MagneGas Israel, Ltd.

1
MagneGas Israel, Ltd.

• Business Plan

2
Mission Statement

• It is our goal and mission to be the leading
  provider of environmental clean-up services to
  municipalities, farms industries in Israel who
  produce over 450 million 14 million cubic
  meters per year respectively of liquid waste.
• With this large feedstock of waste liquids and
  our proprietary technology, we intend to be the
  leading supplier of green energy (MagneGasTM) to
  replace the current system of fossil fuels as
  well as to be the leading supplier of irrigation
  water to Israeli agriculture.

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Mission Statement Cont.

• Another goal of the company is to have MagneGasTM
  as the leading replacement fuel for the over 2
  million vehicles in Israel which produce a large
  percentage of the air pollution. The combustion
  of MagneGas does not only not pollute, but
  releases 15 oxygen into the atmosphere thereby
  reversing the damage done to the environment and
  qualifying the company for hundreds of millions
  of in emissions trading credits under Kyoto
  protocol.

4
Mission Statement Cont.

• In addition, it will be the goal of the company
  to have MagneGas used as an additive to Israel
  Electric Companys coal burning power plants
  which produce 50 of Israels electric power and
  contributes to a large percentage of the air
  pollution. The use of MagneGas as an additive in
  coal burning power plants can reduce emissions by
  80-90 as well as double the combustion
  efficiency of the coal thus requiring less coal
  and as a result increasing bottom line profits,
  and in addition, would also qualify for emissions
  trading credits under Kyoto.
• Lastly and most importantly, it is the goal of
  the company to bring energy independence to
  Israel in the next 10 years.

5
The Team

• President/CEO- Prof. Pinchas Mandell
• Vice-President- Carmen Mandell
• Prof. Ruggero Santilli
• Carmel Naftali, Advocate

6
Market Summary

• The market for our technology is broken down into
  2 segments
• Environmental Clean-Up Services
• Energy Markets. Sale of MagneGas Hydrogen

7
Market Summary Cont.

• Environmental Clean-Up Services
• The environmental services market is broken down
  into two sectors.
• 1. Municipal/Farm sewage liquid waste which
  exists in quantities of 450 million cubic meters
  per year with a current cost of 0.64 for every
  cubic meter of sewage treated. Income from this
  sector for the company at 0.50 per cubic meter
  represents an annual income potential of
  225.5 million USD with an additional income from
  the sale of 428 million cubic meters of
  irrigation water rich in organic fertilizer for
  agricultural use at a price of 0.20 per
  cubic meter for an additional annual income of
  85.6 million USD for a total annual income from
  this sector of 311.1 million USD
• 2. Industrial toxic liquid waste which exists in
  quantities of 14 million cubic meters annually at
  an average price of 180-400 USD per cubic
  meter currently being paid for the disposal of
  same. Potential annual income from this sector
  for our company at a price of 350 USD for every
  cubic meter of toxic liquid waste eliminated
  represents a total annual income potential of
  4.9 billion USD.

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Market Summary Cont.

• Energy Markets
• The energy market is comprised of 4 major
  sectors
• Vehicles
• Production of Electricity
• Natural Gas for domestic cooking, heating, and
  small industry.
• Hydrogen

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Market Summary Cont.

• Vehicles
• There are approximately 2 million vehicles in
  Israel to date representing 35 of the total
  energy consumption in Israel. This market
  represents a potential annual income of 3.84
  billion. This is based on the assumption of an
  average of 8 refills per month per vehicle with
  an average of 40 cubic meters per refill at a
  cost of 20 USD.
• Production of electricity
• Israel Electric Company (IEC) currently has
  a production capacity of 9.1 Gigawatts with an
  average cost of production of 0.03 per kilowatt
  hour with an annual cost to IEC of 2.3 billion
  USD. The market demand for electricity is
  currently doubling every 10 years.
• Natural Gas for Domestic Cooking, Heating, and
  small industry
• Household small industry in Israel
  consume approximately 390 million cubic meters of
  natural gas annually with an average cost to the
  consumer of 5 USD per cubic meter for a total of
  1.95 billion USD. This market represents a
  potential annual income to our company of 975
  million based on the assumption of a 2.50 per
  cubic meter price to the consumer. Based on the
  current annual increase in demand, by the year
  2010 this market will grow to 600 million cubic
  meters per year.

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Market Summary Cont.

• Hydrogen
• Hydrogen gas is a very large market sector
  in the world currently standing at 3
  trillion USD annually. It is used extensively by
  many industries including the food industry,
  petrochemical, metallic ore reduction, methanol
  production, hydrochloric acid production, metal
  cutting, and the production of fertilizer.
• MagneGas is comprised of 50 hydrogen which
  can easily be separated by off the shelf
  technology called Pressure Swing Absorption. Our
  hydrogen is unique in that it has an energy
  density of 7.5 times more than conventional
  hydrogen and as a result can be stored and
  transported the same as natural gas. It is also
  the most cost effective means of producing
  hydrogen competing with Steam Reformation of
  natural gas or electrolysis of water.
• Hydrogen is a global commodity whos current
  market price is 5.30 USD per cubic meter. This
  aspect allows us to further maximize profit
  potentials. Once the company has a number of
  large installations producing MagneGas we will
  decide what portion of the gas produced will be
  separated into hydrogen to be sold on the open
  global market.

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Problems Opportunities

• Problems
• The problems faced by both our market sectors are
  many and include
• Severe environmental problems leading to
  extensive and expensive legal battles fines.
  The facing of future class action law suites as a
  result of the thousands of deaths per year caused
  by health problems related to environmental
  pollution.
• High costs of treating or eliminating liquid
  waste streams, or in some cases the complete
  inability to do so.
• High cost of energy products (Gasoline, LPG,
  Natural Gas, Coal, Hydrogen) with no end in sight
  and only the inevitable continued increase in the
  cost of energy which in turn will result in the
  crippling of the economy because the cost of
  every product or service is directly linked to
  the energy index.
• Complete dependence for the above energy products
  from foreign sources and the resultant political
  and strategic fall out from such complete
  dependence.

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Problems Opportunities Cont.

• Opportunities
• Just as the problems are many, so are the
  opportunities created, and include the following
• 1. The capability to completely eliminate toxic
  liquid waste produced by various industries in a
  very economical efficient manner while at the
  same time producing an environmentally friendly
  acceptable energy byproduct (MagneGas), which is
  a one for one replacement for fossil fuels as
  well as the production of great quantities of
  heat to be used for the production of
  electricity.
• 2. The capability of effectively economically
  treating municipal/farm sewage while at the same
  time providing large quantities of irrigation
  water rich in organic fertilizer to be used by
  the agricultural sector in addition to the energy
  byproduct (MagneGas) produced in the process.
• The capability of producing on site, and where
  needed, any quantity of gas (MagneGas) thus
  eliminating the need to transport same or to rely
  on foreign imports.
• The capability of economically producing 99.99
  pure hydrogen from the use of the MagneGas as the
  feedstock utilizing off the shelf technology
  called Pressure Swing Absorption. This activity
  will provide a very lucrative profit center for
  the company.
• To eventually eliminate air pollution by
  replacing current fossil fuels with MagneGas and
  as a direct result qualifying for emissions
  trading credits under Kyoto Protocol providing an
  additional very lucrative profit center for the
  company.

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Business Concept

• The business model is based on the technology
  born from the work of Prof. Ruggero Santilli and
  his discovery of a new field of physics
  chemistry called Hadronic Physics Chemistry
  being a super-set of quantum mechanics for which
  he has been nominated since 1985 to present for
  the Nobel Prize in Physics Chemistry.
• The business model has 5 profit centers
• Fees for environmental clean-up services.
• The sale of the MagneGas byproduct as a one to
  one replacement for fossil fuels.
• The sale of Irrigation water to the agricultural
  sector.
• The sale of Hydrogen to industry.
• Income from emissions trading credits under Kyoto
  Protocol.

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Competition

• The competition in regard to the environmental
  services which we will provide includes
• 1. Municipal/Farm sewage treatment utilizing
  technology which is over 50 years old consists of
  the following
• Mechanical treatment
• Influx
• Removal of large objects
• Removal of sand
• Pre-precipitation
• Biological treatment
• High-charged and low-charged purification systems
• Oxidation bed (oxidizing bed)
• Aerated systems
• Post precipitation
• Effluent
• Chemical treatment (this step is usually combined
  with settling and other processes to remove
  solids, such as filtration. The combination is
  referred to in the US as physical-chemical
  treatment. It is rarely used along with
  biological treatment.).
• Disposal of industrial toxic liquid waste streams
  include the following
• Underground Injection of Hazardous Waste
• Land filling
• Incineration

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Competition Cont.

• Our companys competitive advantage over
  existing methods and technologies are as follows
• 1. A more cost effective way of treating
  municipal/farm sewage. Our technology while
  treating the sewage produces a valuable energy
  byproduct as well as a high quality irrigation
  water.
• A more cost effective and environmentally
  acceptable way of dealing with industrial liquid
  wastes. We completely eliminate the liquid waste
  from the planet while producing a valuable energy
  product.
• Our equipment has a very rapid return on
  investment (1.5 years or less) as apposed to
  conventional technology which never pays for
  itself and represents a constant capital
  expenditure. This is because we are paid for the
  environmental services we provide which
  completely offsets the cost of operations, while
  at the same time producing valuable byproducts
  which are a bonus.

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Goals Objectives

• Five-year goals
• Installation of 500 Megawatts of Hadronic
  reactors producing 3.5 million cubic meters per
  day of MagneGas
• 25 market share penetration for energy market.
  50 market share penetration for environmental
  services sector.
• 4 billion USD annually in revenues with 2.5
  billion USD in annual profits.

17
Financial Plan (Projected, if required financing
is in place)
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Resource Requirements

• Technology requirements
• Engineering will be required to scale up the
  Hadronic Reactors from the current 500KW size to
  reactors of 1 Megawatt, 5 Megawatt, and 10
  Megawatt sizes.
• Personnel requirements
• We will need to hire a few engineers in the
  following fields Mechanical, Electrical,
  Chemical.
• Resource requirements
• We will need to raise 5 million USD in order to
  accelerate operations which include the
  acquisition of a 150 Kilowatt reactor for our
  demo center as well as to acquire a shell company
  trading on the Israeli stock exchange in order to
  do a reverse merger so that we can raise capital
  from the public. A portion of the funds will also
  be used for salaries for essential personnel. The
  funds will also be used to acquire a 500 KW
  reactor to begin offering environmental clean-up
  services to industries with hydrocarbon liquid
  waste. The balance will be set aside to finance
  at least one pilot project for the treatment of
  municipal sewage of a medium sized town with at
  least 1,000 cubic meters per day of sewage.

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Risks Rewards

• Risks
• The only risk we foresee would be the improper
  execution implementation of the business plan
  as a result of a poor management team.
• Addressing risk
• We will put together the finest team of people
  each with expertise experience in their
  respective fields and will constantly monitor our
  progress against milestones set by the company.
• Rewards
• Rewards will be realized almost from the
  beginning and will grow at an exponential rate.
  It is well within our capability to grow the
  company to become the largest provider of
  environment services as well as green energy in
  Israel with potential revenues reaching over 4
  billion USD after the first 5 years.

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Key Issues

• Near term
• The conclusion and execution of our current deal
  with Israel Electric Company as well as the
  securing of 1 million USD bridge capital in
  order to take the company public on the Israeli
  Stock Exchange.
• Long term
• The securing of governmental support in the form
  of environmental legislation mandating the use of
  our technology by municipalities and industries.
• The securing of contracts from all the major
  municipalities and industries in Israel.

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Investment Opportunity

• A 5 million USD investment in MagneGas Israel,
  Ltd. in exchange for 49 of the company shares,
  with profits being split 50/50. With a return of
  investment (ROI) of a maximum of 2 years.
• A strategic partner with contacts and experience
  in the fields of Environmental Clean-up
  technologies and or Clean Renewable Energy
  related infrastructures is preferred but any
  qualified investor will be considered if they
  meet our requirements.