BUSINESS PLAN FOR SPIRULINA CULTURE AND PRODUCTION

MONTANA SYNERGY, LLP BUSINESS PLAN FOR SPIRULINA CULTURE AND PRODUCTION

1. OVERVIEW Spirulina algae grows ten time faster than standard plants, and has 70% protein by dry weight. While it makes sense to grow Spirulina in the lower latitudes, it is possible to grow Spirulina in Montana year round in growing pans inside buildings. The target buildings are the hangers at the Glasgow, MT, airport which will provide wind, rain and snow protection. Pans 10' wide and as nearly as long as the hanger, stacked 4 high, and provided with grow lights, will produce the Spirulina. The stack of pans will be so constructed as to provide a controlled environment similar to a greenhouse, but at a much smaller cost. Heat and electricity will be provided by biofuels, namely ethanol and biodiesel. Sales of Spirulina will be in to several markets: Spirulina flower can be combined with hard durham flower for making pasta and breads. Spirulina flower and a binder can be pressed in the form of a lettuce leaf, dyed green, and sold as slettuce. It has many markets in the food and cosmetic industry. It can also be made into biodiesel, biolubricants and other industrial products. 2. SCIENCE See article by Pia Mauates at endnote No. 3. PRODUCTION 3.1 Main production plantform Production is based on water, minerals, heat and sunlight. The production facilities will be house in any building, an old mine tunnel anything which provides protection against rain, snow and wind and is affordable. The candidate buildings are the hangers and other empty buildings of the airport in Glasgow, MT. Boeing did have a test facility at the airport but closed it Heating the entire hanger is simply too expensive. Ownership is unknown, probably the local county or a government sponsored economic development corporation. Rent would have to be $1.00 per year until production begins, then rent would be based a small percent of adjusted gross revenue, say 1%. Production will be in shallow pans 10' wide, 6 high and 100+ long. The pans will be 10 feet wide with sides about six inches. Pans will be built in 24 foot sections, then assembled in the hanger. Pans can be built at Fort Peck or any Indian reservation. When assembled, each pan will be joined to the next (butt joint). Then PEX tubing will be stapled to the bottom of the pan, then the entire pan fiberglassed. Pans should be at least 100 feet long and longer if the hanger permits.

The PEX radiant heating system and an Econo Heat, Inc., water boiler will provide for heating the water in the pan to support the growth of algae. The water level can be as low as 2 and as high at 4 or we will need a higher side wall on the pan. Water will be circulated by pump and nutirents added in liquid form. My guess is that ground, dehydrated fish guts,

and ground dehydrated kelp, reconstituted with water, would make a good source of nutrients. Local sources might included compost tea made from vermiculture castings and well rotten compost. Pans will be in layers. The first layer rests on the slab floor which presumable is dead level. Foam/concrete walls will be build along the sides of the pans. The first pan rests on the slab. The second pan rests on TJI trusses, the ends of which rest on 4 ledge of a 16 foam/concrete course. The third pan rests on TJI trusses, the ends of which rest on a 4 ledge of a 12 foam/concrete course. The fourth pan rests on TJI trusses, the ends of which rest on 4 of an 8 foam course. The remaining 4 supports a 4 foam/concrete course on top of which rests TJI trusses which span not only the 10' pan but a 4 to 6 walkway between the pan walls, allowing for access to the pans inside the climate controlled greenhouse. Walls also cap the ends of the entire set of pans and provide for a 6 foot walkway around the ends of the pan structures. The TJI trusses will be set at two foot on center along the courses, with blocking as appropriate. Before fiberglassing the pans, the OSB pans will be screwed or stapled to the TJI. The exterior walls of the pan will rest (or nearly so) against the adjacent foam/concrete wall. Grow lights, consisting of 8' florescent tube holders, will be attached to the bottom of every other TJI, thus providing growing light. The lights are on as needed. Each stack of these pans is called a Pan Pod. Several Pans make a Pan Pod. The hot water power will be provided by a boiler which uses waste motor oil and similar oils (See:http://www.econoheat.com/boilers.htm There are five manufacturers which offer these types of products under 500,000 BTU and many more manufactures of larger units, which burn No. 6 fuel oil and higher. Biodiesel and/or ethanol or a mix of both, can be used as fuel for these units. Insulation of the pan pods is by air layers. Each Pan Pod or group of Pan Pods will be house under several layers of 6 mil polysheeting. The initial layer will drape over the top of the upper set of TJI trusses, over the lateral and distal aisles, and be held next to the concrete slab by 2 x 2 wood laterals around which the polysheet is wrapped. As successive layers of polysheets are installed, the 2 x 2's are simply stacked along the pan walls and attached to the walls. Each sheet provides an air and vapor barrier by using a compressor to fill the air gaps between the sheets. The air holds the sheets apart and provides for some insulation. Multiples layers of polysheeting will increase the insulation effect to reach R11 to R19. The walls are foam concrete. Foam forms come in all sizes and shapes. The cheapest and quickest is an interlocking block. The block at the bottom of the course is 16 x 16, has a 2 or so wall and is hollow. Inside each hollow is a 3/8 rebar set 9 in a drilled hole in the slab, filled with Simpson's epoxy concrete filler glue. These rebars extend to the full height of the wall. Each course has a lateral steel welded ladder for additional stability, which is installed between the blocks. As each course is finished, the next level of blocks is laid which allows for a 4 ledge on the inside. The butt ends of the TJI's rest on these ledges. When all of the foam blocks are in place, all of the cells are filled with concrete, thus creating a very strong, well insulated structural wall which can take the weight of the TJI's and the water. The cord of the TJI will probably calculate out to be about 11 which together

with the engineered wood flanges, will make the TJI's about 12. The bottom of the TJI's will be about 1.5 to 2 feet above the pan, giving a net height of each pan assembly of about three feet. Height is no problem in the hangers. Electricity will be provided by diesel electric gensets. If such a genset is not already on the airport, then the local government can most likely obtain large gensets from the Federal government surplus property program for free, then lease it to Montana Synergy. The rent would be a percent of the adjusted gross revenue, say 1%. These genset will burn biodiesel. Jerry Spencer is associated with a company which is developing the use of enzymes to produce ethanol from ag waste, such as any cellulose or lingin. Research grants are being offered for this research. Montana Synergy will need ethanol to produce biodiesel and can use it as fuel in the boiler, along with used motor oil. 3.2 ALTERNATIVE PRODUCTION - Warm weather An alternative system is the use unused fish ponds or any pond for that matter during the warm months. New ponds can be dug and lined with shotcrete, then a 60 mil pond liner. The same harvesting system could be used with modification for the shape of the ponds. 3.3 YEAR AROUND PRODUCTION Solar energy It is a given that during about half of the year, solar energy (ET) would not be sufficient to create a mode of full production, even for outdoor ponds. Indoor pans normally would not get any ET. The solution is to collect solar energy outdoors, then transmit it to the indoor growing pans, then distribute the solar energy evenly across the surface of the growing medium in the pans. Short days and cloud cover, of course, would reduce the availability of solar energy for collection. Notwithstanding, any solar energy collected and distributed will save on fuel to run the generators. The solution is to build a solar energy system using parabolic reflectors which concentrate the ET into the ends of fiber optic cables. The cables then carry the ET to the collecting pans. At this point the ET is distributed as evenly as possible across the surface of the pans. The design proceeds as follows: Pick an area on the airport which is close to the hanger(s) and not shaded by any structure. Distance is a function of the cost of the cable, not the transmission losses. Collectors consist of 3' or so dish parabolic pans made out of any cheap material, e.g., fiberglass, plastic or aluminum. To the inside is glued a sheet of mylar which is highly reflective. At the point of greatest concentration of ET, fiber optic cables receive the sunlight over the diameter of the bunched fiber optic strands. Fiber optic cables should be available in considerable quantities from companies which installed the nationwide series of fiber optic systems. The ET entering the fiber optic cables is carried to the growing pans inside the hanger. These cable strands are teased apart and directed upwards toward a linear parabolic reflector. These reflectors and made from fiberglass and are 10' long. They nest between the TJI trusses. To the convex side which faces the growing medium, is glued the highly reflective mylar sheet. By aiming the teased apart strands of fiber optics to the reflective surface, the sunlight is reflected downwards and thus spread evenly across the surface of the growing medium. The reverse parabola surface (back side) thus deconcentrates the ET. The collector pans are on a double gimble system. The main frame orients the pans at ninety degrees to the Sun's rays. As the sun passes east to west, the sun tracker system operates a rack and pinion system to maintain the collector pans at 90 degrees to the solar radiation. At sundown, the system automatically repositions itself

toward the eastern horizon. Strong winds could be a problem. Two solutions: Build very stout snow fence around the solar collector enclosures. A system could be engineered such that when an override signal is given, the pans rotate so that the open face is toward the ground and the main frame lowers the entire assembly to the ground. The convex shape would cause lift as the wind passes over the backside of the pans. The solution is to fix a wind spoiler next to what would become the invert of the pans when lowered because of wind. This spoiler would be a counter-airfoil and would run along the length of the pan. The fiber optic system could add four hours of sunlight. There exists very large, unused excess capacity of high grade fiber optic networks in the U.S. It is possible for sunlight harvested on the east coast to be transmitted to the west coast and vice versa, thus adding the four hours of sunlight because of time zone differences. Also bad weather in the area of the growing grounds could be off-set by good weather in the area where the collectors are built. Just imagine, the Chicago Board of Trade could start trading in sunlight photons. 4. HARVESTING Each pan will have at one end, a rotating cylinder which spans the 10' width of the pan. It has a perforated inner and outer shell with a poly filter between the shells. This drum sits in the pan water with the bottom of the drum just above the bottom of the pan. A pump draws water into the center of the drum and discharges the water to the pan below or above. Each pan has a drum, which are at opposing ends so that water from one pan is discharged into the far end of the neighbor pan, but in reality is just above or below its neighbor, thus avoiding long runs of pipe. As the drum rotates, the suction inside the drum draws algae against the outside of the drum wall which is perforated and hangs on the outside because of the polyfilter which is against the inside wall of the outer drum wall. This drum can turn slowly on a continuous basis as the algae will have grown more closest to the drum or at least become more concentrated. Scientists will have to work out how this happens. The algae which is in the vacuum system now becomes a slurry which is transported to a centrifuge. Most of the water is removed. One production line then uses this damp algae concentrate to make the slettuce. The remainder is conveyed to a continuous flow oven, which removes the rest of the water. Then the cake is ground in to flour and bagged or boxed. Cake which is not of food grade can be fed to animals and used to grow market mushrooms. It would make an excellent product to sell to certified organic farmers. With as many large hangers and other WWII buildings at the airport this location make great sense because the buildings are so old, they are probable not to code for human habitation, but would be legal for agricultural use. We can get the use of these buildings on the cheap. Thus associated ag production of mushrooms, poultry, organic fertilizers, worms and other value added ag products can be anticipated. 5. PRODUCTS In addition to slettuce, the Spirulina flower can be used to make pasta and different food products. A pasta plant can be installed in the hanger in a building within the hanger. Again, the hanger provides structural protection against rain, snow and wind. The pasta plant only has to conserve heat in its building, which can be built strong enough to allow for polysheeting another type of greenhouse. I read where some Dakota farmers has formed a cooperative to make pasta, but is went out of business. Thus that plant might be available at very low cost. They produced pasta as a commodity. The Montana Synergy plan is to sell directly to the consumer by catalogue and e-commerce through our website. We will also

sell to food cooperatives, use community supported agricultural groups (CSA's) and attend farmer's markets with our slettuce and pasta. Our products will be high in omega 3's, high in protein and will provide for carbohydrates and fiber. Thus, our operation will aid the local grain farmers by using the durham wheats. We could eventually include a seed oil crushing plant so as to process local seed oil grains, create additional flower for retail or animal feed and vegetable oil for production of biodiesel. The cake feed would increase the meat and egg production in the local areas. 6. SALES Montana Synergy should strive to sell direct to the consumer, rather than treating our products as just another commodity. The end users of the flours are bakeries sold in bulk containers, and flour packaged for consumers and sold by mail, e-commerce, CSA's, farmers' markets. Years ago, Olympia Bread sold door-to-door by having bread trucks drive through residential neighborhoods and announced their presence by a distinctive bell. This old method of sales, might be just the right type to renew. The concept is a traveling deli with plenty of foods and pre-prepared meals and main courses, all frozen or in some cases, dried. During the shopping time (11:00 to about 5:00 p.m), the traveling deli could be parked in the parking lot of a shopping center, with permission of the shopping center owner, or in a church or school parking lot. Outside of these hours, the van would travel the residential streets. There are plenty of students, retired folks and low income persons who would benefit from driving the deli van. They would get paid in food and cash. Montana Synergy could also be formed is a communitarian intentional community, where all of the workers are owners and all of the owners are workers. I have diligently studied this subject and have many papers on how to organize and manage a self-sufficient, sustainable, rural, intentional community. 7. CAPITAL There are grant and loan funds available for the pilot project and the startup. Green Oxy Fuels, LLP, has applied for a $10,000 loan from the Montana Department of Environmental Quality Alternative Energy Revolving Loan Program. This application is based on the purchase of a small biodiesel refinery and a diesel generator. The objective is to produce electricity using biodiesel from waste vegetable oil from MSU's kitchen fryers, which supplants use of commercial electricity and propane for a one-bedroom, one bath mobile home which I have been building for the past 1.25 years. The maximum loan for this program is $40,000. There are several other sources for funding alternative energy and more are announced every quarter. The budget for this project is available on request. In addition to government and foundation grants and loans, a standard stock subscription to create a cooperative would seem to be a successful way to raise capital. 8. ORGANIZATION Montana Synergy, LLP, will be formed as a Montana Limited Liability partnership. Membership will have two parts. The personal membership would cost $100.00 which would carry the right to vote for the partners constituting the governing council of partners. A second class, capital membership, would be based on capital contributions and would provide for one vote from every $5,000 of capital contributed. The capital would receive a share of the net profits proportional to the amount each holder has to the total of all capital contributed. The amount of capital membership is merely a bookkeeping entry and would be subject to Federal and State securities laws. The two classes would have rights defined in

the partnership agreement.

9. SCHEDULE The schedule would be to form the LLP among a group of early investors, including one or two scientists, five or six entrepreneurs, a couple of farmers, one or two residential consumers and one or two industrial consumers. During the early stages, the entrepreneurs have to have control over the course and direction of the enterprise. When the pilot plant is in operation and the marketing plan has been proven to be successful, then the major plant can be financed by the second wave of investors, most of which are likely to be a mix of grain farmers, animal meat and egg producers, CSA members and industrial consumers, such as bakeries. We should avoid banks and other lenders. Jim Miller is the in-house lawyer (not licensed in Montana, but in California). We will have to hire a licensed Montana securities attorney when the time comes, to issue the opinion and do the securities work. I will do the due diligence and draft all documents, under that attorney's supervision. The formation of Montana Synergy and its initial memberships can be accomplished in about 60-90 days. During this time applications for loans and grants can be prepared and submitted. At the end of December, when I graduate, I can relocate to Glasgow, provided we have satisfactorily formed Montana Synergy and concluded the necessary agreements and grants or loans for the pilot project. Respectfully submitted,