1. Feasibility Studies and Business Planning Plan for your Success! North Dakota Corn Utilization Council Value Added Summit December 18, 2013 Kyle Althoff Equinox LLC www.equinox8.com

2. Plan for your Business Success By failing to prepare, you are preparing to fail. Benjamin Franklin Give me six hours to chop down a tree and I will spend the first four sharpening the axe. Abraham Lincoln

3. Plan for your Business Success Set goals and objectives that meet your needs, as well as fit the needs for those that will be your partner in this adventure Investors Debt providers Employees Joint venture, strategic partners Marketers, suppliers Create a plan for your development and operations Update your plan - continuously evaluate and modify your business plan as markets change and new information arises

4. Improving The Odds Of Success 2. Market Feasibility 3. Business Feasibility 4. Business Plan 5. Focused Execution Is it Possible? Is it Practical? Plan to Execute Execute the Plan! Time Expense Commitment 1. Pre-Feasibility Explore the Opportunity Process Objective? Cost? Idea, Wish, or Value Proposition Business Success!

5. Industrial Genetics Companies Genetics Companies Grower Seed Retail Seed Retail Fertilizer & Petroleum Supplier Local Elevator Farm Mgmt & Agronomy Farm Mgmt & Agronomy Brokers & Grain Co. Foreign Markets Feed Mill Grain Processor Grain Processor Food Manufacturer Food Manufacturer Wholesale Retail Foodservice Wholesale Retail Foodservice Chemical Companies Chemical Companies Machinery & Equipment Machinery & Equipment Consumer Trends Consumer Trends Terminal Elevator Foreign Consumer Foreign Consumer Domestic Consumer Domestic Consumer Livestock Production Livestock Production Slaughter & Processing Slaughter & Processing Market Drivers Consolidation & Integration Consolidation & Integration Grain Supply Chain Globalization Technology Biotechnology Risk Management Policy Positioning Within the Value Chain Biofuels

6. Road Map

7. Business Models: Representations of Reality What is the Value of a Model? Breeds Creativity & Interaction: experiment, test, create, tear down, recreate, stimulate, react & communicate Helps Develop Deeper Understanding of Concepts and Process Allows for Quick Decision Making Governs Repeatable Actions Educates in Context Supports Creation of Other Models

8. 1.Business formation 2.Conduct a feasibility study 3.Develop a business plan 4.Fund initial development 5.Proceed with preliminary work, permits, siting, research 6.Raise balance of equity 7.Negotiate marketing agreements, utility agreements, sales contracts, JV/partnerships 8.Obtain debt financing/financial close 9.Hire a project construction manager, management team, employees 10.Begin construction, startup, operations Example of a Business Development Path

9. The 5 Cs - What does it take to Attract Financing? 1.Character:Management 2.Capacity:Repayment ability 3.Capital:Financial condition 4.Collateral:Quality and value 5.Conditions:Purpose, amount and requirements External Internal

10. The Three Ms – Be able to Demonstrate 1.Management Management/Leadership Team Board Direction Operations 2.Markets Inputs Outputs 3.Money Cash flow available Debt Payments Dividend Payments Tax Payments Future Capital Expenditures

11. Why Businesses Fail Poor management Undercapitalized Operations do not perform to specifications or original plans Business is not competitive with other projects Structural changes in the market Increased price of raw materials Lower sales price for products

12. Successful Businesses Mitigate feedstock supply & price risk Early biofuel plants were farmer owned with corn delivery contracts Strong management team with industry experience Engage reputable partners Sales agreements/ off take, feedstock suppliers Technology providers Contractors, construction, design/build companies Well capitalized – typically 40% minimum equity In a commodity market – you must focus on being a Low cost producer and/or differentiate your product/process to improve the returns

13. Feasibility Studies and Business Planning Plan for your Success! North Dakota Corn Utilization Council Value Added Summit December 18, 2013 Kyle Althoff Equinox LLC www.equinox8.com