2. Page | 2Private & Confidential
COMPANY BUDGET - FIVE YEARS
This Company Budget – Five Years contains forward-looking statements that
involve a number of risks and uncertainties, including, but not limited to,
unpredictability of operating results, risks in product and technology development
and rapid technological change, extent of demand for the company’s products,
impact of competitive products and pricing, market acceptance, changing
economic conditions, dependence on key personnel, difficulties in managing
growth, risks relating to sales and distribution, risks of product defects, uncertainty
in product development and related product trails, dependence on company
proprietary technology. There can be no assurance that the results projected in
this Company Budget – Five Years will be met. The content of this Company
Budget – Five Years is proprietary to the company and is provided on the
understanding that it will not be disclosed to any third parties without the express
written consent of RGT.
proprietary & proven technology producingproprietary & proven technology producing
high grade Agarose under controlled conditionshigh grade Agarose under controlled conditions
May, 2014
page
Introduction
Business Ventures -
1 Marine Farm 3
2 Agarose Extraction Process 3
3 Agarose as an Intermediate Agent 3
4 Sub-Contracted Final Products (White Label) 4
5 RGT Branded Products 4
Profit & Loss Accounts - Annual Summaries 5
Profit & Loss Accounts - Marine Farm 6
Agarose Extraction Process 7
Estimated split for Agarose powders applications 7
RGT Capital Expenditure - Quarterly Summaries 8
Combined Farm Activity - Quarterly Summaries 9
Israel Farm Activity - Quarterly Summaries 10
Panama Farm Activity - Quarterly Summaries 10
Gracilaria Cultivation - 500 sq m capacity 11
Gracilaria Cultivation - 3,000 sq m capacity 12
3. Page | 3Private & Confidential
COMPANY BUDGET - FIVE YEARS
May, 2014
INTRODUCTION:
RGT five year Company projections forecast total revenues of $367 million; operating
costs of $108 million and EBITDA of $259 million over the period.
RGT will operate as five business venture operations:
Business Venture 1 – MARINE FARM
RGT will be operating as a Marine Farm for the mass cultivation of Gracilaria macro algae
(sea weed). We estimate that the company could sell its crop at a price of around $15
per kilo. Over the five year period the Company is projecting to cultivate around 1,866
tons of dry Gracilaria, which we value at approximately $28 million. The attributable
costs of cultivation are around $20 million – a notional Profit & Loss Summary is shown on
page 6.
As far as the Company is aware its innovative process for the mass cultivation of
Gracilaria is unique to RGT and there are no known competitors for this controlled
cultivation.
Business Venture 2 – AGAROSE EXTRACTION PROCESS
RGT will be operating an Agarose Extraction Process Plant to extract Agarose from the
dried Gracilaria. The Plant will produce a range of Agarose powders that can be sold at
prices from $500 per kilo. Approximately 80% of the Agarose powders produced by the
Company will be sold to customers – essentially for scientific applications. The balance
of approximately 43 tons will be processed and used by the Company as an essential
ingredient for three further business ventures – see below.
A notional Profit & Loss Summary for the Agarose Extraction Process is shown on page 7,
as well as an estimated split for Agarose powders applications. Over the five years
approximately 218 tons is being sold for scientific applications and the Company is
projecting revenues of $109 million from the Agarose powders sales to third parties.
Business Venture 3 – AGAROSE AS AN INTERMEDIATE AGENT
From around 20% of the Agarose powder that the Company is extracting from the
Gracilaria, RGT plans to produce Agarose based Gels and Creams as a platform for both
cosmetic and cosmeceutical products. The Company has patent protection on these
innovative products. It plans to produce Agarose based Intermediate Agents as gels and
creams that can then be sold to cosmetic and cosmeceutical companies and applied as an
Agarose base for those companies.
Over the five year budget period the company is projecting revenues of around $111
million form cosmetic and cosmeceutical customers from the sale of these Agarose based
Intermediate Agents to third parties.
4. Page | 4Private & Confidential
COMPANY BUDGET - FIVE YEARS
May, 2014
Business Venture 4 - SUB-CONTRACTED FINAL PRODUCTS (White Label)
The Company plans using the Intermediate Agents as a base material to develop a “White
Label” business of Agarose based cosmetic and cosmeceutical products.
RGT will be formulating the development of part of its Agarose based Intermediate
Agents specifically for a range of cosmetic and cosmeceutical products that can be tailor-
made for clients’ requirements. The Company is projecting revenues of around $99
million from the sale of these “sub-contracted” and innovative White Label products over
the five year period.
Business Venture 5 – RGT BRANDED PRODUCTS
The Company intends to develop its own range of branded Agarose based cosmetic and
cosmeceutical products. A provisional name for this product range is “Sea Dreams”.
RGT will therefore again be producing the Agarose Intermediate Agent as a base for a
cosmetic/cosmeceutical product, developing the required formulation and marketing and
selling the Final Product under its Own Label.
The Company is projecting revenues of around $49 million from the sale of RGT Branded
Products over the five year period.
6. Page | 6Private & Confidential
COMPANY BUDGET - FIVE YEARS
May, 2014
Profit & Loss Account – MARINE FARM:
5 YEARS Year 1 Year 2 Year 3 Year 4 Year 5
Marine Farming Capacity: Sq. m Sq. m Sq. m Sq. m Sq. m Sq. m
Israel - annual increase 57,500 9,500 12,000 12,000 12,000 12,000
Panama - annual increase 33,500 0 0 9,500 12,000 12,000
Total Farm Capacity 91,000 9,500 12,000 21,500 24,000 24,000
Gracilaria Harvests - dry weight: Kg Kg Kg Kg Kg Kg
Israel 1,431,300 15,300 138,000 282,000 426,000 570,000
Panama 435,300 0 0 15,300 138,000 282,000
Total Farm Harvests 1,866,600 15,300 138,000 297,300 564,000 852,000
Gracilaria Sales Value - @ $15/kg: $ $ $ $ $ $
Israel 21,469,500 229,500 2,070,000 4,230,000 6,390,000 8,550,000
Panama 6,529,500 0 0 229,500 2,070,000 4,230,000
Total Dry Gracilaria $27,999,000 $229,500 $2,070,000 $4,459,500 $8,460,000 $12,780,000
Less: Marine Farm Costs:
Farm Operating Costs 16,375,900 417,400 1,455,600 2,820,900 4,796,400 6,885,600
Research & Development - 20% 1,023,240 43,560 105,120 204,720 283,920 385,920
General & Administration - 20% 3,022,680 243,960 442,560 605,280 758,400 972,480
20,421,820 704,920 2,003,280 3,630,900 5,838,720 8,244,000
Marine Farm "Profit" $7,577,180 ($475,420) $66,720 $828,600 $2,621,280 $4,536,000
27.1% -207.2% 3.2% 18.6% 31.0% 35.5%
7. Page | 7Private & Confidential
COMPANY BUDGET - FIVE YEARS
May, 2014
Profit & Loss Account – AGAROSE EXTRACTION PROCESS:
5 YEARS Year 1 Year 2 Year 3 Year 4 Year 5
Gracilaria Harvests - dry weight: Kg Kg Kg Kg Kg Kg
Total Farm Harvests 1,866,600 15,300 138,000 297,300 564,000 852,000
Agarose Extraction Process @ 14% Kg Kg Kg Kg Kg Kg
Total Farm Harvests 261,324 2,142 19,320 41,622 78,960 119,280
Agarose Extraction Value - @ $500/kg: $ $ $ $ $ $
Value of Extracted Agarose 130,662,000 1,071,000 9,660,000 20,811,000 39,480,000 59,640,000
Agarose Extraction Process Costs:
Dry Gracilaria 27,999,000 229,500 2,070,000 4,459,500 8,460,000 12,780,000
Agarose Extraction Process Costs 20,554,844 420,278 1,358,712 3,024,846 5,806,224 9,944,784
Research & Development - 20% 1,023,240 43,560 105,120 204,720 283,920 385,920
Marketing & Sales - 25% 694,800 35,640 98,640 146,340 178,740 235,440
General & Administration - 20% 3,022,680 243,960 442,560 605,280 758,400 972,480
25,295,564 972,938 4,075,032 8,440,686 15,487,284 24,318,624
Agarose Extraction Process "Profit" $77,367,436 $98,062 $5,584,968 $12,370,314 $23,992,716 $35,321,376
59.2% 9.2% 57.8% 59.4% 60.8% 59.2%
5 YEARS Year 1 Year 2 Year 3 Year 4 Year 5
Agarose Powders: Kg Kg Kg Kg Kg Kg
Scientific 217,642 2,142 16,500 36,000 67,000 96,000
Intermediate Agents 24,600 2,000 3,600 7,000 12,000
Sub-contracted Final products 14,200 700 1,500 4,000 8,000
Own Branded Products 4,882 120 522 960 3,280
261,324 2,142 19,320 41,622 78,960 119,280
Estimated split for Agarose powders applications:
8. Page | 8Private & Confidential
COMPANY BUDGET - FIVE YEARS
May, 2014
Marine Labs & Small Main
Farms Equip. Plant Plant
$ $ $ $ $
Year 1 Q1 150,000 150,000
Q2 375,000 300,000 75,000
Q3 625,000 300,000 75,000 250,000
Q4 900,000 300,000 100,000 500,000
Year 2 Q1 1,800,000 300,000 1,500,000
Q2 1,300,000 300,000 1,000,000
Q3 300,000 300,000
Q4 300,000 300,000
Year 3 Q1 450,000 300,000 150,000
Q2 750,000 300,000 150,000 300,000
Q3 300,000 300,000
Q4 300,000 300,000
Year 4 Q1 300,000 300,000
Q2 300,000 300,000
Q3 300,000 300,000
Q4 300,000 300,000
Year 5 Q1 300,000 300,000
Q2 300,000 300,000
Q3 300,000 300,000
Q4 300,000 300,000
$9,950,000 $5,850,000 $450,000 $650,000 $3,000,000
Based on Based on Based on Based on
$100,000 estimates for small plant $2,400,000
per 1,000 sqm lab. costs & estimates Main Plant
of ponds equipment + 25% contingency
TOTAL
TOTAL
RGT CAPITAL EXPENDITURE – Quarterly Summaries:
9. Page | 9Private & Confidential
COMPANY BUDGET - FIVE YEARS
May, 2014
Combined Farm Activity - Quarterly Summaries:
Y1 - 5
Q1 -20 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 Q19 Q20
sq m / 000's
Building Ponds:
Israel 57.5 0.5 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0
Panama 33.5 - - - - - - - - 0.5 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0
Total Farm capacity 91.0 0.5 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.5 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0
Cumulative farm capacity 0.5 3.5 6.5 9.5 12.5 15.5 18.5 21.5 25.0 31.0 37.0 43.0 49.0 55.0 61.0 67.0 73.0 79.0 85.0 91.0
kg / 000's
Total Harvests 1,866.5 - 0.3 3.0 12.0 21.0 30.0 39.0 48.0 57.0 66.3 78.0 96.0 114.0 132.0 150.0 168.0 186.0 204.0 222.0 240.0
kg / 000's
Extracted Agarose @ 14% 261.3 - 0.0 0.4 1.7 2.9 4.2 5.5 6.7 8.0 9.3 10.9 13.4 16.0 18.5 21.0 23.5 26.0 28.6 31.1 33.6
< - - kg / 000's - - > < - - kg / 000's - - >< - - kg / 000's - - > < - - kg / 000's - - > < - - kg / 000's - - >
< - - sq.m / 000's - - >
< - - kg / 000's - - > < - - kg / 000's - - > < - - kg / 000's - - > < - - kg / 000's - - > < - - kg / 000's - - >
< - - sq.m / 000's - - > < - - sq.m / 000's - - > < - - sq.m / 000's - - > < - - sq.m / 000's - - >
Year 5Year 1 Year 2 Year 3 Year 4
Revenue Projections:
RGT 5-year Revenue Projections are based on a cultivation capacity
in Israel of 57,500 sq m, and in Panama of 33,500 sq m. The
Panama farm capacity starts in Year 3.
11. Page | 11Private & Confidential
COMPANY BUDGET - FIVE YEARS
May, 2014
500 sq m pond capacity:
Gracilaria Cultivation:
Gracilaria Gracilaria Gracilaria Agarose
Cultivation Harvesting Drying Extraction
"Year" 1 wet weight wet weight dry weight @14%
kg kg kg kg
1 10
2 20
3 39
4 78
5 156
6 313
7 625
8 1,250
9 2,500
10 2,500
11 2,500 2,500
12 2,500 2,500 250
13 2,500 2,500 250 35
14 2,500 2,500 250 35
15 2,500 2,500 250 35
16 2,500 2,500 250 35
17 2,500 2,500 250 35
18 2,500 2,500 250 35
19 2,500 2,500 250 35
20 2,500 2,500 250 35
21 2,500 2,500 250 35
22 2,500 2,500 250 35
23 2,500 2,500 250 35
24 2,500 2,500 250 35
42,490 35,000 3,250 420
kg kg kg kg
"Year" 2 etc. 60,000 60,000 6,000 840
Q4
Harvest
period
Q1
Q2
Q3
Gracilaria Marine Farming metrics: Assumptions:
1 Production Unit is 500 sq m cultivation capacity
2 500 sq m capacity stands in an area of 600 sq m
3 Green house growing conditions
4 Water is heated approx. 4 months in winter & cooled 2 months in summer
5 Harvesting every two weeks - but say 24 harvesting periods annually
6 Starting process with 10 kg wet weight Gracilaria
7 Doubling in weight every two weeks
8 Nursery ponds are from 1 sq.m
9 Cultivation ponds are mostly from 7 sq m and upwards
10 Optimum macro algae density is around 5 kg/sq m
11 Current R&D is working on 50 sq.m and 100 sq.m ponds
12 Gracilaria drying period is assumed as 1 to 2 weeks
13 Agarose extraction period is assumed as 1 to 2 weeks
14 Delivered Agarose sales is assumed as additional 4 weeks
12. Page | 12Private & Confidential
COMPANY BUDGET - FIVE YEARS
May, 2014
3,000 sq m pond capacity:
Gracilaria Cultivation:
Gracilaria Marine Farming metrics: Assumptions:
1 Production Unit is 3,000 sq m cultivation capacity
2 3,000 sq m capacity stands in an area of 3,375 sq m - i.e. 80% footprint
3 Green house growing conditions
4 Water is heated approx. 4 months in winter & cooled 2 months in summer
5 Harvesting every two weeks - but say 24 harvesting periods annually
6 Starting process with 30 kg wet weight Gracilaria
7 Doubling in weight every two weeks
8 Nursery ponds are from 1 sq.m
9 Cultivation ponds are mostly from 7 sq m and upwards
10 Optimum macro algae density is around 5 kg/sq m
11 Current R&D is working on 50 sq.m and 100 sq.m ponds
12 Gracilaria drying period is assumed as 1 to 2 weeks
13 Agarose extraction period is assumed as 1 to 2 weeks
14 Delivered Agarose sales is assumed as additional 4 weeks
Gracilaria Gracilaria Gracilaria Agarose
Cultivation Harvesting Drying Extraction
"Year" 1 wet weight wet weight dry weight @14%
kg kg kg kg
1 30
2 59
3 117
4 234
5 469
6 938
7 1,875
8 3,750
9 7,500
10 15,000
11 15,000 15,000
12 15,000 15,000 1,500
13 15,000 15,000 1,500 210
14 15,000 15,000 1,500 210
15 15,000 15,000 1,500 210
16 15,000 15,000 1,500 210
17 15,000 15,000 1,500 210
18 15,000 15,000 1,500 210
19 15,000 15,000 1,500 210
20 15,000 15,000 1,500 210
21 15,000 15,000 1,500 210
22 15,000 15,000 1,500 210
23 15,000 15,000 1,500 210
24 15,000 15,000 1,500 210
239,971 210,000 19,500 2,520
kg kg kg kg
"Year" 2 etc. 360,000 360,000 36,000 5,040
Q4
Harvest
period
Q1
Q2
Q3
