318,298 382,278 371,001 219,925 224,935

5830 chInA (TAIwAn) 40,857 34,657 41,370 30,685 27,900 40,894 25,963 21,149

5600 InDonesIA 21,589 19,332 22,540 20,342 26,383 26,076 17,085 16,396

3310 ecuADoR 20,170 22,439 18,733 17,987 18,478 12,494 10,059 4,004

2150 honDuRAs 18,720 15,689 16,212 17,929 17,618 18,218 11,355 15,636

2230 cosTA RIcA 12,292 12,824 13,180 11,949 12,576 14,974 10,781 8,808

3010 colomBIA 3,736 3,803 4,067 5,263 6,403 8,546 5,554 5,834

oTheR 15,285 7,862 9,387 10,709 12,009 12,493 8,663 13,599

ToTAl 395,559 404,132 474,967 433,162 503,644 504,698 309,385 310,361

whole, fRozen

5700 chInA (mAInlAnD) 63,998 65,459 50,575 56,686 51,417 53,633 33,718 31,137

5830 chInA (TAIwAn) 35,015 29,056 35,927 26,883 23,019 36,063 22,845 18,810

5490 ThAIlAnD 7,309 1,994 2,613 1,253 1,089 915 662 1,259

5520 vIeTnAm 469 292 247 333 561 400 331 1,394

2250 pAnAmA 558 144 349 447 336 314 105 329

5650 phIlIppInes 419 53 252 435 327 204 131 6

5330 InDIA 6 855 282 85 85 60

oTheR 1,729 391 183 521 709 482 390 171

ToTAl 109,496 97,388 90,152 87,412 77,739 92,097 58,267 53,165

fIlleTs, fResh

2150 honDuRAs 18,368 14,356 15,973 17,814 17,200 18,066 11,241 15,165

3310 ecuADoR 18,640 19,974 17,321 16,848 16,246 10,723 8,591 3,946

2230 cosTA RIcA 12,271 12,613 12,843 11,837 12,112 14,388 10,225 8,399

3010 colomBIA 3,587 3,589 3,960 5,207 6,279 8,513 5,521 5,795

5830 chInA (TAIwAn) 1,238 458 485 773 1,023 1,522 938 780

2110 el sAlvADoR 1,119 1,060 733 760 333 779 524 187

2010 mexIco 10 3,503 2,563 4,614

oTheR 2,277 1,650 982 519 1,684 2,631 2,225 986

ToTAl 57,501 53,700 52,297 53,758 54,888 60,126 41,826 39,871

fIlleTs, fRozen

5700 chInA (mAInlAnD) 198,910 222,022 298,904 261,612 330,415 316,915 185,842 193,558

5600 InDonesIA 21,228 19,308 22,491 20,298 26,265 26,017 17,026 16,396

5830 chInA (TAIwAn) 4,604 5,142 4,957 3,030 3,858 3,309 2,181 1,559

5490 ThAIlAnD 970 1,497 2,327 2,909 5,360 3,214 1,895 2,376

3310 ecuADoR 1,050 2,465 1,407 1,104 2,074 1,579 1,325 58

5570 mAlAysIA 15 705 1,692 1,539 279 79 569

2150 honDuRAs 353 1,333 239 115 419 152 114 471

oTheR 1,431 1,278 1,488 1,232 1,088 1,009 830 2,338

ToTAl 228,561 253,044 332,518 291,993 371,018 352,474 209,291 217,326

Import Of Various Seafood Species By Country Of Origin

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3.1 Species - TilapiaThere are many reasons for selecting tilapia as the species of choice in the initial Dominion

Aqua aquaculture complex. Tilapia is mild-flavored and firm, yet delicate in taste and texture, making it well suited for the US palate. This general seafood group, categorized as “white fish,” has a unique and broad market appeal in the US, especially in the fillet market

sector. In addition to its marketability, tilapia also offers significant production advantages. With proper management and system design, tilapia can be grown in a very high-density environment and still maintain a rapid growth rate. Finally, unlike many other fish species, tilapia fingerlings can be produced in controlled conditions during all months of the year allowing for consistent year-round production.

In research conducted for this project, Dominion Aqua considered several fish species; however none possessed the combination of broad market potential and the exceptional production economics of tilapia. For example, hybrid striped bass are cultured under production techniques similar to tilapia but management is more complex and markets are also more limited. Trout, salmon and catfish are other commonly cultured species but, except for salmon, gaining market share in already crowded and limited categories is difficult. Most salmon today are produced in seawater although genetic lines have now been developed for freshwater production. Meanwhile, commercial production techniques are not well developed for yellow perch, walleye, bluegills and crappies, and while price can be elevated, market opportunities tend to be regional or niche. As a result, Dominion Aqua has strategically selected tilapia as a species offering great potential for the first major aquaculture industry development in Virginia. We will continue to analyze the market and production capabilities to decide what species subsequent facilities will be focused on.

The fastest growing fin fish sector is the fillet segment, which includes frozen and fresh fillets, with the fresh share out-pacing frozen in both desire and price for many fish species. The size of the US market for fresh fillets of tilapia has been heavily impacted by insufficient supply. Among other things, deteriorating water quality in ponds and the potential for higher revenue products such as shrimp have steered some producers to focus on non-tilapia product. This trend has resulted in a current import supply shortfall for tilapia, particularly in the fresh fillet segment. Research has shown that if adequate supply of fresh tilapia fillet can be secured, demand should increase to over 90 million lbs. by 2021 (5% CAGR).

Dominion Aqua’s production will meet unfulfilled demand and replace import programs in several distribution channels.

3.2 Location – Southwest VirginiaDominion Aqua has selected a 122 acre lot in Tazewell County, VA on which the integrated production facility will be built. The carefully selected location in Southwest Virginia provides ready rail access for inexpensive transport of feed ingredients from neighboring counties and states by rail. The site also has close proximity to the interstate highway system, putting it within 12 hours’ access to 60% of US households.

The location also offers access to a skilled and trainable workforce with an excellent work ethic. That workforce was previously employed in the now-dwindling coal and tobacco industries, both of which required similar skill levels. We have also formed a strategic relationship with Virginia Tech and its robust, internationally renowned Aquaculture studies and research program, and newly commissioned food marketing, packaging and business resource center at its Blacksburg, VA campus. The Company is expected to create over 400 jobs and steer substantial economic growth into a region with otherwise little or no new economic activity. As such, the Company is eligible for substantial grants, loans and other state and local incentives that offer significant, non-dilutive funding sources to the capitalization of the company and to the benefit of its equity investors. The Company has begun the process of obtaining state grants where available and

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has included a summary of this application process as an Appendix.

The following critical elements were identified as required for a competitive aquaculture production facility

• Adequate supply of good quality water; Low cost electricity;

• Availability of primary feed ingredients;

• Siting to permit efficient and low-cost access to major seafood consuming markets;

• Access to necessary infrastructure components (roads, electricity, labor, etc.) and / or economical means to acquire them; and

• Ample acreage for both the initial production complex and future expansion

• Available skilled and trainable work force with superb work ethics

The site we have identified in SW Virginia meets all of these requirements. In addition, key feed ingredients, i.e., soybeans, soybean meal, and wheat for feed ingredients can be supplied in large quantities using unit trains and the extensive rail system in the region. This will substantially reduce the transportation cost of feed ingredients that otherwise have to be transported from various Midwestern states via truck.

The Company has identified a specific site, and in July 2014 has signed an Option Agreement granting it the right to purchase the 122 acre lot for the appraised value for 6 months. At the Company’s discretion, the option can be extended for an additional period of 3 months. Concurrent with entering into this Option Agreement, the Company has engaged a local engineering firm to conduct preliminary site engineering design that includes the following:

• Boundary and Topographic Survey

• Preliminary Site Design

• Geo-technical Engineering, Drilling and Laboratory Testing

• Preliminary Environmental Engineering

• Environmental Permitting Plan Development

• Environmental Engineering and Permitting

The Option Agreement and the engineering firm’s credentials and contract terms are attached as an Appendix.

3.3 Impact InvestmentDominion Aquaculture represents a true impact investment on three levels. Locally, introducing a new manufacturing and food processing industry will have a transforming effect on a region that, with the demise of the coal and tobacco industries, is now plagued by high unemployment and little economic activity. Dominion is expected to employ over 400 people directly and to steer economic activity that, according to studies by the Virginia Economic Development Partnership, will have a 3-5x multiplier effect. Nationally, offering consumers branded, locally grown, healthy, contaminant-free, low mercury and tasty ultra-fresh fillets of tilapia fish will have a significant and favorable impact on the health of Americans. Third, on a global level, sustainably producing the most efficient animal protein for human consumption, with a minimal carbon footprint, in an indoor, closed-loop, environmentally friendly facility, will protect our oceans and wild fish populations and have a substantial long-lasting positive environmental impact.

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4.0 Technology Dominion Aqua will, under exclusive arrangement, deploy the proprietary, patented and operational Recirculating Aquaculture System (“RAS”) technology of our Israeli technology provider/partner, AquaMaof Aquaculture Technologies. This technology allows us to grow fish in unprecedented densities in a zero discharge, energy efficient manner, paving the way for true industrialization of fish production.

4.1 RAS BackgroundThe development of Recirculating Aquaculture System (RAS) technology started in Japan in the1950s, and it was introduced experimentally in Europe in the 1970s. It is a closed-loop production system that holds and cultures fish under controlled conditions while continuously filtering and recycling the water. It enables large-scale fish production in regions where climatic conditions are not conducive to fish farming at minimal environmental impact to the region. It also creates optimal growing conditions for the fish.

4.2 AquaMaofOur strategic partner and technology provider is a globally-recognized industrial aquaculture business known for constructing and managing fish farming facilities in Israel and around the world. AquaMaof

specializes in integrated aquaculture solutions for the entire fish production cycle, providing complete service packages starting at business development concepts, through systems and production line engineering design, set-up, commissioning, operation and maintenance. The organization today represents an evolution, growth and expertise of more than 20 years in the making, bringing together companies, and teams of technologists and aquaculture experts, who provide research and development, professional consulting and outsourcing services for aqua-farming - in over 50 locations around the world.

AquaMaof serves as a business partner to other companies, collectively forming the “Maof Group”, which consists of affiliates and subsidiaries working in concert to provide clients a comprehensive package of high quality innovative aquaculture products and services. AquaMaof evolved from Maof Machines Designing and Manufacturing, Ltd. wishing to streamline their operations and focus on RAS. To date, many customer sites, such as those located in Israel, Poland, Russia, Belize, Brazil or Costa Rica, have become self-sufficient, profit-making ventures due to AquaMaof’s dedication to development of superior aquaculture technology, comprehensive services and project management support.

AquaMaof is known for giving seafood producers the most practical and advanced systems for growing fish from eggs to market. The integrated program concept (from facility design, construction and commissioning, then through production and business development), ensures a successful long term profitable venture for both the seafood producer and the surrounding community. AquaMaof also operates an R&D facility in Israel, managed by a large staff of aquaculture experts and engineers to advise aqua-farming operators worldwide.

At present, AquaMaof is arguably the most advanced company in the world working in the sector of intensive indoor RAS.

Engineering Rendering of the Proprietary AquaMaof RAS Design

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Affiliated companies include 2 Israeli companies: Maof Machines Designing and Manufacturing, Ltd. and MaofMadan, Ltd. AquaMaof 4 subsidiaries include: Maof Hanegev Ltd. (Israel), Globalfish Sp. Z o.o. (Poland), A.A. Petra Building Ltd. (Cyprus), and ECOSUS Virginia LLC (United States) dba Dominion Aquaculture.

Unique features of its RAS system include the following:

• Proprietary and patented scalable indoor design

• Energy efficiencies requiring 1/3 the power of comparable technologies

• Production tanks with integral hydro-cyclones

• Proprietary oxygen dissolving systems

• Complete filtering and water recycling

• Sophisticated remote monitoring technologies. The technology is proven and operational, having been most recently deployed successfully in Europe, where it powers a facility in Poland and another in Russia.

Dominion Aquaculture will incorporate methods and technologies that differentiate it from existing aquaculture operations. Today, much of the world’s aquaculture production comes from flow-through, ocean cage or pond systems. By contrast, Dominion Aqua’s plan puts all facets of this process indoors. In so doing, Dominion Aqua employs a proven, patented, re-circulating Intensive Production System that is indoors, allowing total control of the growing environment, increased bio-security and disease control. Most US aquaculture projects today are small-scale operations that can only sell to local, live fish markets, or to small-scale fish fillet processors. In the alternative, Dominion Aqua will build and operate the largest, state-of-the-art, aquaculture complex in the US, vertically integrating its production with the processing of feed, fish, fishmeal and co-products. This achieves significant economies-of-scale, while combining to distinguish Dominion Aqua from existing US aquaculture projects. As a result, Dominion Aqua will produce and market high quality, fresh, US grown, raised and processed aquaculture products that will all demand top value in the marketplace. Finally, Dominion Aqua will also evaluate and consider the export markets for select product lines.

4.3 RAS Technology AdvantageMany countries import the major portion of their seafood because land-based production (not including pond production) is only now beginning to emerge. Unfortunately, few have resources necessary for appropriately scaled facilities. As a result, most aquaculture today is done in ponds, lakes, and oceans and these technologies do not allow for proper control of the many environmental factors that influence production. The patent pending, Indoor Advanced Aquaculture Technologies (IAAT), of Dakota Fisheries, Inc. and AquaMaof Aquaculture Technologies, however, control these environmental factors at optimum levels.

There are also worldwide concerns today about the ocean sea cage cultivation centers in Chile, Norway, Canada and Scotland. Salmon production in Chile recently experienced a major disease incident that caused losses in the billions of dollars and this has now spread to other production centers. There are now pressures from environmental groups to remove the breeding cages due to their harmful effects and the contamination of fjords and bays that result from commercial salmon production. This controversy has strengthened the need for an alternate method of cultivation. Studies carried out in Hong Kong indicate that 85% of the phosphorus, 80–88% of the carbon, and 52–95% of the nitrogen inputs to open net cages may be lost through uneaten food and fecal wastes. Even Norway is beginning to see negative campaign against net pen production as illustrated by the following quote from an August 2013 news article:

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“The four major supermarket chains in Norway threaten to throw farmed out of the shops unless farmers switch

to closed facilities and guarantee that the fish are safe to eat.”While initial capital expenditure for bio-secure, land-based tanks is significantly higher than sea-based cage breeding facilities, the costs of both production and breeding is much lower once production begins. For example, salmon can reach market size at 12 months in an environmentally controlled, indoor production facility when compared to 16 to 24 months in open sea cages and without the need to genetically modify the stock. In addition, the feed conversion ratio is dramatically more efficient in indoor farms where environmental conditions can be maintained at optimum levels.

Many consider open-ocean farms (located long distances from shoreline and in waters unprotected from weather elements) as the future technology of choice for seafood production. The economic reality is that these operations require a higher capital investment than cage breeding facilities and higher production costs. These costs result from the many difficulties in managing processes along with the transportation requirements necessary to operate in remote locations. It is expected that feed costs will continue to increase, in part because the world has a limited supply of phosphorus. An aquaculture technology that can recycle phosphorus, therefore, will have significant competitive advantages.

On a total cost basis, we have made detailed comparisons of net pen and land-based production technology for the Canadian salmon industry. Evaluation of total capital required (construction and operating combined) for the two technologies is approximately equal. Net pen technology has no real advantage in capital costs. Reasons for net pens’ high operating capital requirements are that the production cycle is 18-24 months whereas for a land based operation with temperature control, it is only 12 months. In addition, the land based technology will produce continuous monthly harvests instead of batch harvests every two years. Seasonal water temperatures regulate the stocking month and government regulations for disease control require that a batch production plan be used (all fish stocked, all fish harvested and then, a mandated fallow period before restocking).

The operating cost advantages of land-based production systems are many when compared to ocean net pen technology. Control of water temperature and oxygen concentration has impacts on growth rate and on the feed conversion ratio. Results of comparisons with Canadian salmon production show that feed costs can be reduced by 20%-25% in indoor production systems. This is very significant since feed costs are the highest single expense in fish production. There are also other operating cost advantages, mostly related to the harsh environment that is required for ocean net pen operation (predator control, disease and vaccination costs, marine transportation, and parasite damage). And, these cost discussions do not include the societal costs relating to environmental damage from ocean net pens (yet the one significant advantage claimed for net pen production is “no water treatment costs”.)

Development of large scale, environmentally controlled, animal production facilities has become the norm in recent years and sustainable aquaculture production will follow this trend. Dominion Aqua’s design concept was developed specifically to create operating unit synergies that offer competitive advantages for fish production. Proprietary, patent pending project design concepts will be used in all our fish production systems and allow for us to scale operation and add capacity as the market is developed.

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4.4 AquaMaof Design Advantages

Optimum Water Temperature and Oxygen: Water temperature and dissolved oxygen content are very important in fish production to maintain high growth rates and the best feed conversion rates. Many producers using net pens or ponds employ paddle-wheels for aeration. At times, however, ambient weather conditions reduce water temperature and oxygen below optimum levels. This can slow growth and require more feed for production, sometimes significantly reducing growth for as long as six months. Our design has controls to adjust for these environmental factors and maintain optimum levels enabling maximum production during all times of the year.

Intensive fish production requires the use of pure oxygen and the oxygen must be efficiently dissolved into the water. The most efficient process is to dissolve oxygen into the circulated water stream just prior to entering the production tank. Oxygen is the limiting factor (also associated with the resulting carbon dioxide from fish respiration) for the fish. Water flow requirements are directly related to dissolved oxygen concentration. The electric cost for separating oxygen from air is 4.0kg (8.8 lbs.) oxygen/ kWh of electricity through the VSA technology commonly used for industrial supply of pure oxygen. Some intensive aquaculture facilities use another oxygen separation technology, PSA, which requires about 3 times more electric energy to produce the same quantity of oxygen.

Paddle-wheel aerators are commonly used in pond fish production. These do increase production capacity, however, are not the most efficient method of aeration for maintaining dissolved oxygen levels of 5 mg/liter or above (5 mg/liter dissolved oxygen would be the absolute minimum for many marine fish species to attain good growth). Also these aerators require significant maintenance and repair. Paddle-wheel aerators are usually rated at highest at 2.5 Kgs (5.5 lbs.) oxygen transfer per kWh of electricity bringing water from zero oxygen to saturation. Our target is to hold the dissolved oxygen at 5 mg/liter or above (not 0 to saturation used for rating aerator standards). At 5 mg/liter dissolved oxygen concentration, paddle-wheels deliver 31% of the rated capacity or about 0.77 Kgs of oxygen per kWh. This compares to 3.4 Kgs (4 Kgs/kwh for VSA times 85% dissolving efficiency) per kWh for the oxygenation in our Dominion Aqua system design, 4 to 5 times more oxygen dissolved for the same energy cost. For ocean net-pen production, paddle-wheel aeration is thought not to be needed as it could be claimed that no oxygenation costs are required for ocean net-pen production; however, the growth of the fish stock will be restricted because of less than optimum oxygen concentrations and the cost of production will increase due to a less efficient feed conversion ratio

As an alternative to a paddle-wheel aerator, many aquaculture designs have suggested the use of airlift technology for pumping and aeration. This is less efficient than the use of paddle-wheels for aeration. There are times for sea cage and net pen culture that the oxygen available is very low and even with the addition of paddle-wheels for aeration the oxygen concentrations in the culture water is much less than optimum and can cause death of fish in extreme conditions.

Land Requirements: Land and environmental restrictions are frequently cited as a disadvantage for aquaculture in developed countries such as the US. Our design does not use extensive ponds but deploys large diameter tanks requiring approximately one hectare of building area for annual production of 4,000 tons of fish (3.5 million lbs./acre). This production capability compares to maximum annual production of 25 tons per hectare for intensive pond production (about 20,000 lbs./acre, US pond production of catfish is usually less than 10,000 lbs./acre). We believe that the land cost required for our facility is not a significant disadvantage for fish production in US but an advantage when all factors are considered. In addition, our production approach allows for nutrient and water reuse making the process sustainable and a positive environmental impact.

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Feed: Feed or feed ingredients are usually imported for fish production in countries that export seafood to the US. We believe the integration of our production farm, and easy access to local feed-grain ingredients supplied via rail will provide us with a significant advantage. Feed costs are the highest single component to the production of fish. Our goal is not to determine the lowest cost feed, but the feed that will produce fish at the lowest cost fish fillets in our specific production system. We will manufacture the feed on-site that effectively produces lean fillet muscle and not excess fat. Use of the optimum protein to energy ratio for each growth phase is effective for producing lean muscle. Our feed production will remove cost factors associated with outside company profits on feed manufacture and transportation resulting in the lowest possible cost.

Water Recirculation: Water flows through the production system with one pumping step. This provides water flow for the production tank, all of the water treatment processes, and for returning to the pump. Dual pumps and piping systems are used to provide redundancy should one system fail. Electricity cost for pumping in the system is $0.011 per pound of fish produced. The pumps specified are high quality units, designed for continuous pumping at required water head pressure.

Electricity: Electricity cost is often considered a major cost factor in intensive systems. Our cost estimate for our tilapia facility is $0.033/lb. of production. This is only 3% of the total costs including processing. There will be differences in electric cost in future facilities depending upon the individual fish species requirements for water treatment; especially in the maintenance of low carbon dioxide concentrations. Included in the electricity cost for fish production are the following: water pumping, oxygen supply, lighting, carbon dioxide control, and ozone production for water treatment. Our expected electricity cost is less than the costs of vaccination, disease treatment, and parasite damage incurred in the ocean net-pen industries which is a cost that our design will avoid entirely.

Maintenance: Repair and maintenance costs are low for permanent concrete structures. The solid waste separation process, biological filter, and oxygen dissolving are static devices (no moving parts) also require low maintenance. Water pumps and oxygen generator are high quality with low service requirements. Proper design will result in annual repair costs of approximately 0.5% of the initial build cost. The useful life for the majority of the “heavy” equipment is estimated to be 15-20 years with the useful life of the building, concrete or non-machinery items to be even longer.

By comparison, repair and maintenance costs for cage and net pen technology are much higher considering the severe conditions of their open seas locations. The repair costs for net pen salmon production in British Columbia, Canada are approximately 6% of the capital cost per year and the useful life of most equipment averages 7-10 years.

Scale:Our design will allow for us to scale production as the market grows and deploy similar facilities in the future. Overall profitability will increase as the market grows and in an economically viable manner. Increasing margins will also provide the opportunity for us to enter into additional markets but this opportunity has not been factored into our business plan. Future benefits of our design and plan include the potential for multiple species facilities utilizing single supporting operating centers. To date, all indoor intensive aquaculture tilapia farms in the US have been designed primarily for live fish sales or the whole fish niche markets and have thus, not achieved the economy of scale required for competitive processed fish sales into the US seafood markets.

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Growth Rate: Growth Rate is a factor all producers are seeking to increase for the best fish production. Faster growing fish will produce more fish for each dollar of investment. As growth rates are related to optimum temperatures and conditions, it is much more difficult to control and predict growth rates in an outdoor environment. If optimum temperatures are not available during a portion of the year in outdoor systems, then a maximum increased growth rate is a benefit for only a portion of a year. Even in intensive production systems where the system design capacity is based upon quantity of feed per day, increased rate of growth provides little improvement because the production system is limited based upon feed quantity. The Company’s design has taken this into account and will have some excess water treatment capacity to provide treatment for additional feed quantity. By improving growth rates, the Company can more easily attain 100% of the design production capacity of a system without increasing the number of fish per cubic meter of culture water. On a cost basis, the greatest improvement resulting from improved growth rate is that feed conversion ratio usually improves with improved rate of growth resulting in a lower feed cost.

Feed Conversion Ratio (“FCR”): FCR/feed cost is the highest single factor in the fish production. One way this cost can be managed is through the use of feeds specific for each growth phase of the fish. This is an important advantage for Dominion Aqua because feed manufacture and fish production are both contained within one company and the least cost feed can be based upon the final fish product. The ability to manage feed at different growth phases is much more difficult if not impossible when purchasing feed from outside suppliers or when working in an ocean-pen environment.

Feed conversion can also be impacted by the mortality loss of partially grown fish. Improvement in the immune response from top quality feed and optimum production conditions will reduce mortality rates and increase productivity. By comparison, in ocean or other outdoor production, the mortality is often related to bird predation and sometimes diseases and parasites that are brought in with water, wild fish or birds. Improved feed would have no effect on bird predation, parasites and most diseases and is only a small advantage for outdoor production.

In our evaluation of the Canadian BC salmon production, the benefits from control of optimum oxygen and temperature resulted in FCR improvements of 25%. A very significant cost savings when feed costs are more than 50% of fish production cost.

Processing Capability: Sale of whole fish and processed fish products into fresh-seafood local and regional markets is an advantage for Dominion Aqua. The Company will have opportunity to make the selection of fish for whole/gutted fish on its on-site the processing line reserving the most uniform sized fish for the filleting process with the remaining fish selected for whole fish sales. This selection process will result in the highest total revenue for all products combined.

Biomass: Average system biomass represents the total quantity of fish in each production system. If more fish are in the system, more fish can be produced and overall overhead as a percentage of total production is reduced. The ability to control the production environment at every step in production results in much higher efficiency and increased biomass production. While the theoretical capability of our design is much higher and more robust, our projected production rates are based upon conservative fish biomass densities of 85 to 129 kg/m3 for tilapia.

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For all the reasons described above, marked decreases in overall production costs are readily achievable through careful design of the systems and by taking advantage of the existing resources available at the production site. In addition, the Company will hire managers with experience in production and processing of each species, as well as a strong, qualified senior management, to ensure proper implementation and execution of practices, procedures, and integration of business centers throughout the Company.

AquaMaof RAS Design

1

2

1. Proprietary Oxygen Dissolving System• More oxygen, less energy• Oxygen generated on site• Waste heat recovered• Oxygen level regulated in each tank

2. Optimal Filtering• 100% water filtering on each cycle achieving optimal

water parameters.

3. Industrial Production Tanks • Robust tanks for lifetime usage• Unique shape with integrated side-door and

hydrocyclone

4. Fish Channel Fish Transfer Through WaterEconomical, simple, and safe way to move fish through the production chain.

• Stocking• Grading• Marketing

5. Full BIO-Security ControlThe plant is designed in accordance with strict BIO-security protocols.

• Quarantine• Disinfection• Staff movement control• Safety procedures for entering and exiting the facility

6. Monitoring & ControlThe plant is designed in accordance with strict BIO-security protocols.

• 24 x 7 Monitoring of all critical components• 24 x 7 Monitoring of all water parameters• Automatic activation of all emergency backup

systems

3

4

5

6

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Vertically Integrated Operation: To achieve its bio-security objectives in our US plant, Dominion’s facility is designed to be vertically integrated to control all aspects of production. That control is illustrated by the following graphic:

Flowchart: Operations

Product Development

Product Development*

Process Development

Process Development*

Fish Feed Production

By-ProductsFish Meal & Fish Oil

Marketing/Sales ofValue Added Branded Products

Hatchery Fry- Fingerling

Fish Growth

Fillet Process

Packaging & Shipping

Distribution Retail Outlet

Company Activity

Performed by Others

* Virginia Tech Aquaculture Program

In the typical design for a commercially scaled facility, fish production is divided into production modules. Each module consists of 6 fish production tanks, a pumping sump and a water treatment system to recycle water. Water with nutrient by-products is intermittently discharged from the treatment system to a specially designed water recycle for treatment and recycle back to fish production.

The feed mill, fish processing, and fish offal rendering plants are constructed so as to be contiguous to the fish production facility. This enables both efficient transfer between plants and the potential of sharing of by-product heat energy.

Commercially scaled, vertically integrated facility parameters:Each facility must have its own production, processing, feed milling and inedible rendering on-site

• Each facility is developed to produce either a single fish species or possibly 2 species

• Development of multiple farms offers significant advantages by providing for a common marketing initiative and the interchange of fish meal by-product.

• Integration allows for the capture and re-use of by-product heat from integrated processes (e.g. feed milling, processing, and rendering) to supply heat for fish production.

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5.0 Research & DevelopmentDevelopment of a truly unique product that has increased value in the market requires research, planning, and networking. This research will include selection of attributes that create value in the market and also the development of methods (and patenting) to create desirable attributes in the fillets produced in our production system. A second level of research is also now underway to include processing techniques that enhance these attributes once the fish is processed into fillets, such as innovative and MAP packaging.

Attributes we are researching that will be expressed in the fillets during the growing process are listed below.

1. Increased DHA omega 3 lipid content in the fillet. This will be accomplished through changes in the feeding ration.

2. Improved omega 3: omega 6 ratio. Established through feed ration adjustment.

3. Reduced mercury content concentrations in the fish fillet. Mercury contamination is a concern for all seafood consumption. Although mercury content in tilapia fillets is not generally high, much lower mercury content can be achieved in our controlled production system. This is accomplished through:

A) Selection of feed ingredients (our facility has a feed mill on-site);

B) Addition of nutrients in the feed that prevent deposition of mercury into the fish; and

C) Use of low mercury concentration production water.

4. Reduced content of PCB (or other contaminants). Accomplished through the use of uncontaminated water and careful selection of feed ingredients.

5. Undesirable flavor notes, common in imported tilapia fillets, are caused by geosmin and MIB chemicals (produced from cyanobacteria and actinobacteria) in the production water. This continues to be a major problem for the US catfish pond production industry and also, very common in many tilapia fillets imported to the US from Asia and other locations. As a result, this is a major reason many people “never eat tilapia.” In response, our production system incorporates technologies that prevent this off-flavor problem by: a) purging the fish in clean water prior to harvest; b) a system design that prevents accumulation of chemicals in the fillets; and c) total management of the bacterial community in the fish production system.

6. Our initial finished product mix will include fillets, whole gutted and scaled, and eventually, value added, further processed products. Initially, the major portion of our products will be delivered fresh (never frozen) to the targeted market channels and a branded concept will, thus be developed to distinguish our tilapia from the commodity programs currently supplying tilapia products to all the various trade channels.

By-products from fish processing will include: fish scales and skins that have special markets, fish meal, and fish oil. The fish meal/fish oil inputs (inedible) are transported on-site to the fish meal plant for daily processing to dried fish meal and separated fish oil.

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6.0 CompetitionDespite strong demand demographics, most US aquaculture farms today are dedicated specifically to production for live fish sales. The market for live fish, however, is quite small relative to the total US seafood market, so, in essence, there are no large aquaculture operations in the US today that can bring economy of scale to bear as a competitive price advantage when selling into the fresh seafood market.

Accordingly, the US fresh fin fish market has competition only from those countries with either a short transportation distance or offering specialty products of high value. Fresh imported tilapia products come primarily from Central and South America. The majority of these fresh products are shipped via air freight making high shipping costs part of their total price structure. In addition, it typically takes 4 days to get the product through the distribution channels and “on to the shelf.” Dominion Aqua will ship fresh tilapia products by truck from Virginia to all locations in the US with exceptionally short delivery times to all the heavily populated eastern seaboard markets.

As can be seen, the key suppliers to the US fresh tilapia fillet market are aquaculture farms in Honduras, Costa Rica, Colombia, Ecuador, and Mexico. Below is a short description of the operations in each of these countries:

• Ecuador and Colombia: The largest supplier of fresh fillets to the US is Tropical Aquaculture Products, a US company that has 11 pond farms in Ecuador, Columbia and Brazil. It considers itself to be the largest supplier to the US market; through all of its facilities, has a 30 – 40% market share. The product is transported to the US by air. As stated earlier, Ecuador producers have been changing some of their tilapia production to shrimp to meet a huge supply hole in Asia, especially China.

• Costa Rica: There are 4 major Costa Rican based companies producing and exporting tilapia products to the US; and 90% of their production is fresh fillets. All 4 producers use one distributor for the US market: Rain Forest Aquaculture based in Miami, FL. This, in effect, creates a major competitor to any new market entrant. Again, the product is transported to the US by air.

• Honduras: The major tilapia production facilities in Honduras are owned by Regal Springs Tilapia Group. They use cages instead of ponds to raise their tilapia; this helps control what the fish eat which, they state, provides a taste difference.

Regal Springs, through all of its aquaculture facilities globally, considers itself to be the world’s largest producer and importer of tilapia fillets to the US. They have facilities in Indonesia and Mexico in additional to those in Honduras.

In 2013, Regal Springs commissioned a new tilapia production facility in Chiapas, which is in south Mexico. They plan to export 11,000 metric tons of tilapia (not stated, but assumed to be fresh fillets) to the US from this plant as well as produce 8 – 10,000 tons of whole fish for the Mexican market. The stated objective of the import portion of the business is to make up for the shortfall in tilapia production from Ecuador. Product from this facility is expected to be trucked to the US.

Between its Honduras and Mexico facilities, Regal Springs must be considered a third major supplier of fresh tilapia fillets to the US market. Adding to the logistics cost advantage of Dominion Aqua is the feed transportation costs for foreign production/processing facilities. The largest single cost factor in finfish aquaculture production is feed with four to six pounds of feed required for each pound of finished fillet product. Many international farms, including those in Central and South America, must ship quality feed ingredients from US feed sources over long distances, drastically increasing unit production costs. Also, some fish species, like salmon, require a higher percentage of fish meal in the feed and less grains. This has become a major sustainability concern for those fish species used for feed. Dominion Aqua will be using grain based fish diets complemented with a combination of internally produced fish meal from other farms along with a small

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38+10+22+15+1+10+2+2+Aamount of wild capture fish meal.

Dominion Aqua will overcome the high feed cost obstacle by a combination of its access to the major feed producing regions and manufacturing feed on-site using feed transported in large quantities by rail. This substantially reduces feed cost, eliminates significant truck shipping expenses, assures high quality feed manufactured to exact specifications for each fish age group and increases sustainability.

As a result of the above, Dominion Aqua’s pricing will be at parity with regular imported products due to our competitive advantages of time, vertically integrated operations, reduced production costs and lack of airfreight expense. Moreover, Virginia’s central location on the US eastern seaboard will compete favorably with the distribution of imported seafood products and especially those fresh imported seafood products that require air freight transportation to reach the US.

As mentioned above, in addition to all the market data we have presented, Dominion Aqua will draw upon established trade relationships to conduct an in-depth, in-person analysis at key accounts in each of the trade channels we target. This will provide specifics as to who will buy our product as well as details as to volume potential, price and marketing support parameters. It will also establish critical initial relationships with many of those accounts where we intend to launch our product line.

Tilapia Fresh Fillet by Country of Origin

This chart shows the distribution of source countries from which fresh fillets of tilapia are being imported. Source: Department of Commerce, Bureau of the Census

2%Mexico

38%Honduras

10%Ecuador

22%Costa Rica

15%Columbia

1%China (Taiwan)

10%EL Salvador

2%Other

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7.0 Marketing StrategyOur go-to-market strategy is to offer a premium, locally grown product to the US market at a price distributors currently pay for product in their import programs. Given our cost advantages (energy, feed, transportation), Dominion Aqua can successfully provide a clearly superior product for the same price paid for competing, imported product.

To succeed, Dominion Aqua will need to establish a leadership position in the US fresh tilapia fillet market. We believe this market leadership position can be achieved by delivering a product that:

• Is raised in the US and delivered to the marketplace within one day of processing

• Is free of chemicals, antibiotics, growth hormones, preservatives, and potential contaminants such as mercury

• Has superior nutritional value and taste when compared with competing products and is supported by certifications commensurate with such a strategy.

US consumers have shown a strong preference for locally grown food and for unconditional food safety. Locally Grown, Ultra-Fresh, tasty, contaminates-free and superior nutritional values compared to competing products are the key elements of our marketing strategy. Our team has contacted buyers across the supply chain, among them supermarket chains (Kroger, Stop&Shop, Food City), buying consortiums (Topco), Club Stores (BJ’s, Costco SE), distributors (Inland Seafood) and food service companies (First Class, Modern Fish, South Coast Fish) and the feedback received was universal: Demand for tilapia is strong and growing and no product that is locally grown in a sustainable fashion currently exists in the market. “If you can make it, we will buy it.. “ To allow the market to absorb Dominion’s output, we have adopted a staged production/sales strategy that will produce and deliver to the market tilapia fillets in the following progression: 9,000 tons of production in the first year, an incremental 9,000 tons the second year of production and reaching full capacity of up to 30,000 tons in the 4th year of production, once distribution relationships and customer demand are cemented.

We attribute great importance to marketing and sales, and will recruit a well-credentialed senior marketing executive to focus on promoting our unique US born, raised and processed products. This will serve to establish the company as the leading domestic supplier of fresh fish fillet products.

Dominion Aqua’s marketing program will also explore developing strategic alliances with producers and distributors of other food products to enhance the movement of our products through the various distribution channels. The marketing program will begin with our initial market evaluation of the following targeted markets:

1. Food service: a. National distributors b. Regional distributors c. Metropolitan distributors d. Restaurant chains (buying direct) 2. Supermarkets: a. National chains b. Regional chains c. “Natural food” chains d. Wholesalers e. Distributors 3. Club stores

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4. Mass retailers 5. Cruise lines 6. Processors 7. Military

Procedures: 1. Define overall volume data for each trade channel listed above 2. Select 2-3 representative key accounts in each channel 3. Prepare preliminary presentation materials a. Literature describing the unique attributes of our applied RAS technologies: i. Sustainability ii. Bio-security iii. Environmental responsibility iv. Superior quality v. Competitive pricing vi. Commercial scale vii. Domestically produced / locally grown b. Sample product--Generate representative sample quantities of our product 4. Network to reach decision making seafood category managers at each targeted account 5. Arrange in-person appointments with each category manager defined above: a. Present our program, initial pricing, capacity and product availability date. b. Gather potential volume requirements c. Determine required promotional support programs d. Seek written expressions of interest / intent / commitment

Forecast: Based upon the information gathered as set forth above, prepare a channel specific sales forecast for inclusion in our financial models.

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8.0 Management TeamWe have assembled an executive team with deep experience in aquaculture, food, manufacturing and finance. Below is a short biography on each of our executive team members:

Tal Kimmel, CEO Mr. Kimmel is a seasoned investment banking and private equity executive with extensive experience in global impact investments, economic development and public/ private partnerships. He joined Dominion Aquaculture from Israel Opportunity Fund (“IOF”), a New York City based opportunity fund focusing on buyout and venture transactions globally. Mr. Kimmel was the co-founder and managing partner of IOF. Previously, Mr. Kimmel was the co-head of SVCH, Inc., a Miami based global merchant banking group and an investment banker at Lehman Brothers in New York, where he advised companies in the media and telecommunications sectors on private equity, M&A and public equity transactions. He earned his M.B.A. with distinction from New York University’s Stern School of Business and B.A. magna cum laude in Economics from Queens College.

Yoav Dagan, Board MemberMr. Dagan is VP of Marketing and Sales for AquaMaof Aquaculture Technologies. He is an aquaculture industry veteran with over 20 years of experience across all aspects of aquaculture production and facility management. In addition to his executive role with Dominion, Mr. Dagan is a vice president at AquaMaof Aquaculture Technologies in Israel, a turn-key solution provider to aquaculture facilities globally. Previously, he served as a director and principal at Fish Negev and as CEO for Moaf Development, Ltd. Mr. Dagan was educated at Boston University, and completed additional academic courses in relevant fields such as real estate entrepreneurship (phase A), planning, zoning and building laws, construction project management and contracts, frameworks on economics and taxation. He served extensively in the Israeli military in a combat / field intelligence unit and recently relocated with his family in Blacksburg, VA

Harley L. (Mike) Rollins, III, CFO. (Proposed) Mr. Rollins has been a C-level executive for 17 years. He has served as CFO, CEO and COO for a number of public and private companies. His finance background and experience includes analyzing business transactions for IRS, GAAP and SEC reporting requirements; developing extensive financial models for telecommunication mergers and acquisitions; preparing analyses of international tax treaties and regulations for favorable US treatment, and generating various business case and cash flow forecasting models for valuation or general business use. His operations experience includes Elevation Health, Fuse Science Inc., Technology Control Services, TVC Telecom, Interglobe (UK) and Elandia International, Deloitte and Touche LLP. He holds a Bachelor of Arts in Business Administration and a Masters in

Accountancy from the University of Georgia.

Gary Myers, Senior Technology AdvisorMr. Myers is the Chief Technology Officer of AquaMaof Aquaculture Technologies. He is a renowned aquaculture expert with over 30 years of experience in aquaculture project design and management. His main areas of expertise are intensive aquaculture project design and environmental impact analysis. He evaluated the economics and oversaw design for many land-based indoor aquaculture facilities including projects sized over 1000 tons. He is an accomplished scientist and inventor with two pending patents on intensive aquaculture system design, and is the recipient of a US DOE award for innovative use of waste heat. Mr. Myers serves as the US Technical Director for AquaMaof Aquaculture Technologies, LTD in Israel. In that capacity he consulted to and designed numerous intensive aquaculture projects for many fish species. He earned a BA and MA in Zoology with honors from North Dakota State University, Fargo, ND.

John Schiering,COO Mr. Schiering is a tenured and accomplished operating executive with over 20 years of experience in the food sector. Prior to joining Dominion Aqua, Mr. Schiering managed the successful launch and roll out of FAVORED, Inc.’s award winning, nutritionally enhanced, dairy products program. Prior to that he served as Vice President of Manufacturing for Nabisco Confections, Inc., President & CEO at Kron Chocolatier, Ltd. and then, President & CEO for Borden Foods’ $100 MM Candy Division. Mr. Schiering holds his BA from Brown University, his JD, magna cum laude, from the New England School of Law and is a member of the Massachusetts Bar.

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9.0 Financial Summary9.1 OverviewWith a target launch of Q2 2015 for the groundbreaking of the plant, the Company has a unique capability to deliver significant returns to investors with an investment opportunity that is supported by cutting edge technology and capital investment expenditures. The required capital for Dominion’s first facility is estimated at $135 million, of which Buildup Capital Expenditure is estimated at $123 million. The table below summarizes the buildup cap ex by category/year:

As noted earlier, we intend to follow a staged production/sales strategy that will start with the production of 9,000 tons in the initial production stage, and adds a 9,000 ton module in each of the following 2 years. This staged approach allows us to spread the buildup capital expense cost over a 3 year period. However, to eliminate the future financing risk as a condition for the public funding support of the project, we are committed to raising the capital in its entirety.

Working capital of approximately $12 million will be required by 2016 and will include ramp up expenses (approx. $6.8 million) working capital (approx. $5 million) and additional capital for expenses related to the capital formation process.

The build-out capital expense budget outlined above is based upon AquaMaof’s extensive experience in building RAS systems worldwide. However, cost can vary by location and so the Company has engaged an experienced local mechanical engineering firm (Facility Engineering Services, PA) with broad and specific experience in designing and constructing animal housing and aquaculture facilities, to provide specific design drawings and detailed cost estimates for the project. We expect our preliminary estimates will vary slightly once the engineers cost estimates are finalized, but not materially. The credentials of our engineering team is outlined in the Appendix to this business plan.

9.2 Capital Structure DesignWe expect Dominion Aquaculture to be eligible for -- and awarded -- various grants, loans and other financial incentives given the transformational effect this project will have on the local economy. We have applied for over $40 million in grants from various sources, and our team continues to work with staff at the Virginia Economic Development Partnership (VEDP) to identify and apply for funding from additional sources.

To date we have applied for funding from the following entities:

• $10 million in funding from the Virginia Coalfield Economic Development Association (granted. See Appendix for a copy of the award letter)

• $1 million in funding from the Tobacco Regional Opportunity Fund (TROF) – Granted (see Appendix for a copy of the award letter)

• $25 million from the Tobacco Indemnification and Community Revitalization Commission (commonly known simply as The Tobacco Commission). Our application with the Commission is pending (see copy of the complete application in the Appendix)

• $5 million from the Governor’s Opportunity Fund (to be applied for formally upon securing a capital commitment from our equity investors syndicate)

In ‘000 USD 2015 2016 2017 2018 2019

Revenue $0 $5,169 $32,586 $68,469 $108,905eBITDA $(1,668) $(4,398) $13,835 $19,020 $35,886neT Income $(3,948) $(8,336) $2,841 $10,528 $15,614cApITAl InvesTmenT $73,824 $10,323 $22,625 $23,992 $2,464

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With about $40 million expected in various grants from public sources, we are looking for approximately $95 million from private debt and equity sources. The financial modeling and returns analysis we have done show that for equity returns to reach an internal rate of return of 25%, believed the threshold required by private equity investors, the equity raised cannot exceed $50 million. Accordingly, we are looking for $50 million in equity, and $45 million in debt.

Our models shows that the 10 year internal rate of return is expected to exceed 25% with annual EBITDA exceeding $35MM per year. Key financial metrics (projected) for the first 10 years of the project (tilapia facility only) are highlighted in the table below:

10 Year Projections – Key Financial Metrics Buildout Capex: 2014 2015 2016 2017 Total

(us$ ‘000)

fIsh pRoDucTIon $0 $49,432 $22,784 $21,528 $93,743 hATcheRy $0 $4,752 $472 $0 $5,223 TesTIng AnD evAluATIon sysTem $0 $5,268 $280 $0 $5,549 feeD mIll $0 $7,039 $1,052 $0 $8,091 pRocessIng plAnT $0 $4,936 $3,156 $0 $8,092 fIsh meAl RenDeRIng $0 $950 $1,550 $0 $2,500

Total $0 $72,377 $29,293 $21,528 $123,198

9.3 Model AssumptionsThe following is a summary of key assumptions used in modeling the operation and financial opportunity for investors:

InITIAl pRoDucTIon (meTRIc Ton, lIve weIghT) 8,812

mAx pRoDucTIon (meTRIc Ton, lIve weIghT) 30,407

fIlleT yIelD 36%

fIsh oIl yIelD (fRom non-pRImARy weIghT) 10%

fResh fIlleTs pRIce ($ / lB.) $4.04

AnnuAl escAlATIon % 2%

whole fIsh pRIce ($ / lB.) $1.40


fIsh oIl pRIce ($ / kg) $1.80


fIsh meAl pRIce ($ / kg) $1.00


Key Production / Revenue Model Assumptions

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Key Cost/Expenses Model Assumptions

Projections containing a full set of financial statements, including more detailed profit and loss statement, balance sheet and cash flow statement are attached as an Appendix.

9.4 Cost AnalysisPercentages of major operating costs for the production of fresh tilapia fillets are shown in figure below. Feed, labor, packaging / shipping, interest, and depreciation represent 81% of total operating costs for fresh tilapia fillet production. The cost of production for fresh tilapia fillets delivered to US markets is $3.04/lb (excluding depreciation). See note re. depreciation below). Each of the operating costs is discussed including specifics supporting how each cost can be attained. Financing/interest costs are based on assumed 9% interest, and a capital structure of 37% equity, 33% debt, and 30% grants.

Cost of Production for Whole Tilapia, 2020* (excluding Depreciation)Item US $1,000’s cost/kg cost/lb %/total

feeD $24,917 $0.819 $0.372 74.62%lABoR $1,263 $0.042 $0.019 3.78%elecTRIcITy $2,225 $0.073 $0.033 6.66%nATuRAl gAs $80 $0.003 $0.001 0.24%offIce AnD ADmInIsTRATIon $144 $0.005 $0.002 0.43%lIquID oxygen $30 $0.001 $0 0.09%RepAIRs $616 $0.02 $0.009 1.84%mAnAgemenT sAlARIes Top level $397 $0.013 $0.006 1.19%mAnAgemenT sAlARIes pRoDucTIon $389 $0.013 $0.006 1.16%pRoDucTIon Bonus $304 $0.01 $0.005 0.91%R&D $1,695 $0.056 $0.025 5.08%InsuRAnce $267 $0.009 $0.004 0.80%pRopeRTy TAx $416 $0.014 $0.006 1.25%employee BenefITs $242 $0.008 $0.004 0.72%mIscellAneous pRoDucTIon expenses $405 $0.013 $0.006 1.21%

Total $33,390 $1.098 $0.499 100.00%

feeD cosT ($ / kg) $0.605 AnnuAl escAlATIon % 0.50%pAckAgIng cosT / kg $0.300 AnnuAl escAlATIon % % 2%shIppIng cosT / kg $0.25 AnnuAl escAlATIon % 2%cosT peR kwh $0.065 AnnuAl escAlATIon % 3%oxygen RequIReD (kg o2 / kg feeD) 0.50 oxygen geneRATIon cosT (kwh / kg o2) $0.25 mARkeTIng cosT peR kg whole fIsh $0.097 % chAnge -3%wATeR cosT peR m3 $2.12 AnnuAl escAlATIon % 3%RepAIR expense As % of ToTAl consTRucTIon 0.5%DIRecT lABoR cosT peR houR: $22.00 AnnuAl escAlATIon % 2%

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35+32+5+4+10+4+2+8+AFeed Ingredient Cost:Feed is usually the largest cost component in aquaculture projects and represents about 2/3 of total production costs. However, this is usually measured on production of the whole fish and not processed fillets. Feed costs represent a lower percentage of the total cost of fillets for the following reasons:

• It includes all costs through transportation to distribution points;

• Labor costs for fingerling production, fish processing and feed manufacture are included in the labor category;

• Feed costs, therefore, cover ingredients only since the feed mill has been integrated on-site with fish production operations; and

• Our facility is located at a site adjacent to major railroad allowing for large quantity deliveries of feed ingredients by rail, thereby reducing feed transportation costs.

Dominion Aqua will purchase basic feed ingredients and then manufacture floating, extruded, feed pellets on-site for feeding the fish in its production tanks. An example of feed ingredients used for tilapia grow-out is shown in the table below, along with the expected proportions of each ingredient and their approximate present costs (prices vary according the world markets). During actual production operations, the ingredient list may change should least cost feed rations be computed. Note that the fish meal component might possibly come from rendering of fish processing at projects similar to this one. If this is possible, the price will be significantly reduced. Final feed ingredient cost is $555/ ton with ingredient pricing as shown. As such, feed costs are in the financial model as a combination of this ingredient cost ($555 / ton), and shipping cost of $50 / ton, for a total cost of $605 / ton. The operating labor and depreciation costs for feed milling are combined for the total project.

Approximate Tilapia Grow-out Feed RationFeed Ingredient % of Ration % of Protein Cost/Metric Ton

soyBeAn meAl 38.0% 48% $580vITAmIn mIx 4.5% 15% $1500fIsh meAl 5.0% 66% $1550soyBeAn oIl 3.0% 0% $925poulTRy meAl 5.0% 60% $815wheAT mIDDlIngs 17.0% 14% $160wheAT 5.0% 14% $250whole soyBeAns 5.0% 35% $450lInseeD meAl 5.0% 32% $391coRn 3.0% 9% $250feATheR meAl 2.5% 80% $675coRn DDgs 7% 27% $215

TOTAL Feed Ration & Cost 100.0% 36% $555

Distribution of Production Cost Factors – Tilapia Fillet, 2020 (excluding Depreciation)

35.18%Feed

32.12%Labor

3.84%Other

3.69%Sales & Marketing

10.47%Shipping & Packaging

4.51%Electricity

2.39%Research & Development

7.81%SG&A Salaries & Benefits

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Total feed consumed has been computed using a feed conversion ratio (FCR) of 1.3:1.0 (lbs. of feed to lbs. of whole fish produced). FCR in tilapia production has a wide range with variations from as low as 1.1:1 to more than 2.0:1.0. The differences are related to the quality and digestibility of feed ingredients, fish genetics and production environmental conditions such as water temperature and oxygen concentrations. Our production facility has both temperature and oxygen control capability to maintain optimum levels for both as well as an on-site feed mill allowing for customization of the feed ration as needed. Finally, the FCR has been estimated at 1.3 which represents a weighted average for all fish in the system with small fish having a lower FCR and with FCR increasing as fish grow to larger sizes. We expect the actual FCR will be even better, considering our planned, high feed ingredient quality, on-site feed manufacture, carefully selected fish genetics, and tightly controlled growth conditions.

The feed cost per lb. can, therefore, be estimated from the FCR times the feed cost per lb. for a cost per lb. of fish of $0.37. As our product is fresh tilapia fillets, we are expecting the yield from whole tilapia to fresh fillets at 36% fillet and 64% offal. This will result in a fillet feed cost of approximately $1.03 per pound. The offal (64% of the total weight) portion of fish production will be rendered on-site into fish meal and fish oil and is available for future feed production or an alternative income stream.

Labor Cost:Labor is one of the factors generally considered as a barrier to competitive aquaculture in the US. Direct labor will be the largest cost factor for producing our fresh tilapia fillets representing 34% of the total production cost. Well-designed intensive aquaculture systems have the potential to reduce overall labor expense when compared to other production environments especially when labor costs are addressed as an integral part of the design. Our production system has been designed for maximum labor efficiency in production of live fish. Some of the key labor metrics we expect are as follows:

• One person can feed and manage an annual tilapia production of greater than 2,000,000 lbs

• Night coverage with 2 people required for each shift.

• Fish transfer is achieved by partially draining a tank and swimming the fish to the processing area through specially designed harvest channels

• Fish processing labor with semi-automated lines operating at 50 minutes per hour and 7 hours per shift

• Other direct labor requirements for the tilapia facility are shown in the table.

Direct Labor for Fresh Tilapia Fillet Production pRoDucTIon TechnIcIAns/fIsh 12hATcheRy, R&D 10pRocessIng 363feeD mIll & RenDeRIng 6nIghT opeRATIons/pRoDucTIon 4logIsTIcs, ADmInIsTRATIon 18TOTAL 413

As our design will use specialized processing equipment whenever possible, the cost of labor required for intensive indoor tilapia production as listed above compares very favorably to the cost (while individually much cheaper) of far greater numbers of people required to operate seines, trucks, boats, fish pumps and other harvest equipment in large ponds or transfer fish from cages to processing facilities. Even if a processing

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facility is located near a production farm, moving fish from the production areas to processing requires harvesting and transporting in tanks, trucks or boats over often considerable distances. As a comparison, total labor hours required for production of live fish in our facility design is less than the labor required for just the seine harvest of catfish in US ponds.

Depreciation:The calculation of depreciation is subject to assumptions regarding the useful life of the capital equipment utilized in the fish production process, as well as various accounting principles and conventions. In addition, capital equipment that is purchased with grant funds is not eligible for depreciations according to US tax laws. Accordingly, we excluded the depreciation cost from the overall cost analysis outlined above. Internally, we assumed a 25 year useful life and depreciated the capital equipment (excluding “grant equipment”, but including 50% of maintenance capex) over such period. Under such assumptions, depreciation adds $0.07 per /lb of tilapia fillet. Note: Other assumptions for depreciation could result in a cost of up to $0.15 per lb.

Packaging and Shipping:Packaging and shipping combined are the third largest production cost factor at 10% of the total production cost for tilapia fillets. They are directly related to the lbs. of fillets produced and equal $0.31 / lb. of fillet. This is fairly evenly divided between packaging supplies and shipping costs.

Marketing:Marketing has been estimated at $0.11 /lb. of tilapia fillets. This is a $1.4 million expense for the first year of sales. In subsequent years, marketing costs do not inflate but decline by 3% / year because some markets will require lower promotional support once initial sales and a customer base are established. This represents about 4% of the total costs.

Employee Benefits:Employee benefits are estimated at $600 per month per employee with a 3% per year increase and are 5% of the total cost of production of tilapia fillets. These benefits do not include items such as social security, payroll or other government taxes and fees which have been included in the labor cost section.

Electricity Cost:Many people evaluating indoor aquaculture production consider the electrical requirements for the indoor fish production systems to be excessive and highly cost-prohibitive for this technology. As noted previously, we estimate electricity for fish production and processing will represent only about 4% of total cost of production for fresh tilapia fillets at a rate of $0.065/kWh.

Research and Development:R&D will be critical for our continued success in identifying future fish species and improving production processes related to them. We have estimated this annual expense at approximately $1.7 million which will include work on fish

38+26+24+7+4+1+AElectricity Cost Components Whole Tilapia

26%Ozone Generation

4%Ventilation

1%CO2 Removal

38%Water Circulation

24%Oxygen Generation

7%Lighting

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genetics, new fish species, product development, and technology improvements. The contemplated facility includes a special R&D unit where fish can be grown in full scale production tanks and technology improvements can be tested. The R&D cost represents 2% of the fillet production cost. This firm commitment to R&D will set Dominion Aqua apart from other companies and maintain us as a leader in the industry.

Fingerling Cost:Dominion Aqua has a tilapia egg production facility (brood fish) and early stage fingerling production system (from egg to 2 gram size - 225 fish per pound). Fingerling costs are estimated from the cost of operation of this on-site facility plus a cost for the contracted genetic development of brood fish. The cost of fingerling production is 2.5% of the total production cost.

Other Costs:Other costs equal 2%of total production costs for fresh tilapia fillets. These other costs include: insurance, office, repairs, professional fees, consultants, water cost, and taxes.

10. Current Status10.1 Milestones to DateSince its formation in early 2014, Dominion Aqua has aggressively begun to execute on its business plan and strategic vision. The important milestones achieved to date include the following:

• Establishment of key strategic partnerships – The Company has worked at length with Virginia Tech University on the feasibility of deploying its first facility in Virginia as well as working with Food Science and Technology Department Virginia Tech on facility design and the introduction of value added items to our product line. The Company has also cemented the parameters of the operating agreement with its largest shareholder (AquaMaof) and has begun working with Tazewell County and the State of Virginia on what will be required for a successful private-public partnership for this endeavor. The support letter detailing out some of the work the Company is doing with Virginia Tech is attached as an Appendix.

• Seed Capital Raised – The Company was awarded a $1 million grant by the Virginia Tobacco Commission which has enabled it to begin operations. Copy of the Award Letter is attached as an Appendix.

• Preliminary grant award – The Company was awarded a preliminary grant approval in the amount of $10MM by the Virginia Coalfield Economic Development Authority. Copy of the Award is attached as an Appendix.

• Land Option – The Company has entered into an option agreement to purchase the land it has identified as the site of the tilapia facility. A copy of the option and rendering of the facility on the land are attached as an Appendix.

• Core Management – The Company has brought on the management expertise it needs to raise the money required and build the facility

• Preliminary engineering, site design and testing underway – The Company has retained an engineering firm with expertise in aquaculture to prepare the initial engineering documents required for the buildup of the facility. A completed initial assessment which will allow professional engineering estimates of the project capex is expected to be completed by Q1 2015. The agreement detailing the scope of this work is attached as an Appendix.

• Initial customer contacts – As part of the launch of the first facility, the Company has made contact with a variety of potential customers seeking their interest levels in the product which will be sold by the Company. The response received has been extremely positive. Some of the “expression of interest” letters received by these potential customers is attached as an Appendix.

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10.2 Time-lineThe Company is currently on plan to begin building the facility at the beginning of Q2 2015, the expected time-line with targeted events is as follows:

• Equity/Funding Raise – Present – Q1 2015

• Phase 1 Initial Facility Build-out – Q2 2015 – Q3 2016 (includes 6 months engineering work, also processing facilities completer later)

• Fingerling Production – Q2 2016 (assumes nursery construction completed earlier than full facility)

• First Fish Production to market – Q4 2016

• Phase 2 Initial Facility Build-out – Q2 2016 – Q4 2016

• Phase 3 Initial Facility Build-out – Q1 2017 – Q3 2017

• Facility #2 Build-out – Q4 2017 – Q3 2018

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Schedule of AppendixesAppendix A Financial Statements – P&L, BS And Cash FlowAppendix B Support Letter From Virginia Tech Appendix C: Grant Award Letters Appendix D: Land Option Agreement /Aerial Photo / Maps Appendix E Engineering Agreements/ Scope/ Reports Appendix F: Expressions Of Interest From Potential Customers

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Appendix A Financial Statements – P&LIncome Statement 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025Revenue: fIsh fIlleTs $0 $0 $4,571 $28,811 $54,165 $85,359 $79,128 $69,949 $63,664 $55,981 $57,100 $58,242

vAlue-ADDeD fIlleTs $0 $0 $0 $0 $6,372 $11,046 $25,321 $40,355 $52,798 $67,513 $69,377 $70,764 whole guTTeD fIsh $0 $0 $213 $1,343 $2,822 $4,447 $4,672 $4,765 $4,860 $4,958 $5,057 $5,158 fIsh oIl $0 $0 $165 $1,042 $2,190 $3,451 $3,626 $3,698 $3,772 $3,848 $3,925 $4,003 fIsh meAl $0 $0 $220 $1,390 $2,920 $4,601 $4,834 $4,931 $5,030 $5,130 $5,233 $5,337

Total Revenue $0 $0 $5,169 $32,586 $68,469 $108,905 $117,580 $123,699 $130,124 $137,429 $140,691 $143,505 memo: % gRowTh NM NM 5% 1% 1% 0% 0% 0% 0% 0% 0%

cosT of sAles: feeD $0 $0 $2,583 $9,131 $17,219 $24,217 $24,917 $25,041 $25,166 $25,292 $25,419 $25,546 lABoR $0 $0 $1,827 $7,061 $14,768 $21,031 $22,749 $24,074 $25,178 $26,406 $26,934 $27,472 elecTRIcITy $0 $0 $331 $1,100 $2,107 $3,044 $3,197 $3,293 $3,391 3,493 3,598 3,706 nATuRAl gAs $0 $0 $20 $88 $188 $298 $317 $326 $336 346 356 367 shIppIng & pAckAgIng $0 $0 $320 $2,019 $4,360 $6,872 $7,415 $7,762 $8,060 8,387 8,555 8,726 InsuRAnce - pRoDucT lIABIlITy $0 $0 $5 $35 $74 $120 $132 $142 $152 164 171 178

Total Cost of Sales $0 $0 $5,086 $19,435 $38,717 $55,582 $58,726 $60,639 $62,284 $64,089 $65,033 $65,996 gRoss pRofIT 0 0 $83 $13,151 $29,752 $53,323 $58,854 $63,060 $67,840 $73,340 $75,658 $77,510 memo: gm% NM NM 0% 0% 0% 0% 1% 1% 1% 1% 1% 1%

sg&A: sAles AnD mARkeTIng $0 $0 $1,240 $873 $1,744 $2,613 $2,611 $2,533 $2,457 $2,383 $2,312 $2,242 offIce AnD ADmInIsTRATIon $0 $0 $102 $132 $136 $140 $144 $149 $153 $158 $162 $167 lIquID oxygen $0 $0 $9 $10 $20 $30 $30 $30 $30 $30 $30 $30 RepAIRs $0 $362 $508 $562 $616 $616 $616 $616 $616 $616 $616 $616 mAnAgemenT sAlARIes $600 $663 $1,134 $1,344 $1,371 $1,399 $1,426 $1,455 $1,484 $1,514 $1,544 $1,575 pRoDucTIon Bonus $0 $0 $15 $93 $191 $295 $304 $304 $304 $304 $304 $304 ReseARch AnD DevelopmenT $0 $0 $262 $1,558 $1,602 $1,648 $1,695 $1,743 $1,793 $1,844 $1,897 $1,951 InsuRAnce $0 $145 $203 $229 $256 $261 $267 $272 $277 $283 $289 $294 pRopeRTy TAx $0 $217 $305 $347 $392 $404 $416 $428 $441 $455 $468 $482 wATeR cosT $0 $0 $23 $33 $71 $113 $120 $123 $127 $131 $135 $139 employee BenefITs $0 $41 $356 $1,272 $1,923 $3,100 $3,803 $4,100 $4,350 $4,596 $4,798 $4,942 AccounTIng AnD legAl $0 $240 $240 $247 $255 $262 $270 $278 $287 $295 $304 $313 mIscellAneous pRoDucTIon expenses $0 $0 $90 $124 $255 $393 $405 $417 $430 $443 $456 $470

Total SG&A Expense $600 $1,668 $4,488 $6,825 $8,832 $11,275 $12,108 $12,449 $12,750 $13,052 $13,315 $13,526 eBITDA $(600) $(1,668) $(4,405) $6,326 $20,920 $42,048 $46,747 $50,610 $55,091 $$60,289 $62,344 $63,984 memo: eBITDA mARgIn % NM NM (1)% 0% 0% 0% 0% 0% 0% 0% 0% 0% (-) DepRecIATIon $0 $(448) $(2,181) $(2,682) $(3,113) $(3,451) $(3,698) $(3,944) $(4,190) $(4,437) $(4,683) $(4,930)

EBIT $(600) $(2,116) $(6,586) $3,644 $17,807 $38,597 $43,049 $46,666 $50,900 $55,852 $57,661 $59,054 (-) InTeResT expense $0 $(992) $(2,912) $(3,839) $(3,851) $(3,863) $(3,670) $(3,284) $(2,897) $(2,511) $(2,125) $(1,738)(+) InTeResT Income $303 $204 $105 $68 $18 $38 $95 $139 $179 $216 $251 $280

EBT $(297) $(2,904) $(9,393) $(127) $13,975 $34,772 $39,474 $43,522 $48,182 $53,558 $55,787 $57,596 (-) TAx pRovIsIon $0 $0 $0 $0 $(501) $(13,909) $(15,790) $(17,409) $(19,273) $(21,423) $(22,315) $(23,038)

Net Income $(297) $(2,904) $(9,393) $(127) $13,473 $20,863 $23,685 $26,113 $28,909 $32,135 $33,472 $34,557 (-) TRAnsAcTIon expenses $(450) $(1,050) $(150) $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Income After Other $(747) $(3,954) $(9,543) $(127) $13,473 $20,863 $23,685 $26,113 $28,909 $32,135 $33,472 $34,557

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2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

AsseTs:

cAsh AnD equIvAlenTs $30,253 $10,500 $10,500 $3,198 $500 $7,198 $11,825 $15,982 $19,772 $23,502 $26,735 $29,174

AccounTs ReceIvABle $0 $0 $850 $5,357 $11,255 $17,902 $19,328 $20,334 $21,390 $22,591 $23,127 $23,590

InvenToRy $0 $0 $1,038 $3,966 $7,901 $11,343 $11,985 $12,375 $12,711 $13,079 $13,272 $13,469

ToTAl cuRRenT AsseTs $30,253 $10,500 $12,388 $12,521 $19,657 $36,443 $43,139 $48,692 $53,873 $59,173 $63,134 $66,233

pp&e, neT $0 $71,929 $99,042 $107,124 $114,775 $113,788 $112,554 $111,074 $109,348 $107,375 $105,156 $102,691

Total Assets $30,253 $82,429 $111,430 $119,645 $134,432 $150,231 $155,693 $159,766 $163,221 $166,548 $168,291 $168,924

lIABIlITIes AnD shAReholDeRs’ equITy:

AccounTs pAyABle $0 $79 $513 $1,355 $2,408 $3,373 $3,497 $3,547 $3,593 3,643 3,680 3,717

ToTAl cuRRenT lIABIlITIes $0 $79 $513 $1,355 $2,408 $3,373 $3,497 $3,547 $3,593 3,643 3,680 3,717

DeBT $0 $22,052 $42,661 $42,661 $42,922 $42,922 $38,630 $34,337 $30,045 25,753 21,461 17,169

ToTAl lIABIlITIes $0 $22,131 $43,174 $44,016 $45,330 $46,294 $42,127 $37,884 $33,639 29,396 25,141 20,886

new equITy $30,000 $40,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 50,000 50,000 50,000

gRAnT equITy $1,000 $25,000 $32,500 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 40,000 40,000 40,000

ReTAIneD eARnIngs $(747) $(4,702) $(14,244) $(14,371) $(898) $13,937 $23,566 $31,882 $39,583 47,152 53,150 58,037

Total Liabilities + SE $30,253 $82,429 $111,430 $119,645 $134,432 $150,231 $155,693 $159,766 $163,221 $166,548 $168,291 $168,924

Appendix A Financial Statements – Balance Sheets

US$ thousands, except as noted

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Appendix A Financial Projections – Cash Flow Statement

US$ thousands, except as noted

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

cAsh flow fRom opeRATIng AcTIvITIes:

neT Income $(747) $(3,954) $(9,543) $(127) $13,473 $20,863 $23,685 $26,113 $28,909 $32,135 $33,472 $34,557

DepRecIATIon & AmoRTIzATIon $0 $448 $2,181 $2,682 $3,113 $3,451 $3,698 $3,944 $4,190 $4,437 $4,683 $4,930

chAnges In woRkIng cApITAl:

(IncReAse) / DecReAse In A/R $0 $0 $(850) $(4,507) $(5,899) $(6,647) $(1,426) $(1,006) $(1,056) $(1,201) $(536) $(463)

(IncReAse) / DecReAse In InvenToRy

$0 $0 $(1,038) $(2,928) $(3,935) $(3,442) $(642) $(390) $(336) $(368) $(193) $(196)

DecReAse / (IncReAse) In A/p $0 $79 $434 $842 $1,053 $965 $125 $50 $46 $50 $37 $38

ToTAl woRkIng cApITAl chAnges $0 $79 $(1,454) $(6,593) $(8,781) $(9,124) $(1,943) $(1,347) $(1,346) $(1,520) $(692) $(621)

cAsh flow fRom opeRATIng $(747) $(3,428) $(8,816) $(4,038) $7,805 $15,190 $25,439 $28,710 $31,754 $35,052 $37,463 $38,866

cAsh flow fRom InvesTIng AcTIvITIes:

cApITAl expenDITuRes $0 $(72,377) $(29,293) $(10,764) $(10,764) $(2,464) $(2,464) $(2,464) $(2,464) $(2,464) $(2,464) $(2,464)

cAsh flow fRom InvesTIng $0 $(72,377) $(29,293) $(10,764) $(10,764) $(2,464) $(2,464) $(2,464) $(2,464) $(2,464) $(2,464) $(2,464)

cAsh flow fRom fInAncIng AcTIvITIes:

IncReAse / (DecReAse) In DeBT $0 $22,052 $20,609 $0 $261 $0 $(4,292) $(4,292) $(4,292) $(4,292) $(4,292) $(4,292)

IncReAse / (DecReAse) In equITy $30,000 $10,000 $10,000 $0 $0 $0 $0 $0 $0 $0 $0 $0

IncReAse / (DecReAse) In gRAnT equITy $1,000 $24,000 $7,500 $7,500 $0 $0 $0 $0 $0 $0 $0 $0

cAsh DIvIDenDs $0 $0 $0 $0 $0 $(6,028) $(14,056) $(17,797) $(21,208) $(24,565) $(27,474) $(29,670)

cAsh flow fRom fInAncIng $31,000 $56,052 $38,109 $7,500 $261 $(6,028) $(18,348) $(22,089) $(25,500) $(28,857) $(31,767) $(33,962)

neT IncR / (DecR) In cAsh $30,253 $(19,753) $0 $(7,302) $(2,698) $6,698 $4,627 $4,157 $3,790 $3,730 $3,232 $2,440

cAsh, Bop $0 $30,253 $10,500 $10,500 $3,198 $500 $7,198 $11,825 $15,982 $19,772 $23,502 $26,735

cAsh, eop $30,253 $10,500 $10,500 $3,198 $500 $7,198 $11,825 $15,982 $19,772 $23,502 $26,735 $29,175

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