Mountain Sky Group

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INDIANA SUSTAINABLE INDOOR AGRICULTURE (ISIA)

• Mountain Sky Group
• Ecolonomic Realty Group
• August, 2010

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World Agriculture Today

• In April, 2008, the Washington Post reported food
  riots breaking out in Egypt, Indonesia, Cameroon,
  Peru and Haiti due to extreme food shortages.
• The Food and Agriculture Organization reports
  that 1 billion people go to bed every night
  hungry.
• The World Bank predicts that global food
  shortages will occur well before any significant
  shortages occur for oil, water, or any other
  commodity.
• Dominant monoculture farming is consuming such
  great quantities of water and soil nutrients that
  fertilizer costs have more than tripled in the
  last 10 years.
• Experts agree that traditional row crop,
  irrigated agriculture cannot sustain the growing
  world population (9 billion people by 2030).
• Little about the dominant agricultural practices
  in the world today is sustainable.

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World Agriculture Today

Fertilizer costs triple in Ten years
Food Riots over rice shortages in 2008



Traditional monoculture cannot Produce enough food
One Billion People will die this year From hunger
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Sustainable Agriculture

• Sustainable practices emphasize a balance of the
  three Ps Profit, People and Planet.
• Sustainable Agriculture preserves vital natural
  resources including water, nutrients and
  minerals.
• Diversified production reduces many typical
  agricultural risks (disease, pests, etc.).
• Aquaculture is the fastest growing segment of
  agriculture in the world.
• Recirculating aquaculture is sustainable and best
  adapted to local indoor production.

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The Principles of Sustainability
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A Generic Model for Sustainable Agriculture
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Pond Aquaculture Non-sustainable
Super-Intensive Pond Aquaculture Sustainable
Texas Gulf Coast - Shrimp Farm
MSG Greenhouse Colorado Commercial Aquaponics
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Local, Natural Food! Fad or the Future?

• Today, food Americans eat comes from an average
  distance of 1500 miles.
• Ten years ago the numbers of organic/natural
  farms in the United States and India were
  inconsequential. Today there are 300,000
  organic/natural farms in India which is ten times
  more than there are in the US.
• As little as two years ago major US grocery chain
  Safeway had minimal promotion of locally grown
  food. Today, every Safeway store has well placed
  point of purchase displays of locally grown,
  natural foods.

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Local, Natural Food! Fad or the Future?

• Recent outbreaks of deadly Salmonella poisoning
  and other food related health issues have almost
  always come from imported food.
• Numerous consumer surveys have proven locally
  grown food tastes better.
• Local, natural grown food yields better health
  for consumers.
• Locally grown food substantially reduces global
  warming.
• Eating locally grown food greatly benefits the
  local economy.

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Indoor Agriculture

• Urban agriculture has been practiced around the
  world for thousands of years but most of it has
  been outdoors.
• Indoor agriculture is a relatively new phenomena
  (19th century) dominated by greenhouses.
• The demise of manufacturing in the US and other
  developing countries has left many abandoned
  buildings for use in indoor agriculture.
• Improvement in lighting efficiencies for large
  indoor spaces (LEDs and Fluorescents) has
  increased the viability of indoor agriculture.
• The technical improvements in aquaponics and
  recirculating aquaculture have made possible an
  assembly line approach to indoor agriculture.

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Mountain Sky Group and Sustainable Indoor
Agriculture

• Relevant Mountain Sky Group Business Areas
• Environmental Consulting for Environmentally
  Impaired Property Issues (Mountain Sky Consulting
  MSC)
• Strategic Business Development Consulting and
  Management for green/sustainable/ecolonomic
  businesses (MSC in partnership with IOE)
• Green real estate development and construction
  (Mountain Sky Developers MSD), Four Northern
  Colorado Projects
• Environmentally Impaired Property Ownership
  (Partnering with various entities)
• Sustainable Agriculture research and proof of
  concept commercialization (Mountain Sky Ranch and
  Mountain Sky Alpacas)
• Aquaculture consulting, research and development
  (WorldWide Aquaculture - WWA)

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Mountain Sky Group and Sustainable Indoor
Agriculture

• Relevant Mountain Sky Group Partners
• Institute of Ecolonomics (IOE)
• Ecolonomic Realty Group (ERG)
• AquaPlanet Group
• Industrial Realty Group (IRG)
• International Risk Group (Risk Group)
• Oceans Bounty Partners (OBP)
• Garden Fresh Farms

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Mountain Sky Group and Sustainable Indoor
Agriculture

• Sustainable Agriculture Leadership and Selected
  Staff
• Dr. Wayne Dorband CEO and Chairman, 35 years
  experience as an entrepreneur and in aquaculture
• Mr. Stuart Lichter CEO Industrial Realty Group,
  largest private owner of Industrial real estate
  in US
• Mr.Eric Kaplan Principal Industrial Realty
  Group, 20 years in finance
• Mr. Dustin Dorband Construction manager,
  directing construction at several indoor
  agriculture projects
• Mr. Jerry Corbier Principal, ERG, 25 years
  business operating experience
• Mr. Steve Alves Principal ERG, 10 years real
  estate experience
• Mr. D. Paul Golden MSG Physicist and Engineer
• Mr. Travis Hughey AquaPlanet Partner,
  aquaponics pioneer
• Mr. Joey Hundert Canadian business leader,
  sustainability leader
• Mr. Bevan Suits AquaPlanet Partner, Industrial
  engineer, writer

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Mountain Sky Group and Sustainable Indoor
Agriculture

• Representative Current Sustainable Agriculture
  Projects
• Largest US super-intensive recirculating shrimp
  culture Farm (South Carolina OPB)
• Feasibility Study for Large Canadian (Alberta)
  sustainable indoor agriculture farm on Paul First
  Nation Reserve (Alberta, CA Seven Fires)
• Proof of Concept Inland Shrimp Production and
  Research Farm (Colorado OBP/IOE)
• Broad Scope Aquaponics Research and Development
  including small scale commercial production
  greenhouse based farm (Colorado IOE)

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Mountain Sky Group and Sustainable Indoor
Agriculture

• Current Sustainable Agriculture Projects (cont.)
• Local Food production education and consulting
  (WWA AquaPlanet)
• Medium scale urban indoor agriculture farm (MN
  Garden Fresh Farms)
• Aquatic Species Genetic Banking (CO IOE, Aiken
  Enterprises)
• Proof of concept sustainable aquaculture project
  (CO IOE, D. Paul Golden)
• Large Scale Urban Sustainable Indoor Agriculture
  Production Projects (MI, CA, OH IRG, OBP)
  www.www.com
• Indiana Sustainable Indoor Agriculture Project
  (IN ERG, IRG, OBP)

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Indiana Sustainable Indoor Agriculture (ISIA)
Project

• Proof of Concept ERG Martinsville Location
• First Project of this type in Indiana, possibly
  nationally depending on the pace of several of
  our other similar projects.
• Smaller scale projects using similar technology
  already in operation by MSG
• The ERG Martinsville site has a number of
  characteristics that make it an excellent site
  for sustainable indoor agriculture
• Close to a major population center and food
  market (Indianapolis).
• Low ceilings make building more energy efficient
  for indoor farming.
• The building has unusually abundant sources of
  compressed air, three-phase power, floor drains
  and outside bay door access. All of which are
  optimal for indoor agriculture.
• The campus setting of the site will make it easy
  to be a showcase proof of concept location.
• Abundant additional open space at the site allows
  for easy site improvement (attached greenhouse
  space).
• Immediately adjacent retail makes year around
  farmers market a good option.

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Indiana Sustainable Indoor Agriculture (ISIA)
Project

• Follow-up Expansion and Duplication
• Food from this project will have only a small
  regional impact. Demand for all the food and
  associated production will satisfy less than 1
  of the Indianapolis marketplace.
• We will have early adopter advantage and will
  quickly be able to duplicate the success with our
  first production location in Martinsville in an
  other Indianapolis or more geographically diverse
  locations.
• We will be game-changers for sustainable
  agriculture like Tesla has been for the plug-in
  electric car.
• We will be developing intellectual property and
  patented technologies that will give us
  sustainable long-term market advantage.

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Indiana Sustainable Indoor Agriculture (ISIA)
Project

• ISIA Phases
• Planning and Design Underway with an additional
  1-2 months needed following funding commitment.
• Site improvements (greenhouse construction and
  building modifications) 6-8 months following
  design completion.
• Agricultural system construction - partially
  concurrent with site improvements 8-10 months
  following design completion.
• System testing and equilibration 1-2 months
  following system construction completion.
• Plant production Ongoing beginning after system
  equilibration with harvests beginning 6 weeks
  after completion of equilibration.
• Compost production Ongoing beginning after
  system equilibration with initial product sales 3
  months after completion of system testing.
• Fish production Weekly with first harvests
  beginning 6 months following system
  equilibration
• Shrimp production Weekly with first harvests
  beginning 6 months following system
  equilibration.

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Indiana Sustainable Indoor Agriculture (ISIA)
Project

• Project Leadership and Staffing
• Dr. Wayne Dorband Project Director
• Mr. Dustin Dorband Construction Manager
• Mr. D. Paul Golden and Mr. Bevan Suits Systems
  engineering design and planning
• Mr. Jerry Corbier and Mr. Steve Alves Site
  management
• Mr. Stu Lichter Business strategy and oversight
• Mr. Eric Kaplan Project Funding
• MS Level Farm Manager to be determined
• Other MSG partners and staff as needed

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Indiana Sustainable Indoor Agriculture (ISIA)
Project

• Production System Design
• Utilize the existing infrastructure of the former
  HK building adding greenhouse structures to the
  south sides .
• The building already has most of the needed
  mechanical resources (lighting, power, drainage,
  etc.)
• Food and associated by-product production will
  occur using three independent but inter-related
  technologies
• Aquaponics
• Super-intensive recirculating aquaculture
• Vermiculture enhanced composting

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Indiana Sustainable Indoor Agriculture (ISIA)
Project

• Production System Design (cont.)
• All three production systems have been proven by
  us and are being used commercially at various
  locations
• Attributes of the production technologies
• No outside water or nutrient resources required
• No waste or water discharge
• No special permitting or zoning required
• Production efficiencies 10-40 times greater than
  traditional agriculture production systems
• All natural/organic
• Operable by local labor base (farm type labor)
• Year around production HUGE BENEFIT
• Local food production
• Bio-secure, safe and with many built in risk
  mitigators

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Indiana Sustainable Indoor Agriculture (ISIA)
Project

• Competition
• Food from 1500 miles away, not fresh, unknown
  quality.
• As an early adopter we have no local
  competition.
• No local year around sources we are not threat
  to traditional agriculture locally.
• Market
• Local (within 200 miles)
• Mostly high end year around buyers (restaurants,
  retailers, etc.)
• Some local on-site sales
• Specialty processing possible site has
  commercial kitchen

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Indiana Sustainable Indoor Agriculture (ISIA)
Project

• Marketing and Advertising
• Local, regional and national PR campaign
• Target high end regional buyers
• Tours and visits during construction
• Visits to other existing operations (CO, SC)
• Engage a marketing firm locally
• Operations
• Local, on-site day to day management.
• Direction from MSG professional staff
• Local labor (15-20 FTEs)
• 24/7 on-site system monitoring and maintenance
• Year around harvesting
• Fresh delivery or pick-up by customers
• Continuous new propagation removing risk of
  catastrophic failures.

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Indiana Sustainable Indoor Agriculture (ISIA)
Project

• Overview Financial Projections (Details)
• Capital costs for site improvement - 1,100,000
• Capital costs for agriculture production system
  equipment 1,950,000
• Projected Annual gross revenues (Following
  funding)
• Year 1 - 421,571
• Year 2 - 3,291,522
• Year 3 - 3,877,946
• Year 4 - 4,299,682
• Projected Annual Net Profit (EBITDA)
• Year 1 - (250,430)
• Year 2 - 1,242,668
• Year 3 - 1,464,213
• Year 4 - 1,833,197
• Projected annual ROI of 26 with all cash
  investment

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Indiana Sustainable Indoor Agriculture (ISIA)
Project

• Financing Options
• Local, state, private and federal funding
  incentives and grants (SBIR grants, Industrial
  Revenue Bonds, TIFs, ARRA funding, USDA grants,
  etc.)
• USDA Business and Industry Guaranteed Loan
  Program
• 80-90 guaranteed by USDA for loans made by
  traditional lenders with up to 80 of project
  costs available. Ownership guarantees required.
  30 year amortization with terms of 1.0 2.0
  above prime.
• MSG has successful experience with this loan
  program for our South Carolina shrimp project
  (4.0 MM).
• A lender has already shown specific interest in
  this project.
• Private debt and/or equity capital.
• Exit Strategy
• Three year plan to an exit
• Exit will most likely be a Tesla like IPO (100
  MM) or a home-run strategic buy-out by either
  an investment group or a large company in the
  food industry. This is an industry changing
  opportunity!!

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Indiana Sustainable Indoor Agriculture (ISIA)
Project

• Risk/Risk Mitigation
• Technical infeasibility
• Practical experience (hundreds of years for team
  members)
• Lab scale, pilot scale and small scale commercial
  experience
• Multiple technologies spreading the risk (several
  aquaponic technologies, shrimp aquaculture,
  vermiculture)
• Market rejection
• Multiple products (shrimp, several fish species,
  multiple plant species, multiple compost
  products) all currently consumed but shipped from
  thousands of mile away.
• Catastrophic loss
• Disease
• Water quality (temperature, DO, etc.)
• Pests
• Bio-secure (indoors, staff cleanliness, risk
  management)
• Diverse species
• Redundant systems (air, temp, power)
• State of the Art water quality monitoring and
  alarms

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Current ISIA Project Needs

• Capital for Existing Loan Payoff
• 1.7 MM
• Capital for System Design and Construction
• 2.9 MM (see business planning document for
  details)
• Capital for Initial Operating Needs
• 500,000 for the first 6-8 months of operation
  until positive cash flow is achieved
• Local Market Knowledge and Connections

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Conclusions

• Sustainable Agriculture Will Be the Future of
  World Agriculture.
• MSG and ERG see early Adoption as a Winning
  Strategy.
• We are looking for Strategic, Financial and
  Operating Partners.
• Options Include
• Relieve our current debt pressure by providing a
  repayment moratorium to allow ERG the necessary
  time to capitalize this project.
• Become business partners in ISIA by providing
  financing for the project.
• Become operationally involved in ISIA though
  management participation.