1

Fuel-From-Waste, LLC

Eco-Friendly Oil Recovery from Waste Streams to Supply

Multiple Industries

January 2015

2

DisclaimerThis confidential overview (“Overview”) is being provided to you and your firm (the “Recipient(s)”) for the sole purpose of assisting the Recipients in evaluating whether to proceed with an in depth investigation of the investment or financing opportunity (the “Transaction”) in accordance with procedures established by Fuel-From-Waste LLC (“FFW”).

 

Neither Emerald Biofuels LLC (“Emerald”) nor Renewable BioSystems LLC (“RBL”), nor any of their respective affiliates or representatives make any representation or warranty, express or implied, to the accuracy or completeness of the information contained herein or in any other written or oral communications transmitted or made available to the Recipient as a prospective financing provider to the Transaction. Any estimates and projections contained herein have been prepared by the management of Emerald or by RBL or by their representatives and involve significant assumptions and subjective determinations, which may or may not be correct. Emerald, RBL and their respective affiliates or representatives expressly disclaim any and all liability based, in whole or in part, on such information, errors therein or omission there from. This Overview does not purport to contain all of the information that may be required to evaluate the proposed Transaction and Recipient hereof should conduct its own investigation and analysis.

This Overview contains forward looking statements that may not accurately represent affairs of FFW and no representation or warranty is made as to the accuracy or completeness of any of the information contained herein. Each Recipient of this Overview agrees that all of the information contained herein is of a confidential nature, that he/she will treat it in a confidential manner, and that he/she will not directly or indirectly disclose, or permit his/her agents or affiliates to disclose, any of such information without the prior written consent of the company. Neither this Overview, nor its delivery to any recipient, shall constitute an offer to sell or the solicitation of an offer to buy any securities of FFW, nor shall this Overview be construed to indicate that there has been no change in the affairs of the company since the date hereof. All risks associated with any action on behalf of the reader with regards to any information contained are the sole responsibility of the reader, including but expressly not limited to any investment made in FFW.

3

Contents

• Background on Fuel-From-Waste• Industry Opportunity• Extraction Technology• Lagoon Remediation• Project Economics• Investor Proposition• Going Forward

4

Background onFuel-From-Waste, LLC (FFW)

5

Fuel-From-Waste, LLC Overview

• Extracts organic oil from slaughter house process water concentrated in lagoon caps (called “Fat Caps’).

• Fat Caps contain a high oil concentration 30% to 70%• Oil contains a high proportion of 16 carbon molecules

making the oil very valuable in certain applications.– Makes an gradient for dairy feed increasing milk production; – Makes fireplace logs flame better; and– Makes a feedstock for biofuels.

• FFW uses a licensed, patented technology from a UK developer with a 5 year track record of successful plant operations.

• FFW currently operates one plant. • FFW needs funding to payoff a loan and provide working

capital.

6

Fuel-From-Waste is a Company formed thru a Partnership between Renewable BioSystems and

Emerald Biofuels

zEmerald BiofuelsDeveloping Renewable Building a Renewable

Diesel Refinery Won DoD awards for $76

million.

Renewable BioSystems

Assembles, installs and operates Waste Oil Extraction

Plants

Fuel-From-Waste~21 thousand Gallon Per Day Waste Oil Recovery Capacity from a Lagoon

Renewable Feedstocks LLC.

Partnership between Emerald and RBL to Develop Waste Oil Recovery Projects

Holds Class A Units

Investors have contributed $2

million in EquityFor Class B Units

Lenders have loaned $950K,$100K from

Principals and $430K from a related

company

7

Emerald Overview

• Building a 88 MGPY refinery to produce renewable diesel.

• Uses Honeywell UOP’s Ecofining™ technology.• Won 2 awards from the Department of Defense in a

competition to design a “drop-in fuel” from renewable sources totaling $76 million

• Obtained $6 million in matching funds so far.• Feedstock supply agreement with Tenaska

Commodities. • Seeking offtake agreement from refiners with floor

pricing.

8

Renewable BioSystems

• Holds an exclusive North American 20-year license agreement to manufacture and market the patented, proprietary waste oil extraction technology.

• RBL is an independent spin-off from Control & Power Systems, Inc. • Turnkey engineering/controls/fabrication firm.

• 30-year track record.

• Custom produces highly engineered products for pharmaceuticals, biofuels, specialty chemical, wastewater & livestock processing industry.

• RBL also is a JV partner in Go Green Oil Extraction, a trap grease oil extraction company, and has operated a biodiesel plant on a contract basis.

9

FFW’s/RF’s Management Team

• CEO - Peter Behrle (RBL’s CEO) 40 years of business experience in marketing and operations, including operating and developing biofuel business for Corrib Biofuels, LLC.

• COO – Mike McHale (RBL’s Chief Engineer) a degreed (BS Drexel University) mechanical engineer with more than 15 years experience in construction management and oil extraction/waste process plant operations.

• CFO - Howard Jensen (Emerald’s CFO) 40 years of business experience in agricultural and finance. Most recently as an investment banker for Marathon Capital and Greenwich Capital Markets. Was a CFO for several process businesses.

• VP, Finance – Mike Losch (RBL’s CFO) 35 years of financial management experience in biofuels, telecom and health care.

• VP, Engineering – Trey Fleming (Emerald’s CTO) – Degreed Chemical and Environmental Engineer (BS and MS Univ. of Mississippi) with 25 years of experience in wastewater and biofuels.

• FFW Plant Manager – Elvis McGovern a degreed (BS Drexel University) mechanical engineer with 5 years experience in oil extraction from waste streams and biofuel production.

10

Industry Opportunity

11

Slaughter House Plant Waste Water Lagoon Fat Caps Contains Oil with High Value Carbon Molecules (C-16) Solving Two Big Problems, Creating an Opportunity.

Waste is anEcologicalProblem

Lack of Low Cost C-16

Sources is aProblem

Organic Oil Extraction

Technology

Organic oil used in a dairy

feed application that increases

milk production, fire place logs and

biofuel feedstock

12

Prospective Customers

Dairy Feed Producers/Users

• Cargill/Gold Coast Commodities• Church and Dwight (Arm and

Hammer)• Milk Specialties• Vitus Nutrition• Magnus• Simmons• HJ Baker• Land O’Lakes• Large dairy farms

Industrial Users

• Duraflame• Pine Mountain/Northland• Biofuel producers

13

Organic Oil from Waste is a Good Supply Source

• Does not compete with food use (a big international issue as world wide food demand increases).

• Turns waste into fuel and animal feed. • Relatively inexpensive as it does not compete with

virgin vegetable oils and animal fats. • Domestic source with no dependence on foreign

suppliers.

14

Extraction Technology

15

Waste Streams from Livestock

Processing PlantsLagoon Fat Caps

Clean Material

Rock andGrit Separation

Discarded

SeparationCentrifuge

Solids• Disposal at landfill

Organic Oil• Biofuel Feedstock• Dairy Cow Feed• Fire place logs

Water• Return to Lagoon

Contaminants

Pre Processing

• Size reduction• Heating

Extraction/Separation Process

16

The Oil Extraction Equipment has been Operating Commercially in Europe Since 2006

• 2003-2006: technology developed in UK.

• Operated commercially in Europe since 2006.

• Extracts 95+% of the available oil with 90+% uptime.

• Operated successfully in the US for a year.

• Not labor intense, requires on two to three operator per shift, one supervisor per site.

• Lagoon material is scooped up by a back hoe contracted for the task.

17

The First Lagoon is at a Tyson Poultry Plant in Blountsville, AL

18

The Fat Cap is Scooped to a Input Station for Cleaning and Heating

19

After Heating and Cleaning, the Material is Pumped to where the Material is Separated into Oil, Solids and Water. Oil is sold. Water is returned to the lagoon. Solids go to a

land fill.

20

First Lagoon being Remediated is in Blountsville,

Alabama – at a Tyson Plant

21

Blountsville

22

The First Lagoon to be Remediated is at Blountsville, AL

• The site is at a Tyson Poultry Slaughter Plant. Lagoon has never been cleaned.

• There is a contract in place to remediate the lagoon at no charge to Tyson.

• Tyson receives 0.5% of revenue above 1.5 million gallons recovered.

• The lagoon is 350’ X 300’ X 12’ deep, contains ~4.2 million gallons of oil.

23

There are many more additional lagoons available

• Tyson, Cargill, Pilgrims and Fish Processors will commit additional lagoons.

• FFW has estimated that there are about 40 poultry plant lagoons and about 30 fish packing plant lagoons mostly in the South.

• Accessing lagoons requires developing a working relationship with not only the company, but also with local plant management.

• After a lagoon is remediated (may take up to 36 weeks for a big lagoon, 19 weeks for an average lagoon), equipment is moved and set up (takes 8 weeks).

24

Lagoon remediation equipment is designed to be moved.

• Each site requires a cement pad to hold C-100 and auxiliary equipment.

• Requires hookup to electric power.• Source of steam can be either powered by

gas or diesel. Steam generators are rented.• Back hoes are contracted locally.• Water disposal back to the lagoon.• Solids are trucked to local landfill.

25

FFW Project Economics

Fuel-From-Waste Uses a “Contracted” Business Model

Waste from Slaughter

Plant LagoonScooped out

by Contractor’s

back hoe

FFW Oil Recovery Process

Plant at the Lagoon Site

Water is returned to Lagoon

Solids are taken to a land fill

Recovered organic oil is deodorized (if

needed by third party) and sold to

customers for producing a “prill” or sold in liquid

form.

Contracts

27

Operational Metrics

• C100 runs 20 hours X 6 days per week.• FFW – Dedicated COO and Plant

Manager • Contract labor from Kelly Services at

$21/hr including benefits.• Oil prices at $0.15 per pound FOB lagoon

site.• Electricity at $0.10/kW• Natural Gas at $12/MMBTU

28

Projected 5 Year Financials

Any year’s revenue and hence the EBITDA depends on (1) the size of the lagoon and (2) the time for movement of the equipment from a completed lagoon to a new lagoon. The first lagoon at Blountsville is a large one with 37 weeks estimated to complete. Additional lagoons are assumed to be smaller, taking an average of 19 weeks to complete. It assumed it takes 8 weeks to move and set up the equipment.

Year 1 Year 2 Year 3 Year 4 Year 5Revenue 5,781,421$ 4,730,253$ 5,124,441$ 5,387,233$ 4,730,253$

Operating Expenses 1,845,287$ 1,805,235$ 1,820,254$ 2,080,267$ 1,805,235$ Fees 168,353$ 137,744$ 149,222$ 156,875$ 137,744$ Overhead 1,292,351$ 1,057,378$ 1,145,493$ 1,204,236$ 1,057,378$

Total costs 3,305,992$ 3,000,357$ 3,114,970$ 3,441,379$ 3,000,357$

EBITDA 2,475,429$ 1,729,896$ 2,009,471$ 1,945,854$ 1,729,896$

29

Need for a $750K Subordinated Loan

• Organic Oil was successfully extracted for 2 1/2 weeks in October. Smell issue developed.

• Projected operational metrics were met.• Determined that C-16 users require extracted oil to be

deodorized prior to being sold into dairy cow feed manufacturers and fire place log producers.

• Oil extraction to be deodorized at Gold Coast Commodities (GCC) plant in Chattanooga, TN.

• Commercial deodorization to begin week of Jan 5 at GCC.• Additional biofuel customers being contracted.• FFW needs to payback a $431K loan.• Additional need for Working Capital.

30

Investor Proposition

31

Fuel-From-Waste is a Special Purpose LLC

Fuel-From-Waste

Class B Investors as a group receive 80% of Cash Flow until 12% IRR then 30% of the Cash Flow, after debt

payments.

Renewable Feedstocks, LLC

(Partnership between Emerald

and RBL) have Class A Units

32

FFW gave Priority Returns to Class B Investor’s Equity Contribution

• Class B Equity Investors as a group receive 80% of distributable cash until the investor gets the original investment back plus 12% interest compounded annually.

• Thereafter, the Class B equity investor share in 30% of the distributable cash flow generated from operations with balance any cash to the Class A holders.

Distributable cash flow is the cash generated by the business less capital spending, debt repayment and operating reserves.

33

New Subordinated Loan Terms

• Loan is subordinated to a Bank Loan, but pari- passu to another Loan with equal preference in interest and principal payments.

• Loan principal: $750,000.• Loan interest rate: 15% per annum paid monthly in

arrears.• Loan amortization: As cash flow is available. The

bank requires 50% of cash generated going to amortization. The balance is available for amortization payments.

• Investor gets 5% of cash going to Class A Units after the $750K loan is paid for the life of FFW.

Going Forward

34

35

The Investor Proposition is Designed to Yield a Good Return plus Upside

Participation in the Plant’s Cash Flows

• Future growth is limited to oil price increases.

• There are approximately 70 known poultry and fish plant lagoons in the US.

• The FFW project takes 5 year to remediate 6 lagoons.

• There is room for 5 or 6 lagoon oil processing plants.

36

Renewable Feedstocks will Develop Future Plants

• As plants are developed, participation will be offered to current investors at a discounted price.

• If lagoons become unavailable, stationary applications can be developed to process oil containing waste.