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Clean Renewable Energy – January 2014 Confidential.

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Presentation on theme: "Clean Renewable Energy – January 2014 Confidential."— Presentation transcript:

1 Clean Renewable Energy – January 2014 Confidential

2 Important Notes This presentation contains “forward-looking” statements, within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. Forward-looking statements involve certain risks and uncertainties that could cause actual results, performance or achievements to be materially different from any future results, performance or achievement expressed or implied by the Company’s forward-looking statements. Forward-looking statements include, but are not limited to, statements about the progress of the Company’s research and development programs, the timing of anticipated achievement of milestones or regulatory approvals, competition in the energy industry, the impact of potential future litigation, changes in or failure to comply with governmental regulation, trends affecting the energy industry, loss of key personnel, general economic conditions, performance by parties under contracts with the Company, and other risks described from time to time in its public filings. When used in this context, the words “expect”, “estimate”, “anticipate”, “believe”, “may”, “will”, “should”, “could”, “plan”, “project”, “predict”, “potential” and similar expressions are intended to identify forward-looking statements. These statements reflect the Company’s current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, potential investors should not place undue reliance on the forward-looking statements. These forward-looking statements represent the Company’s reasonable estimates and assumptions only as of the date of any of its filings and are not intended to give any assurance as to future results. This presentation contains confidential information and is covered by the Non-Disclosure Agreements in place.

3 PROFILE 1

4 The Company We believe that clean, renewable energy can be part of the overall energy solution to reducing some of the negative impacts of traditional energy sources. In addition, we believe that with the right approach, renewable energy can be a profitable investment.

5 Management Team Ing. Pedro P. Quiros- Chairman Ing. Quiros received his Bachelor’s Degree in Mathematics from St. Michael’s College, Vermont, (magna cum laude) and Bachelor’s Degree Electrical Engineering degree from Purdue University, Indiana. Ing. Quiros began his career as a high level executive at the Instituto Costarricense de Electricidad (ICE). He went on to have varied career where he worked at a variety of multinational corporations such as Ascom-Timeplex, ITT, Harris Corporation, GTECH and General Electric. He has operated, restructured and started companies in more than a dozen countries including telecommunications systems in Saudi Arabia, Jordan, Brazil and Colombia. Most recently, Ing. Quiros served, from , as the Chief Executive Officer & Chairman of the Instituto Costarricense de Electricidad (Grupo ICE) where he oversaw the company’s telecommunications and electrical utilities companies. ICE has revenue of $1 billion, over twenty thousand employees and is Costa Rica’s state owned telecommunications and energy company.

6 Management Team Jose P. Quiros- CEO Mr. Quiros received a double Bachelor of Science from Barry University in Miami. He holds degrees in Economics/ Finance & International Business and graduated Summa Cum Laude. Mr. Quiros also attended the University of Miami School of Law. Mr. Quiros has worked at a variety of industries and companies from start-ups to Fortune 1000 companies. He has operated companies in the UK, Dubai, India, Russia and the US. Prior to founding Versant Corporation, Mr. Quiros was the Chief Operating Officer for CETIS, Inc. where he grew the company’s revenue from $6,000,000 in 2006 to a run rate of $29,000,000 in early While at Cetis, he undertook a multi continent expansion and completed two successful mergers & acquisitions. The United States Patent & Trademark Office has awarded Mr. Quiros five design patents.

7 Management Team Jaime L. Kniep- CFO Ms. Kniep has focused her career in business management and accounting. She has worked for several companies directly handling their financials, daily accounting practices and overall internal procedures. For over a decade, Ms. Kniep served as the Financial Controller for CETIS, Inc. where she managed $30 mm in revenues. In this role, she managed four offices containing a staff of ten accountants, bookkeepers, and administrative people on three continents. As part of her responsibilities, she oversaw several successful audits, including both private and publically held (NYSE). Ms. Kniep maintained all relationships with banks, creditors, and outside accounting firms and handled due diligence in the merger and acquisition of two separate companies over the course of three years.

8 Project Support Team Owner’s Engineer (GL Garrad Hassan) GL Garrad Hassan is one of the world’s most well-known and respected advisors for the renewable energy industry. With over $500 million per year in revenues, they possess the experience and technical ability to ensure the construction and implementation of the business plan on the site. This strategy helps the Company control costs and leverage all areas of the construction- procurement, civil works, etc. Garrad has already provided wind analysis services and the working relationship is good. Garrad Hassan is an approved expert for all major banks with regard to the renewable energy space including Ex-Im Bank.

9 Project Support Team Financing We are working directly with the Export-Import Bank of the United States and working on the closing process based on their Letter of Interest. Structuring/ Tax The Company’s structure was developed by Ernst & Young. It maximizes the tax benefits of the tax treaty between the US and Costa Rica. We plan to continue to use their services to ensure the best possible tax strategies in both the US and Costa Rica. Legal In Country. The Company has received valuable legal advice from GBG Asesor Juridico. Mr. Geovanni Bonilla Goldoni was in charge at Grupo ICE for all legal matters and also worked at the Attorney General’s office. Very well connected, especially within the energy sector. External. We have an engagement letter with Akin Gump. Mr. Dino Barajas has closed a number of deals in Central America including a $280 million geothermic deal in Nicaragua in Well recommended. Akin would handle the turbine, O&M, Ex-Im agreements, as those need to be coordinated.

10 Strategic Partners

11 The Site The Company is developing approximately 300 hectares in the northern section of Costa Rica. The site is 20 kilometers to the East of La Cruz in the Guanacaste province of Costa Rica. The site has over 5,300 hectares of land (approximately 13,000 acres) which can be discussed for future development. The land lease has a 25 year term, which is renewable upon mutual consent.

12 SITE: VTRES-BACHE Total capacity: 37.5 MW Wind Turbine Generators (expected):TBD, expected 22 Rated at:TBD, expected 1.7 MW Production (P75):135,000,000 kWh Manufacturer:GE Investment:$58,000,000 Start of Operations (expected)Q4 2015

13 SITE: LOCATION Lake Nicaragua Rivas Meteorological Station VTRES BACHE Lake Nicaragua

14 Corporate Structure STLK/ Versant Corporation (USA) Energia Renovable Versant SRL (Costa Rica) Energia Renovable Versant SRL (Costa Rica) VTRES FY1 SRL (37.5 MW) VTRES FY1 SRL (37.5 MW) SRL II Future Development SRL II Future Development

15 Wind Studies Wind Studies Conducted by: Wind Measurement Campaign: Marostica (Costa Rica) Initial Validation: Nordteco (Costa Rica) Annual Energy production Report: GL Garrad Hassan (Europe) More than five years of wind data. MET Masts on-site: 6 Met Masts on-site 80 meters in height Measurements since 2007

16 Wind Studies Wind Factors: Wind direction almost fixed year round At 85 m in height, the average wind speed is at CLASS 2 Net capacity factor is 43% (very good) Land Advantages Flat terrain Lake Nicaragua provides a substantial benefit (no obstructions) Excellent existing roads on-site Public road access to site with access to major roadways SIEPAC is on-site (interconnection)

17 Wind Farm Development Process Development ConstructionOperation Development Wind Resource Assessment Permitting & Zoning Financing Business Set-up Interconnec- tion Turbine Selection Construction & Operations Solutions Site Studies Project Managemen t & Planning * Project goals & execution team. *Project plan, resources and timeline. *Consultant selection and agreements. * Review wind maps. *Set-up anemometers, collect & analyze wind data. *Develop detailed production estimates. * Soil and topographic studies. *Site access analysis. *Interconnec- tion options. * Environmental impact report. *Wind rows design, turbine layout. * Federal, State & Local (construction, environmental & commercial permits). * Financial Feasibility Report. *Loan Agreements. * Equity Agreements. * (SPV) Legal incorporation & by-laws. *Power Purchase Agreements. * Insurance contracts. * Tax registration. *Interconnec- tion Report. *Transmission Agreement. *Right-of-way easements. *Turbine and class selection evaluation. *Turbine Supply Agreement. *Technical Feasibility Report. *EPC evaluation & agreement. *Operations evaluation & agreement.

18 COSTA RICA ENERGY OVERVIEW 2

19 National Energy Production GENERATION DISTRIBUTION State Owned Enterprises Grupo ICE CNFL JASEC ESPH COOPELESCA COOPEGUANACASTE 28 PRIVATE COMPANIES Grupo ICE CNFL JASEC ESPH COOPELESCA COOPEGUANACASTE COOPEALFARO

20 ENERGY SOURCES (MW)

21 ESTIMATED INSTALLED CAPACITY & WIND ENERGY ALLOWANCE (2021)

22 GRUPO ICE- REQUIRED INVESTMENT We estimate, based on our Chairman’s firsthand knowledge as Grupo ICE’s ex-CEO, that Grupo ICE will need to invest approximately $10 billion to reach their 2021 goals. According to most sources, there will be a shortfall of approximately $5 billion and numerous delays to the current projects in the pipeline. We believe that this will allow greater participation in the energy sector for private companies and that Versant is well positioned for not only today, but the future.

23 LEGAL & PPA 3

24 Legal The Company has a two part strategy for achieving the Power Purchase Agreement or PPA. The PPA is the long-term contract for the purchase of electricity by the utility. In our case, the PPA enjoys the credit rating of Costa Rica, which is at BB+. (The PPA may also be referred to as an “off-taker agreement”). Our strategy is based on the current legal framework, which allows various options for the Company. These contracts are normally for twenty years. Current conversations have CNFL offering twenty five years for a slightly better price. The PPA essentially guarantees revenues and profits for the term of the contract.

25 Legal Primary Strategy: Alliance with a major distributor (CNFL/ JASEC) for 37.5 MW. Advantages: Allows us to ensure interconnection. Working with these distributors places us with the “Major Groups” teams, which are more amenable to interconnection with SIEPAC. Faster process than Grupo ICE (7200), can contract directly without public bidding. Easier to manage the politics, as both are smaller entities. Both CNFL and JASEC have their own governing laws allowing this type of agreement. Challenges: Slow process, which is typical of a state owned enterprise. These companies are not accustomed to a private company operating at this size of project. While 37.5 MW is small to the developed world, a 37.5 MW private facility under this strategy (non-BOT) is “new” to the country.

26 Legal Alternative Strategy: Two operations of up to MW under Law 7200/7508. Advantages: Less bureaucratic process than an alliance. Environmental/ interconnection studies are all that is required, aside from price negotiations. Buyer is Grupo ICE, the largest player. Challenges: The buyer is Grupo ICE. Challenging in many ways. Politically charged environment. Using this route is more difficult for inter-connection, as a different group handles this for small producers.

27 Power Purchase Agreement Company Offer: 10% less than Buyer’s current costs (estimated at $0.1026/ kWh) No investment cost to Buyer for installation, service, maintenance, etc., other than the cost of electricity. Current Status: We have agreed on the Terms and Conditions. Price is at $0.083/ kwh, 25 years is the term and they will “collect” at the site. We expect to have a PPA signed by May 2014 under current conditions. If we experience a delay, we may pursue the Alternative Strategy at the end of May 2014, as all our studies should be completed and we should be eligible under Law 7200/7508 for a contract with ICE.

28 FINANCIAL 4

29 Financial Assumptions Phase 1 Capacity37.5 MW Annual Production GWh Price per kWh$0.083 Interconnection Cost ($kWh)$0.00 (Customer taking delivery on - site) The financial model does not include potential Carbon Credits revenue that could be generated in the first six years of the project life.

30 P75 – Management Case Annual Average (20 years)USD MM Income12.66 Operation Costs4.885 EBITDA7.81 Taxable Income2.85 Net Free Cash Flow3.0

31 INVESTMENT 5

32 Investment Vehicle On October 15 th, 2012, STL Marketing Group, Inc. and Versant Corporation agreed to merge. The merger was completed on February 6, Currently, STL Marketing Group, Inc. is listed on the OTC as a QB company. The Company plans to begin its registration process, assuming PPA signature, the first quarter of The Company will undergo a 3(a)10 process to reduce approximately $500,000 of debt beginning Q This will significantly reduce the overall debt owed to third parties.

33 Investment Vehicle Costa Rican law requires a 35% ownership interest by Costa Rican nationals for the generation of electricity. The Company is currently working on a variety of financing options including: Equity Lines of Credit. We do have a $5 million line with Tangiers. Convertible Notes. These notes are convertible to common stock at a market discount. Strategic Investors. We have a number of interested parties, including green energy funds waiting for the PPA to initiate negotiations for significant investments.

34 Thank you.


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