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METHANELECTRICAL




             Business Plan Competition 2012
             a Digital Safari Greenbizz Company
             Mt. Diablo High School
             Concord, California 94520

             Marily Abad | Dat Ngo
             Tyler Endo | Gabriela Arevalo
We are Methane Electrical, a determined company run by four intelligent and driven individu-
                                                                                                                                         Mission Statement
           als who were inspired to find a solution to the growing problem of food waste. Methane Elec-                 To reduce the amount of food waste nationwide while also making companies

           trical aims to reduce the food waste and allow companies to take a step toward ecological                    ecologically self-sufficienct by providing them a way to create fuel and fertilizer

           self-sufficiency by producing some of their fuel and fertilizing needs using our product to con-             using a digester to convert local wastes.




                                                                                                                                                                                                                 Compa
           vert local wastes. Inspired by the structure and functions of a cow’s digestive system, Methane
           Electrical has created a device, affectionately called “The Gut” that converts organic food
           waste into methane. We have also incorporated an electrical generator to our product to
           ensure that the methane created from the food waste can be used effectively to power up
           a company’s building or equipment. Furthermore, just as cows excrete their feces, so will our
           machine. A separate tank attached to The Gut contains the feces which can be used as fertil-
           izer or can even be additionally sold depending on what the consumer decides to do with it.          History




                                                                                                                                                                                                                       n
                                                                                                                On a chilly winter night Marily Abad, and her long time business partner Tyler Endo, were at Jack’s




                                                                                                                                                                                                                       y Profile
           We plan on making The Gut well known throughout a wide range of businesses by having                 Bar & Grill having a business meeting to discuss matters regarding their organizational work in Si-
           various methods of publicity. This will include, appearances on local and nationwide news            erra Leone. As hours passed and the restaurant began to close, Marily and Tyler started walking
           stations discussing the features and benefits of purchasing The Gut. We will also be participat-     towards the parking lot to their cars. On the way they saw the kitchen workers at Jack’s hauling
           ing in many trade shows to showcase our product and let as many business personnel know              about 10 bags full of leftover food to the nearest dumpster. This sparked curiosity in Marily’s mind
Execut




           about The Gut as possible. Methane Electrical also plans to provide demonstrations at our            as she wondered where all of that leftover food goes. With this, Marily started a conversation with
           main headquarters so anyone who is interested in buying The Gut for their business will be able      one of the workers and asked him why they couldn’t give the food to a homeless shelter to make
           to come in and get all the information needed in order to purchase the amazingly convenient          good use of all that wasted food. In response, the worker said they couldn’t do anything with the
           Gut.                                                                                                 food but throw it away and have it be sent to a landfill.


           What makes Methane Electrical stand out compared to any other potential competitors is               Upon arriving home, Marily couldn’t shake the image of all that wasted food being thrown away,
 ive Sum




           that we provide top service and an amazing product that produces Methane which is the                so she decided to do some research about food waste in the United States. What she found out
           cleanest burning fuel. When consumers buy our product over the ReCyclone or any other                was quite alarming. 40% of all food waste produced in America is not eaten which amounts to
           device similar to ours, they can be rest assured that The Gut will do its job disposing their food   more than 29 million tons of food, waste each year. She also found out that nationwide, food
           waste and providing them with electricity, while also helping the environment.                       scraps make 17% of what we send to landfills. Within the next day she called up her business
                                                                                                                partner, Tyler, along with two good friends she had met within the Digital Safari Academy, Dat
           Within the first five years of our company, Methane Electrical plans to increase earnings and        Ngo and Gabriela Arevalo, and together they discussed how they could reduce food waste in
           production in order to get maximum profit. The prices of the three different Guts vary in cost       America.
           depending on size. The small Gut is priced at $10,000, the medium Gut is priced at $20,000,
   mary




           while the large gut is priced at $50,000.                                                            With hours of brainstorming, research, and gallons of coffee, a light bulb finally flickered and the
                                                                                                                four individuals came up with a device they affectionally called “The Gut”. This device would
           Methane Electrical is requesting funds for initial production and distribution starting at           turn organic food waste into methane by mimicking the digestive system of a cow. The methane
           $2,000,000. The profit that investors will make from our company will be tremendous, as seen         created from The Gut could then be used for electricity, thus, giving birth to a new company
           on the financial projections. Any person who invests in our company will surely be pleased with      called Methane Electrical.
           the income they will receive within the fifth year of selling The Gut.
Meet the Executives

Marily Abad is the driving force behind Methane Electrical. With three                                                             Tyler has always believed in hands-on learning and how
years of experience in the Digital Safari Academy (DSA), she has ob-                                                               objects physically worked. A member of the Digital Sa-
tained the necessary skills of communication, organization, and the                                                                fari Academy, Tyler uses the skills he has gained to cre-
ability to diligently direct a group. In her first year in the DSA, Ms. Abad                                                       ate designs on three-dimensional computer programs
took on her first leading role by managing a group of four, including her                                                          and then making those same designs come to life. In past
current colleague, Tyler Endo, to create a country development plan                                                                years her has helped the current CEO of Methane Electri-
for Sierra Leone which aims to help infants and mothers. Ms. Abad was                                                              cal, Marily Abad, in developing a country plan for Sierra
also involved with a summer long internship program in which she had                                                               Leone that help s in giving medical attention to infants and
to create web designs, logos, and brochures for specific clients. After                                                            mothers as well as educating expectant mothers on how to
her experience with designing she became the creative director for                                                                 properly give birth and take care of themselves while preg-
Digital Safari Designs where she lead a group of five people to create                                                             nant. With his creativity, intelligence, hands-on ability, and his
 web content and a promotional video for the Cerebral Palsy Center                                                                 compassion for people and the environment, Tyler makes for
  in Oakland. Her three years of experience in the DSA, as well as the
                                                                               Chief Executive Officer   Chief Technical Officer   an extremely well rounded Chief Technical Officer for Meth-
  many leadership positions she has had, and her exceptional ability                                                               ane Electrical.
   to delineate tasks, makes Ms. Abad outstandingly qualified for the
    position as the CEO for Methane Electrical.




        Dat Ngo has acquired skills in multimedia and creative process-                                                            Gabriela Arevalo has had a significant amount of experience work-
        ing from being in the DSA for three years. In his first year in the                                                        ing with numbers and statistics. She is extremely talented in com-
         Academy, he took on different roles such as creating paper                                                                ing up with innovative solutions to financial problems. Ms. Arevalo
          advertisements and leading a group to develop a country                                                                  is in charge of cash flow, company liabilities, financial obligations,
          plan for Benin, Africa. In his second year, he became head                                                               and the expense control of the company. She has taken classes
           in marketing for the Northern California Family Center creat-                                                           that have made her more proficient in the work that she does, such
            ing different kinds of marketing content for that company.                                                             as Statistics and Calculus. Ms. Arevalo joined the Digital Safari Acad-
            Mr. Ngo also interned at Contra Costa Televsion as well as                                                             emy in 2009 to be able to work diligently with her peers. She has worked
             the Martinez Water Shed project, producing an advertise-                                                              with numerous amounts of companies and organizations assisting
             ment for Martinez Water Shed’s Car Wash Kit. He has taken                                                             them with heir financial needs. A combinations of her critical think-
              many roles of leadership, from being freshmen class presi-                                                           ing, determination, and out-going personality has made Ms. Arevalo
               dent to being Student Body President. In those years at                                                             the top choice to be the Chief Financial officer for Methane Electrical.
               Mt. Diablo High School, he gained a significant amount          Marketing Director        Chief Financial Officer
                of knowledge on how to appeal to different audienc-
                es. Over all, Mr. Ngo’s many skills make him perfect
                 to be the Marketing Director for Methane Electrical.
No longer will companies, farmers, restaurants, and institutions have to helplessly
                                                                                                    and mindlessly send their food scraps to non-environmentally friendly landfills. The Gut
                                                                                                    provides companies a quick and amazingly convenient way of disposing their organic food
                                                                                                    waste while also providing them with an electrical source and organic fertilizer.
   1. Conveyor belt

                                                                                                    Inspired by a cow's digestive system, The Gut contains 4 chambers filled with enzymes ready
                                                                                                    to convert organic food waste into methane, which is the cleanest burning fuel source with its
                                                                                                    byproducts being only water and carbon dioxide. Once the food waste is converted it is then
                                                                                                    transported through the electrical generator which has the ability to attach to a building's elec-
                                                                                                    trical socket, or piece of equipment. Thus, having the ability for a building or a peice of equip-
                                                                                                    ment to be run on methane, all provided just from organic food waste.



                                                        Features:                                   Just as real cow's excrete waste, so will The Gut. This will be collected in our seprate, state of the
                                                                                                    art, stainless steel tank. Companies who own The Gut will have the option of using it as fertilizer, or
                                                        1. Conveyor belt to have food scraps
                                                                                                    selling it, depending on their preference.
                                                        easily transported into the four chambers
                                                        2. Four chambers inside a stainless steel
                                                        tank that contain a mixture of water and
Produc




                                                        cow dung which has enzymes/bacteria
                                                        to break down food and create meth-
                                                                                                                                                         Environmental benefits:
                                                        ane
                                                                                                                                                         - It will reduce food waste produced nation-
                                                        3. A tank containing the “feces” and
                                                                                                                                                         wide by 25%
                                                        indigestible items that can be used as
                      2. Four Chambers                                                                                                                   - It will reduce the consumption of harmful
                                                        fertilizer
                                                                                                                                                         fossil fuels currently being used as an energy
                                                        4. An electrical generator that will con-
                                                                                                                                                         source
 t Inform




                                                        vert the methane into electricity to
                                                                                                                                                         - It will create organic fertilizer which is much
                                                        power buildings or equipment
                                                                                                                                                         better than commercial fertilizer




                                                                                                                                                       Consumer Benefits
    ation




                                                                                                                                                       -Turns your trash into electricty
                                                                                                                                                       - Provide a rich, organic fertilizer from the
                                                                                                                                                       digested wastes
                                                                                                                                                       - Amazingly convenient
                                                                                                                                                       - Easy to use
                                                                        4. Electric Generator
                                         3. Collective Tank
Opportunity Assessment
                                                                                                             Food scraps make up 17% of what we send to landfills. When we contribute more
     A staggering 40% of all food produced in America gets mindlessly
                                                                                                             trash to landfills we are greatly contributing to the significant and growing problem of
     thrown away which accounts for 29 million tons of food waste
                                                                                                             Global Warming. The more trash, especially food waste, that sit and rot in a landfill,
     each year. Millions of tons of fruit and vegetables rot in fields and
                                                                                                             the more massive amounts of harmful toxins get emitted into Earth's atmosphere. This
     orchards or are plowed over each year. Some of these edible crops
                                                                                                             is why Methane Electrical has come up with an innovative solution on decreasing
     are left behind because they are misshapen or discolored. Major
                                                                                                             food waste in the world, resulting in less trash being sent to landfills and cleaner air.
     retail grocery chains are more likely to throw away fruits, vegetables
     and even entire hams and roasts than donate to distribution cen-
                                                                                                             With The Gut, companies, farmers, restaurants, and institutions will be provided a
     ters or use it for other useful alternatives Although federal and state
                                                                                                             quick and convenient way to dispose of their food waste, while also receiving some-
     laws protect grocers from liability, many stores expressed concerns
                                                                                                             thing back. Molded after a cow’s digestive system, the organic food waste will pass
     that donated food could sicken recipients, even if it has yet to
                                                                                                             through four chambers and with the help of enzymes and bacteria, get converted
     reach its expiration date.
                                                                                                             into methane and transported into the electrical generator, providing an electrical
                                                                                                             source to power a company’s building or equipment. Furthermore, just as real cow’s
                                                                                                             excrete their waste, so will our machine. Farmers will be able to use it as organic
                                                                                                             fertilizer, or other companies can sell it, depending on their preference. With The Gut,
                                                                                                             companies can take a step toward ecological self-sufficiency by producing some of
Market




                                                                                                             their fuel and fertilizing needs using a digester to convert their very own trash.
 ing Ana




                                         Institutions such as schools, hospitals, or prisons have colossal
                                         amounts of food that are intended for students, pateints, and
                                         inmates, however tons of the left over food get wasted with no
   lysis




                                         valuable place to go. Restaurants alone dump tens of thousands
                                         of tons of edible food every year. A vast majority of the nations
                                         restaurants and eateries don’t do anything useful with their food
                                         and mindlessly haul it to landfills.
Competitive Analysis
Methane Electrical stands out compared to any other potential competitors. We provide
top service and an amazing product that produces Methane which is the cleanest burn-               Methane Electrical will have limited negative effects to the environment and to humans.

ing fuel. When consumers buy our product over any other device similar to ours, they can           All our machine, “the gut”, needs is grass to produce methane that can be used as an

be rest assured that The Gut will do its job disposing their food waste and providing them         energy source. We won’t need to upset plant diversity or contribute to more deforesta-

with electricity, while also helping the environment.                                              tion. We will be getting our grass from open fields which will not interfere with any other
                                                                                                   species. Using methane as an energy source will also not harm the environment as much
Sapphire Energy is a company that uses sunlight, carbon dioxide, and their main com-
                                                                                                   as other alternative fuels. Methane is the cleanest burning fuel with the only byproducts
ponent, algae, to produce gasoline, diesel and jet fuel. This poses a potential competitor
                                                                                                   being water and carbon dioxide. In comparison to Sapphire Energy, Methane Electri-
because they are similarly making an alternative fuel source like our company. They pro-
                                                                                                   cal will not need to pay extensive amounts of money to produce our biofuel. Using our
duce “green” gasoline from a synthetic crude oil made from algae. According to Sapphire
                                                                                                   methane for an alternative fuel is clearly the greenest and most effective way.
Energy, this “green crude” meets fuel quality standards and is compatible with existing en-
ergy fuels. Although this may seem promising, oil extraction from algae is a much debated
topic because it is currently connected with significant costs. Environmental effects extract-                                     Sapphire Energy     Power Master         Methane Electrical
                                                                                                   Clean Alternative Fuel
ing oil from algae is also a controversial topic because some environmentalist think that the
solvents used to extract oil can be very harmful to humans.                                        Meets Air Quality Standards


                                                                                                   Conducts Electricity


                                                                                                   Produces Organic Fertilzer




Another potential competitor is a device called the Recyclone Powermaster created by
Inergy Plus Technologies. The ReCyclone is a universal recycling system, recycling the world's
wastes. The recyclone grinds up waste to be recycled or burned for electricty. It turns agri-
cultural waste into compost and organic fertilizer. It grinds the waste using a 200 to 400 elec-
tric motor. The recylclone's moving arm can spin as fast as 650 miles per hour. The recyclone
can extract the gold from circuit boards. Circuit boards can contain between 80 to 1500
grams of gold, which is up to 800 times the concentration of gold found in gold ore.
Customer Profile                                                                                                     Beyond, capitalization and processing factories,
Methane Electrical’s “The Gut” mainly targets
                                                            Methane Electrical’s primary target is Food Pro-         Methane Electrical’s minor targets are farm lands.
to companies or institutions who generate food
                                                            cessing factories, due to they are the biggest           Farm lands use fertilizers containing phosphorous
waste, or food manufacturing and processing
                                                            contributors, and Institutions and Restaurants,          and nitrogen oxide, which with rain fall it leads to the
facilities, schools, supermarkets, hospitals, pris-
                                                            are our secondary consumers of “The Gut.” Our            ocean creating algae on the surface of the ocean,
ons, restaurants, and food courts. Food service
                                                            customers will also benefit from “The Gut” be-           thus blocking the sun light resulting in killing everything
providers (e.g., supermarkets, institutions, restau-
                                                            cause, it will reduce the amount of food waste           below, i.e. coral, fish, sea plants, etc. Farmers can feed
rants) commonly produce large quantities of
                                                            they produce, and when it is converted to Meth-          our product the grass they have, and producing their
food waste each day. These food service provid-
                                                            ane, the gas can be used to power their busi-            own, clean fertilizer and leading to less algae forming
ers are considered, large-scale food waste gen-
                                                            ness/institutions. With the US producing 34 tons         on ocean surfaces, also using the Methane to power
erators, which the EPA encourages to find a way
                                                            of food waste, Food Processing factories with 5.1        their farm. Alongside with clean fertilizer, farmers will
to use the waste in a productive manner. The US
                                                            tons of food waste, Institutions producing 3.3 tons      have a better environment within their farm. Their grass
alone, produces 34 tons of food waste, in which
                                                            of waste, and Restaurants with 1.9 tons.                 and stock will be cleaner, due to the fertilizer. And the
are separated between the three groups.
                                                                                                                     farmers will not waste money on fertilizer, because they
                                                                                                                     will have their own, and will have more to have better
Data shows how much food waste each group
                                                                                                                     equipment for themselves.
produces; Food Processing factories are the big-
                                                          15.00
gest contributors by producing, 15 tons of waste.
                                                                                                                         20.0%
As for Institutions, i.e. Schools, Hospitals, and Pris-
ons, produce 10 tons, and Restaurants produce             11.25

9 tons.                                                                                                                   15.0%
                                                           7.50

                                                                                                                           10.0%
                                                            3.75

                                                                                                                             5.0%
                                                                  0                                    Restaurants
                                                                                        Institutions
                                                                      Food Processing
                                                                                                                                0%
                                                                                                                              Algae on the Oceanʼs Surface
                                                                       Food Waste before “The Gut,”                         Algae on the Ocean’s Surface
                                                                       Food Waste after “The Gut.”                          Algae after “The Gut”
Product:
     Methane Electrical will manufacture a mechanical version of the cow's digestive system,
     that will reduce the amount of food or organic waste in the US. Made from stainless steel,
     the gut will have four chambers containing the enzymes in a cow's digestive system. And
     the waste can be fed into one end of the gut and undergo the same process as cows
     do when they consume food. This will result in methane that is able to conduct electricity
     through an attachable generator, and organic fertilizer which can be used to the consum-
     ers advantage, either selling it or using it for themselves. Our product can last a lifetime,
     however the steel is expected to rust and subside, and Methane Electrical will replace the
     steel product and restore the whole device if needed.


     Price:
     Pricing of the Gut will vary depending which size you select, small ($10000), medium
     ($20000) or large (&50000). However there will be available discounts if consumer will
Market




     come into headquarters, watch the demonstration of the device and but immediately up
     front. The discount will go up to 20% price will vary depending on size.




                                                                                                     Placement:
                                                                                                     Initially, the gut will be located at headquarters, however when purchased the gut will ne
                                                                                                     shipped in order to spread the device throughout the nation. Trained sellers/technicians will
 ing Pla




                                                                                                     then be available on call for any technical difficulties or general question. Methane Electri-
                                                                                                     cal will not be distrubing The Gut to retail stores, and we will be our own distributors.


                                                                                                     Promotion:
                                                                                                     A majority of our marketing funds will go into the creation of our promotion team.We will
                                                                                                     be hiring a group of highly skilled and sociable people who’s main job will be to make
   n




                                                                                                     Methane Electrical known. This will include appearances on the news where we discuss the
                                                                                                     various features and benefits of The Gut. In addition, demonstrations for the product will
                                                                                                     be displayed at trade shows where an area will be dedicated to the Gut and everyone
                                                                                                     can see the features. We will also have our promotion team gather people from various
                                                                                                     companies and bring them to our headquarters to view The Gut and get more information
                                                                                                     about it.
Price and Sales Model:
            Methane Electrical will have three sizes of The Gut that vary in cost. The smallest Gut will   Cost of Good:
            be priced at $10,000, our medium Gut will be priced for $20,000, and the large Gut will be     For the purpose of this project it is assumed that the cost of goods for our company’s product
            50,000. Methane Electrical is its own distributor, therefore not needing a retail price and    comprises 40% of our revenue and is composed of the following individual items: stainless steel
            being sold at wholesale price.We determined the prices for these buy estimating how            imported from China, rubber for the conveyor belts, as well as rubber latex to make the four
            much it would cost to make the product itself, while also marking up the price in order to     chambers in The Gut. Stainless steel will cost about 33 cents per pound. Our rubber will be recy-
            reach maximum profit. We plan to sell The Gut to companies, restaurants, and institutions      cled from tires which charges 17 cents per pound while latex will cost around $2.50 per pound.
            such as schools, prisons, and hospitals, that produce vast amounts of food waste. We plan
            to sell our product by showing our potential consumers the benefits and abilities of The
            Gut through the news, trade shows, and even inviting potential consumers to our main           Advertising and Marketing Expenses:
            headquarters to view a live demonstration. We will be attracting these people through our      For the purpose of this project it is assumed that 20% of our operations budget will go towards
            promotional team. The small and medium Gut will be targted more towards smaller com-           sales and marketing, which is equivalent to $1 million dollars within the first year. We plan to target
            panies and restaurants, while the large Gut is focused on big food processing companies.       our potential customers through appearances on the news, where we will discuss the benefits and
                                                                                                           advantages of our product will have. Business will see us on the news also even even watch dem-
            Sales and Revenue:                                                                             onstrations in person at trade shows, where we will have an area dedicated to The Gut. In addition,
            Within the first five years of our company we plan to increase earnings and production to      businesses can even come to our headquarters and see the demonstration and decide if they are
            get maximum profit. With the first year only focusing on introducing The Gut to potential      interested to purchase our product.
Financ




            companies, we predict that in the second year we will already be selling 800 of the small
            Gut, 300 of the medium Gut, and at least 1 for the large gut. Our total revenue for our sec-        Net Profit
            ond year will be around $11 million. On our fifth year mark we plan on selling 6,100 of the
            small Gut, 1,700 of the medium Gut, and 35 of the large Gut. Our total revenue for the fifth
            year will then be around a whopping, $96,750,00. This expresses a remarkable growth from
            year one alone to year five, as seen on the fincial chart. We’ve decided to focus much of
 ial Plan




            our sales on the small and medium Gut because smaller businesses such as restaurants and
            institutions like hospitals and prisons are more prevalent and would be likely to buy these
            more convenient sizes of the Gut. In result, our company has chosen to rise up the price of
            the largest Gut since we will only be selling very few to big companies per year.

             Net Revenue Growth
                                                                                                                                                                        Years
                                                                                                                               Profits display from year 1 to year 5.




                                                                Years
                       Revenue Growth from year 1 to year 5.
Sources and Uses of Funds:
Our operating money will come from our sales income and the investment made by our
series A investor. In addition, about a million dollars has come from each of the four found-
ers. Our Series A investor has granted us $6.5 million dollars. This represents 45% ownership
of Methane Electrical. We plan on spending this money on advertising The Gut, renting a                Financial Projection Model
building for our headquarters, hiring laborers, and paying for the overall production of the
Gut. In order to continue with our company, we are seeking for our Series B funding to start
at $2,000,000. This represents 30% ownership of Methane Electrical. As seen on the financial                                                                                                                     ]
                                                                                                        Financial Model
projections, the profit for our investors will be tremendous.
                                                                                                                                                          Year 1                  Year 2         Year 3              Year 4              Year 5
                                                                                                        Sales       Product/Revenue Source
                                                                                                             1      The Gut:small

Company Valuation:                                                                                                  Projected Units Sold
                                                                                                                    Sales Growth
                                                                                                                                                                     0             600            1,100
                                                                                                                                                                                                          83%
                                                                                                                                                                                                                     2,500
                                                                                                                                                                                                                                 127%
                                                                                                                                                                                                                                          6,100
                                                                                                                                                                                                                                                  144%

By the end of our fifth year Methane Electrical will be worth about $41 million. If our projec-              2      The Gut:Medium
                                                                                                                    Projected Units Sold                             0             250             500                850                 1,700
tions hold true, an investment of $6.5 million in Series A would get investors $18.5 million,                       Sales Growth                                                                          100%                   70%              100%

                                                                                                             3      the Gut:Large
which three times the amount they originally paid for. Furthermore, Series B investors would                        Projected Units Sold                             0              1               3                 10                   35
                                                                                                                    Sales Growth                                                                          200%                   233%             250%
get a remarkable $12 million return, with an investment of $2 million. This is six times the
                                                                                                        Income
amount that was invested. Again, if our projections hold, each founder will gain a profit of
                                                                                                        Gross Revenues
$2 million at the end of year five. With an investment of a million dollars, the four founders              1
                                                                                                            2
                                                                                                                  The Gut:small
                                                                                                                  The Gut:Medium
                                                                                                                                                                    $-              $6,000,000   $11,000,000          $25,000,000         $61,000,000
                                                                                                                                                                    $-              $5,000,000   $10,000,000          $17,000,000         $34,000,000
                                                                                                            3     the Gut:Large                                     $-                 $50,000      $150,000             $500,000          $1,750,000
will see a $6 million return, still representing a 15% ownership of Methane Electrical. With                      Total Gross Revenue                               $-             $11,050,000   $21,150,000          $42,500,000         $96,750,000

such good financial outcomes, Methane Electrical truly believes that there is no better                 Cost of Goods
                                                                                                             1     The Gut:small                                    $-              $2,400,000    $4,400,000          $10,000,000         $24,400,000
                                                                                                             2     The Gut:Medium
company to invest in.                                                                                        3     the Gut:Large
                                                                                                                                                                    $-
                                                                                                                                                                    $-
                                                                                                                                                                                    $2,000,000
                                                                                                                                                                                       $20,000
                                                                                                                                                                                                  $4,000,000
                                                                                                                                                                                                     $60,000
                                                                                                                                                                                                                       $6,800,000
                                                                                                                                                                                                                         $200,000
                                                                                                                                                                                                                                          $13,600,000
                                                                                                                                                                                                                                             $700,000
                                                                                                                   `                                                $-              $4,420,000    $8,460,000          $17,000,000         $38,700,000

                                                                                                                    Gross Profit                                   $-               $6,630,000   $12,690,000          $25,500,000         $58,050,000
                                                                                                                    Gross Margin                                   0%                    60.0%         60.0%                60.0%               60.0%
                                                                                                        Financing                             Founders       $750,000
                                                                                                                                      Friends & Family       $250,000
                                                                                                                                        Series A Round     $6,500,000
                                                                                                                                        Series B Round                              $2,000,000
                                                                                                                    Net Income                             $7,500,000               $8,630,000   $12,690,000          $25,500,000         $58,050,000
    Percentage of Shares




                                                                                                        Expenses
                                                                                                                    Product Development                    $5,200,000
                                                                                                                    Marketing                                $500,000               $4,000,000    $4,000,000           $6,000,000          $8,000,000
                                                                                                                    Company Formation                        $250,000
                                                                                                                    Operations (Fixed Cost)                $1,000,000               $4,440,000    $8,548,800          $17,170,976         $39,043,420
                                                                                                                                    Total Expenses         $6,950,000               $8,440,000   $12,548,800          $23,170,976         $47,043,420

                                                                                                        Profit
                                                                                                                    Net Profit (EBITDA)                  $(6,950,000)             $(1,810,000)   $141,200            $2,329,024         $11,006,580
                                                                                                                    Net Operating Margin                                                -16.4%        0.7%                  5.5%               11.4%

                                                                                                        Cash Flow
                                                                                                                    Beginning Balance                              0                 $550,000     $740,000              $881,200           $3,210,224
                                                                                                                    Ending Balance                         $550,000                 $740,000     $881,200            $3,210,224         $14,216,804



                                                                                                                                                              $12,000,000

                                                                                                                                                              $10,000,000
                           The pie chart displays the percentage each Investor and Founder receives.
                                                                                                                                                               $8,000,000

                                                                                                                                                               $6,000,000

                                                                                                                                                               $4,000,000

                                                                                                                                                               $2,000,000

                                                                                                                                                                         $-
                                                                                                                                                                                                                                               Row 50
                                                                                                                                                                              1              2               3               4             5
                                                                                                                                                               $(2,000,000)

                                                                                                                                                               $(4,000,000)

                                                                                                                                                               $(6,000,000)

                                                                                                                                                               $(8,000,000)
Manufacturing:
                                                                                                    The Gut will be manufactured right here in the United States making it more con-
                                                                                                    venient and effective to distribute amongst the different states. This will reduce
                                                                                                    transportation costs since we are not manufacturing The Gut overseas or in another
                                                                                                    country. Creating The Gut in the U.S. will also provide new jobs for many unem-
                                                                                                    ployed Americans. With the currently high rate of unemployment in America right
                                                                                                    now, Methane Electrical hopes to acquire many eager individuals to be apart of
                                                                                                    the production of The Gut.


                                                                                                    Transporting:
                                                                                                    The transportation of our product will include trucks that will bring The Gut to the lo-
                                                                                                    cation of the customer. This will pose an environmental problem because the large
                                                                                                    trucks we will be using will emit diesel soot, carbon monoxide, nitrogen dioxide, and
                                                                                                    sulfur dioxide which are toxins that are very harmful to Earth's atmosphere. Large
                                                                                                    trucks emit as much pollution as 150 cars. However, Methane Electrical plans to
                                                                                                    convert these trucks into using methane instead of diesel or gasoline because meth-
Life Cy




                                                                                                    ane's only byproducts consist of water and carbon dioxide when burned or used as
                                                                                                    fuel, which is much less detrimental to the environment.


                                                                                                    Using:
                                                                                                    The use of the Gut will not cause pollution to the environment because all possible
                                                                                                    pollutants from the the Gut will be contained, unless there is a malfunction with our
            As with any product that's made there is both negative and positive effects on the
  cle Ana




                                                                                                    state-of-the-art, stainless steel tanks, and methane leaks out. This would contribute
            environment. Although the production of The Gut inevitably comes with costs to the
                                                                                                    highly to Global Warming since methane is toxic when not burned for fuel usage.
            environment, Methane Electrical believes that the benefits from using our product
                                                                                                    The Gut could also possibly create unpleasant odors from the feces that will be
            will out weigh any negative effects that may come with the production of The Gut.
                                                                                                    produced, again, only if our stainless steel tanks malfunction and leakage occurs.

            Acquiring:                                                                              However, Methane Electrical is confident that our highly protective stainless steel
                                                                                                    tanks will not malfunction and release pollutants or bad odors. With the usage of
            Methane Electrical will be obtaining stainless steel from China since stainless still
                                                                                                    The Gut, companies will be able to take a step toward ecological self-sufficiency by
            from there is much cheaper. We will be transporting this by shipping boats which will
    lysis




                                                                                                    producing some of their fuel and fertilizing needs using The Gut to convert their own
            contribute to pollution because of the drastic amount of sulfur dioxide that will get
                                                                                                    wastes. The use of our product creates the perfect win-win situation.
            emitted into Earth's atmosphere by the boat itself. We will also need rubber latex
            to create the four chambers and passage tubes inside of The Gut. This will require
            harvesting the latex from trees, which may devastate habitats for different organ-
                                                                                                    Disposing:
                                                                                                    The enzymes and microbes in The Gut will last a lifetime and will never need to be
            isms. Methane Electrical will be purchasing the electrical generator as a whole
                                                                                                    touched or replaced. If the stainless steel tank happens to deteriorate or malfunc-
            entity, which will also need to be shipped to our manufacturing head quarters. Our
                                                                                                    tion, our highly skilled technicians will come to the customers location and fix it. The
            four chambers will contain enzymes and bacteria needed to break down the food
                                                                                                    Gut is 100% recyclable since it is only made of stainless steel and rubber which are
            waste which will come from a mixture of water and actual cow dung.
                                                                                                    both 100% recyclable.
Methane Electric Business Plan
Methane Electric Business Plan

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Methane Electric Business Plan

  • 1. METHANELECTRICAL Business Plan Competition 2012 a Digital Safari Greenbizz Company Mt. Diablo High School Concord, California 94520 Marily Abad | Dat Ngo Tyler Endo | Gabriela Arevalo
  • 2. We are Methane Electrical, a determined company run by four intelligent and driven individu- Mission Statement als who were inspired to find a solution to the growing problem of food waste. Methane Elec- To reduce the amount of food waste nationwide while also making companies trical aims to reduce the food waste and allow companies to take a step toward ecological ecologically self-sufficienct by providing them a way to create fuel and fertilizer self-sufficiency by producing some of their fuel and fertilizing needs using our product to con- using a digester to convert local wastes. Compa vert local wastes. Inspired by the structure and functions of a cow’s digestive system, Methane Electrical has created a device, affectionately called “The Gut” that converts organic food waste into methane. We have also incorporated an electrical generator to our product to ensure that the methane created from the food waste can be used effectively to power up a company’s building or equipment. Furthermore, just as cows excrete their feces, so will our machine. A separate tank attached to The Gut contains the feces which can be used as fertil- izer or can even be additionally sold depending on what the consumer decides to do with it. History n On a chilly winter night Marily Abad, and her long time business partner Tyler Endo, were at Jack’s y Profile We plan on making The Gut well known throughout a wide range of businesses by having Bar & Grill having a business meeting to discuss matters regarding their organizational work in Si- various methods of publicity. This will include, appearances on local and nationwide news erra Leone. As hours passed and the restaurant began to close, Marily and Tyler started walking stations discussing the features and benefits of purchasing The Gut. We will also be participat- towards the parking lot to their cars. On the way they saw the kitchen workers at Jack’s hauling ing in many trade shows to showcase our product and let as many business personnel know about 10 bags full of leftover food to the nearest dumpster. This sparked curiosity in Marily’s mind Execut about The Gut as possible. Methane Electrical also plans to provide demonstrations at our as she wondered where all of that leftover food goes. With this, Marily started a conversation with main headquarters so anyone who is interested in buying The Gut for their business will be able one of the workers and asked him why they couldn’t give the food to a homeless shelter to make to come in and get all the information needed in order to purchase the amazingly convenient good use of all that wasted food. In response, the worker said they couldn’t do anything with the Gut. food but throw it away and have it be sent to a landfill. What makes Methane Electrical stand out compared to any other potential competitors is Upon arriving home, Marily couldn’t shake the image of all that wasted food being thrown away, ive Sum that we provide top service and an amazing product that produces Methane which is the so she decided to do some research about food waste in the United States. What she found out cleanest burning fuel. When consumers buy our product over the ReCyclone or any other was quite alarming. 40% of all food waste produced in America is not eaten which amounts to device similar to ours, they can be rest assured that The Gut will do its job disposing their food more than 29 million tons of food, waste each year. She also found out that nationwide, food waste and providing them with electricity, while also helping the environment. scraps make 17% of what we send to landfills. Within the next day she called up her business partner, Tyler, along with two good friends she had met within the Digital Safari Academy, Dat Within the first five years of our company, Methane Electrical plans to increase earnings and Ngo and Gabriela Arevalo, and together they discussed how they could reduce food waste in production in order to get maximum profit. The prices of the three different Guts vary in cost America. depending on size. The small Gut is priced at $10,000, the medium Gut is priced at $20,000, mary while the large gut is priced at $50,000. With hours of brainstorming, research, and gallons of coffee, a light bulb finally flickered and the four individuals came up with a device they affectionally called “The Gut”. This device would Methane Electrical is requesting funds for initial production and distribution starting at turn organic food waste into methane by mimicking the digestive system of a cow. The methane $2,000,000. The profit that investors will make from our company will be tremendous, as seen created from The Gut could then be used for electricity, thus, giving birth to a new company on the financial projections. Any person who invests in our company will surely be pleased with called Methane Electrical. the income they will receive within the fifth year of selling The Gut.
  • 3. Meet the Executives Marily Abad is the driving force behind Methane Electrical. With three Tyler has always believed in hands-on learning and how years of experience in the Digital Safari Academy (DSA), she has ob- objects physically worked. A member of the Digital Sa- tained the necessary skills of communication, organization, and the fari Academy, Tyler uses the skills he has gained to cre- ability to diligently direct a group. In her first year in the DSA, Ms. Abad ate designs on three-dimensional computer programs took on her first leading role by managing a group of four, including her and then making those same designs come to life. In past current colleague, Tyler Endo, to create a country development plan years her has helped the current CEO of Methane Electri- for Sierra Leone which aims to help infants and mothers. Ms. Abad was cal, Marily Abad, in developing a country plan for Sierra also involved with a summer long internship program in which she had Leone that help s in giving medical attention to infants and to create web designs, logos, and brochures for specific clients. After mothers as well as educating expectant mothers on how to her experience with designing she became the creative director for properly give birth and take care of themselves while preg- Digital Safari Designs where she lead a group of five people to create nant. With his creativity, intelligence, hands-on ability, and his web content and a promotional video for the Cerebral Palsy Center compassion for people and the environment, Tyler makes for in Oakland. Her three years of experience in the DSA, as well as the Chief Executive Officer Chief Technical Officer an extremely well rounded Chief Technical Officer for Meth- many leadership positions she has had, and her exceptional ability ane Electrical. to delineate tasks, makes Ms. Abad outstandingly qualified for the position as the CEO for Methane Electrical. Dat Ngo has acquired skills in multimedia and creative process- Gabriela Arevalo has had a significant amount of experience work- ing from being in the DSA for three years. In his first year in the ing with numbers and statistics. She is extremely talented in com- Academy, he took on different roles such as creating paper ing up with innovative solutions to financial problems. Ms. Arevalo advertisements and leading a group to develop a country is in charge of cash flow, company liabilities, financial obligations, plan for Benin, Africa. In his second year, he became head and the expense control of the company. She has taken classes in marketing for the Northern California Family Center creat- that have made her more proficient in the work that she does, such ing different kinds of marketing content for that company. as Statistics and Calculus. Ms. Arevalo joined the Digital Safari Acad- Mr. Ngo also interned at Contra Costa Televsion as well as emy in 2009 to be able to work diligently with her peers. She has worked the Martinez Water Shed project, producing an advertise- with numerous amounts of companies and organizations assisting ment for Martinez Water Shed’s Car Wash Kit. He has taken them with heir financial needs. A combinations of her critical think- many roles of leadership, from being freshmen class presi- ing, determination, and out-going personality has made Ms. Arevalo dent to being Student Body President. In those years at the top choice to be the Chief Financial officer for Methane Electrical. Mt. Diablo High School, he gained a significant amount Marketing Director Chief Financial Officer of knowledge on how to appeal to different audienc- es. Over all, Mr. Ngo’s many skills make him perfect to be the Marketing Director for Methane Electrical.
  • 4. No longer will companies, farmers, restaurants, and institutions have to helplessly and mindlessly send their food scraps to non-environmentally friendly landfills. The Gut provides companies a quick and amazingly convenient way of disposing their organic food waste while also providing them with an electrical source and organic fertilizer. 1. Conveyor belt Inspired by a cow's digestive system, The Gut contains 4 chambers filled with enzymes ready to convert organic food waste into methane, which is the cleanest burning fuel source with its byproducts being only water and carbon dioxide. Once the food waste is converted it is then transported through the electrical generator which has the ability to attach to a building's elec- trical socket, or piece of equipment. Thus, having the ability for a building or a peice of equip- ment to be run on methane, all provided just from organic food waste. Features: Just as real cow's excrete waste, so will The Gut. This will be collected in our seprate, state of the art, stainless steel tank. Companies who own The Gut will have the option of using it as fertilizer, or 1. Conveyor belt to have food scraps selling it, depending on their preference. easily transported into the four chambers 2. Four chambers inside a stainless steel tank that contain a mixture of water and Produc cow dung which has enzymes/bacteria to break down food and create meth- Environmental benefits: ane - It will reduce food waste produced nation- 3. A tank containing the “feces” and wide by 25% indigestible items that can be used as 2. Four Chambers - It will reduce the consumption of harmful fertilizer fossil fuels currently being used as an energy 4. An electrical generator that will con- source t Inform vert the methane into electricity to - It will create organic fertilizer which is much power buildings or equipment better than commercial fertilizer Consumer Benefits ation -Turns your trash into electricty - Provide a rich, organic fertilizer from the digested wastes - Amazingly convenient - Easy to use 4. Electric Generator 3. Collective Tank
  • 5. Opportunity Assessment Food scraps make up 17% of what we send to landfills. When we contribute more A staggering 40% of all food produced in America gets mindlessly trash to landfills we are greatly contributing to the significant and growing problem of thrown away which accounts for 29 million tons of food waste Global Warming. The more trash, especially food waste, that sit and rot in a landfill, each year. Millions of tons of fruit and vegetables rot in fields and the more massive amounts of harmful toxins get emitted into Earth's atmosphere. This orchards or are plowed over each year. Some of these edible crops is why Methane Electrical has come up with an innovative solution on decreasing are left behind because they are misshapen or discolored. Major food waste in the world, resulting in less trash being sent to landfills and cleaner air. retail grocery chains are more likely to throw away fruits, vegetables and even entire hams and roasts than donate to distribution cen- With The Gut, companies, farmers, restaurants, and institutions will be provided a ters or use it for other useful alternatives Although federal and state quick and convenient way to dispose of their food waste, while also receiving some- laws protect grocers from liability, many stores expressed concerns thing back. Molded after a cow’s digestive system, the organic food waste will pass that donated food could sicken recipients, even if it has yet to through four chambers and with the help of enzymes and bacteria, get converted reach its expiration date. into methane and transported into the electrical generator, providing an electrical source to power a company’s building or equipment. Furthermore, just as real cow’s excrete their waste, so will our machine. Farmers will be able to use it as organic fertilizer, or other companies can sell it, depending on their preference. With The Gut, companies can take a step toward ecological self-sufficiency by producing some of Market their fuel and fertilizing needs using a digester to convert their very own trash. ing Ana Institutions such as schools, hospitals, or prisons have colossal amounts of food that are intended for students, pateints, and inmates, however tons of the left over food get wasted with no lysis valuable place to go. Restaurants alone dump tens of thousands of tons of edible food every year. A vast majority of the nations restaurants and eateries don’t do anything useful with their food and mindlessly haul it to landfills.
  • 6. Competitive Analysis Methane Electrical stands out compared to any other potential competitors. We provide top service and an amazing product that produces Methane which is the cleanest burn- Methane Electrical will have limited negative effects to the environment and to humans. ing fuel. When consumers buy our product over any other device similar to ours, they can All our machine, “the gut”, needs is grass to produce methane that can be used as an be rest assured that The Gut will do its job disposing their food waste and providing them energy source. We won’t need to upset plant diversity or contribute to more deforesta- with electricity, while also helping the environment. tion. We will be getting our grass from open fields which will not interfere with any other species. Using methane as an energy source will also not harm the environment as much Sapphire Energy is a company that uses sunlight, carbon dioxide, and their main com- as other alternative fuels. Methane is the cleanest burning fuel with the only byproducts ponent, algae, to produce gasoline, diesel and jet fuel. This poses a potential competitor being water and carbon dioxide. In comparison to Sapphire Energy, Methane Electri- because they are similarly making an alternative fuel source like our company. They pro- cal will not need to pay extensive amounts of money to produce our biofuel. Using our duce “green” gasoline from a synthetic crude oil made from algae. According to Sapphire methane for an alternative fuel is clearly the greenest and most effective way. Energy, this “green crude” meets fuel quality standards and is compatible with existing en- ergy fuels. Although this may seem promising, oil extraction from algae is a much debated topic because it is currently connected with significant costs. Environmental effects extract- Sapphire Energy Power Master Methane Electrical Clean Alternative Fuel ing oil from algae is also a controversial topic because some environmentalist think that the solvents used to extract oil can be very harmful to humans. Meets Air Quality Standards Conducts Electricity Produces Organic Fertilzer Another potential competitor is a device called the Recyclone Powermaster created by Inergy Plus Technologies. The ReCyclone is a universal recycling system, recycling the world's wastes. The recyclone grinds up waste to be recycled or burned for electricty. It turns agri- cultural waste into compost and organic fertilizer. It grinds the waste using a 200 to 400 elec- tric motor. The recylclone's moving arm can spin as fast as 650 miles per hour. The recyclone can extract the gold from circuit boards. Circuit boards can contain between 80 to 1500 grams of gold, which is up to 800 times the concentration of gold found in gold ore.
  • 7. Customer Profile Beyond, capitalization and processing factories, Methane Electrical’s “The Gut” mainly targets Methane Electrical’s primary target is Food Pro- Methane Electrical’s minor targets are farm lands. to companies or institutions who generate food cessing factories, due to they are the biggest Farm lands use fertilizers containing phosphorous waste, or food manufacturing and processing contributors, and Institutions and Restaurants, and nitrogen oxide, which with rain fall it leads to the facilities, schools, supermarkets, hospitals, pris- are our secondary consumers of “The Gut.” Our ocean creating algae on the surface of the ocean, ons, restaurants, and food courts. Food service customers will also benefit from “The Gut” be- thus blocking the sun light resulting in killing everything providers (e.g., supermarkets, institutions, restau- cause, it will reduce the amount of food waste below, i.e. coral, fish, sea plants, etc. Farmers can feed rants) commonly produce large quantities of they produce, and when it is converted to Meth- our product the grass they have, and producing their food waste each day. These food service provid- ane, the gas can be used to power their busi- own, clean fertilizer and leading to less algae forming ers are considered, large-scale food waste gen- ness/institutions. With the US producing 34 tons on ocean surfaces, also using the Methane to power erators, which the EPA encourages to find a way of food waste, Food Processing factories with 5.1 their farm. Alongside with clean fertilizer, farmers will to use the waste in a productive manner. The US tons of food waste, Institutions producing 3.3 tons have a better environment within their farm. Their grass alone, produces 34 tons of food waste, in which of waste, and Restaurants with 1.9 tons. and stock will be cleaner, due to the fertilizer. And the are separated between the three groups. farmers will not waste money on fertilizer, because they will have their own, and will have more to have better Data shows how much food waste each group equipment for themselves. produces; Food Processing factories are the big- 15.00 gest contributors by producing, 15 tons of waste. 20.0% As for Institutions, i.e. Schools, Hospitals, and Pris- ons, produce 10 tons, and Restaurants produce 11.25 9 tons. 15.0% 7.50 10.0% 3.75 5.0% 0 Restaurants Institutions Food Processing 0% Algae on the Oceanʼs Surface Food Waste before “The Gut,” Algae on the Ocean’s Surface Food Waste after “The Gut.” Algae after “The Gut”
  • 8. Product: Methane Electrical will manufacture a mechanical version of the cow's digestive system, that will reduce the amount of food or organic waste in the US. Made from stainless steel, the gut will have four chambers containing the enzymes in a cow's digestive system. And the waste can be fed into one end of the gut and undergo the same process as cows do when they consume food. This will result in methane that is able to conduct electricity through an attachable generator, and organic fertilizer which can be used to the consum- ers advantage, either selling it or using it for themselves. Our product can last a lifetime, however the steel is expected to rust and subside, and Methane Electrical will replace the steel product and restore the whole device if needed. Price: Pricing of the Gut will vary depending which size you select, small ($10000), medium ($20000) or large (&50000). However there will be available discounts if consumer will Market come into headquarters, watch the demonstration of the device and but immediately up front. The discount will go up to 20% price will vary depending on size. Placement: Initially, the gut will be located at headquarters, however when purchased the gut will ne shipped in order to spread the device throughout the nation. Trained sellers/technicians will ing Pla then be available on call for any technical difficulties or general question. Methane Electri- cal will not be distrubing The Gut to retail stores, and we will be our own distributors. Promotion: A majority of our marketing funds will go into the creation of our promotion team.We will be hiring a group of highly skilled and sociable people who’s main job will be to make n Methane Electrical known. This will include appearances on the news where we discuss the various features and benefits of The Gut. In addition, demonstrations for the product will be displayed at trade shows where an area will be dedicated to the Gut and everyone can see the features. We will also have our promotion team gather people from various companies and bring them to our headquarters to view The Gut and get more information about it.
  • 9. Price and Sales Model: Methane Electrical will have three sizes of The Gut that vary in cost. The smallest Gut will Cost of Good: be priced at $10,000, our medium Gut will be priced for $20,000, and the large Gut will be For the purpose of this project it is assumed that the cost of goods for our company’s product 50,000. Methane Electrical is its own distributor, therefore not needing a retail price and comprises 40% of our revenue and is composed of the following individual items: stainless steel being sold at wholesale price.We determined the prices for these buy estimating how imported from China, rubber for the conveyor belts, as well as rubber latex to make the four much it would cost to make the product itself, while also marking up the price in order to chambers in The Gut. Stainless steel will cost about 33 cents per pound. Our rubber will be recy- reach maximum profit. We plan to sell The Gut to companies, restaurants, and institutions cled from tires which charges 17 cents per pound while latex will cost around $2.50 per pound. such as schools, prisons, and hospitals, that produce vast amounts of food waste. We plan to sell our product by showing our potential consumers the benefits and abilities of The Gut through the news, trade shows, and even inviting potential consumers to our main Advertising and Marketing Expenses: headquarters to view a live demonstration. We will be attracting these people through our For the purpose of this project it is assumed that 20% of our operations budget will go towards promotional team. The small and medium Gut will be targted more towards smaller com- sales and marketing, which is equivalent to $1 million dollars within the first year. We plan to target panies and restaurants, while the large Gut is focused on big food processing companies. our potential customers through appearances on the news, where we will discuss the benefits and advantages of our product will have. Business will see us on the news also even even watch dem- Sales and Revenue: onstrations in person at trade shows, where we will have an area dedicated to The Gut. In addition, Within the first five years of our company we plan to increase earnings and production to businesses can even come to our headquarters and see the demonstration and decide if they are get maximum profit. With the first year only focusing on introducing The Gut to potential interested to purchase our product. Financ companies, we predict that in the second year we will already be selling 800 of the small Gut, 300 of the medium Gut, and at least 1 for the large gut. Our total revenue for our sec- Net Profit ond year will be around $11 million. On our fifth year mark we plan on selling 6,100 of the small Gut, 1,700 of the medium Gut, and 35 of the large Gut. Our total revenue for the fifth year will then be around a whopping, $96,750,00. This expresses a remarkable growth from year one alone to year five, as seen on the fincial chart. We’ve decided to focus much of ial Plan our sales on the small and medium Gut because smaller businesses such as restaurants and institutions like hospitals and prisons are more prevalent and would be likely to buy these more convenient sizes of the Gut. In result, our company has chosen to rise up the price of the largest Gut since we will only be selling very few to big companies per year. Net Revenue Growth Years Profits display from year 1 to year 5. Years Revenue Growth from year 1 to year 5.
  • 10. Sources and Uses of Funds: Our operating money will come from our sales income and the investment made by our series A investor. In addition, about a million dollars has come from each of the four found- ers. Our Series A investor has granted us $6.5 million dollars. This represents 45% ownership of Methane Electrical. We plan on spending this money on advertising The Gut, renting a Financial Projection Model building for our headquarters, hiring laborers, and paying for the overall production of the Gut. In order to continue with our company, we are seeking for our Series B funding to start at $2,000,000. This represents 30% ownership of Methane Electrical. As seen on the financial ] Financial Model projections, the profit for our investors will be tremendous. Year 1 Year 2 Year 3 Year 4 Year 5 Sales Product/Revenue Source 1 The Gut:small Company Valuation: Projected Units Sold Sales Growth 0 600 1,100 83% 2,500 127% 6,100 144% By the end of our fifth year Methane Electrical will be worth about $41 million. If our projec- 2 The Gut:Medium Projected Units Sold 0 250 500 850 1,700 tions hold true, an investment of $6.5 million in Series A would get investors $18.5 million, Sales Growth 100% 70% 100% 3 the Gut:Large which three times the amount they originally paid for. Furthermore, Series B investors would Projected Units Sold 0 1 3 10 35 Sales Growth 200% 233% 250% get a remarkable $12 million return, with an investment of $2 million. This is six times the Income amount that was invested. Again, if our projections hold, each founder will gain a profit of Gross Revenues $2 million at the end of year five. With an investment of a million dollars, the four founders 1 2 The Gut:small The Gut:Medium $- $6,000,000 $11,000,000 $25,000,000 $61,000,000 $- $5,000,000 $10,000,000 $17,000,000 $34,000,000 3 the Gut:Large $- $50,000 $150,000 $500,000 $1,750,000 will see a $6 million return, still representing a 15% ownership of Methane Electrical. With Total Gross Revenue $- $11,050,000 $21,150,000 $42,500,000 $96,750,000 such good financial outcomes, Methane Electrical truly believes that there is no better Cost of Goods 1 The Gut:small $- $2,400,000 $4,400,000 $10,000,000 $24,400,000 2 The Gut:Medium company to invest in. 3 the Gut:Large $- $- $2,000,000 $20,000 $4,000,000 $60,000 $6,800,000 $200,000 $13,600,000 $700,000 ` $- $4,420,000 $8,460,000 $17,000,000 $38,700,000 Gross Profit $- $6,630,000 $12,690,000 $25,500,000 $58,050,000 Gross Margin 0% 60.0% 60.0% 60.0% 60.0% Financing Founders $750,000 Friends & Family $250,000 Series A Round $6,500,000 Series B Round $2,000,000 Net Income $7,500,000 $8,630,000 $12,690,000 $25,500,000 $58,050,000 Percentage of Shares Expenses Product Development $5,200,000 Marketing $500,000 $4,000,000 $4,000,000 $6,000,000 $8,000,000 Company Formation $250,000 Operations (Fixed Cost) $1,000,000 $4,440,000 $8,548,800 $17,170,976 $39,043,420 Total Expenses $6,950,000 $8,440,000 $12,548,800 $23,170,976 $47,043,420 Profit Net Profit (EBITDA) $(6,950,000) $(1,810,000) $141,200 $2,329,024 $11,006,580 Net Operating Margin -16.4% 0.7% 5.5% 11.4% Cash Flow Beginning Balance 0 $550,000 $740,000 $881,200 $3,210,224 Ending Balance $550,000 $740,000 $881,200 $3,210,224 $14,216,804 $12,000,000 $10,000,000 The pie chart displays the percentage each Investor and Founder receives. $8,000,000 $6,000,000 $4,000,000 $2,000,000 $- Row 50 1 2 3 4 5 $(2,000,000) $(4,000,000) $(6,000,000) $(8,000,000)
  • 11. Manufacturing: The Gut will be manufactured right here in the United States making it more con- venient and effective to distribute amongst the different states. This will reduce transportation costs since we are not manufacturing The Gut overseas or in another country. Creating The Gut in the U.S. will also provide new jobs for many unem- ployed Americans. With the currently high rate of unemployment in America right now, Methane Electrical hopes to acquire many eager individuals to be apart of the production of The Gut. Transporting: The transportation of our product will include trucks that will bring The Gut to the lo- cation of the customer. This will pose an environmental problem because the large trucks we will be using will emit diesel soot, carbon monoxide, nitrogen dioxide, and sulfur dioxide which are toxins that are very harmful to Earth's atmosphere. Large trucks emit as much pollution as 150 cars. However, Methane Electrical plans to convert these trucks into using methane instead of diesel or gasoline because meth- Life Cy ane's only byproducts consist of water and carbon dioxide when burned or used as fuel, which is much less detrimental to the environment. Using: The use of the Gut will not cause pollution to the environment because all possible pollutants from the the Gut will be contained, unless there is a malfunction with our As with any product that's made there is both negative and positive effects on the cle Ana state-of-the-art, stainless steel tanks, and methane leaks out. This would contribute environment. Although the production of The Gut inevitably comes with costs to the highly to Global Warming since methane is toxic when not burned for fuel usage. environment, Methane Electrical believes that the benefits from using our product The Gut could also possibly create unpleasant odors from the feces that will be will out weigh any negative effects that may come with the production of The Gut. produced, again, only if our stainless steel tanks malfunction and leakage occurs. Acquiring: However, Methane Electrical is confident that our highly protective stainless steel tanks will not malfunction and release pollutants or bad odors. With the usage of Methane Electrical will be obtaining stainless steel from China since stainless still The Gut, companies will be able to take a step toward ecological self-sufficiency by from there is much cheaper. We will be transporting this by shipping boats which will lysis producing some of their fuel and fertilizing needs using The Gut to convert their own contribute to pollution because of the drastic amount of sulfur dioxide that will get wastes. The use of our product creates the perfect win-win situation. emitted into Earth's atmosphere by the boat itself. We will also need rubber latex to create the four chambers and passage tubes inside of The Gut. This will require harvesting the latex from trees, which may devastate habitats for different organ- Disposing: The enzymes and microbes in The Gut will last a lifetime and will never need to be isms. Methane Electrical will be purchasing the electrical generator as a whole touched or replaced. If the stainless steel tank happens to deteriorate or malfunc- entity, which will also need to be shipped to our manufacturing head quarters. Our tion, our highly skilled technicians will come to the customers location and fix it. The four chambers will contain enzymes and bacteria needed to break down the food Gut is 100% recyclable since it is only made of stainless steel and rubber which are waste which will come from a mixture of water and actual cow dung. both 100% recyclable.