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responsible organic

fish farms.

Seastar Organic*

Presented by Integrated Sustainability cc

Coho Salmon Farm

Fanny Bay, British Columbia, Canada

In Partnership with

University of British Coloumbia and The Depertment of Fsheries and Oceans Canada

In coopration with

“In the next decade, the majority of fish we eat will be farm-raised, not wild.”

September 5, 2013

SeaStar Organic* CLOSED SYSTEM AQUACULTURE (CSA)

Presented by Integrated Sustainability cc

_ Any estimates, forecasts, statements of intent, statements of opinion and projections contained in the Report have been prepared by

the authors of the Report. Neither Integrated Sustainability, SeaStar Organic*, JLH Consulting, nor any of its respective directors, officers, employees, affiliates, agents, advisors, or representatives make any promise, representation or warranty, expressed or implied, as to the

accuracy or completeness of the information contained in the Report. This Report does not purport to contain all of the information that may be required to evaluate a transaction. Any recipient hereof should conduct their own independent analysis of the opportunities

and the data contained or referred to in the Report.

* SeaStar Organic is the working title of this proposed project.

SeaStar Organic* responsible organic fish farms.

Presented by Integrated Sustainability cc SEASTAR ORGANIC Sept 2013 Sustainable Fish Farms

British Columbia, Canada Fanny Bay Coho Salmon Farm

Presented by Integrated Sustainability cc SEASTAR ORGANIC Sept 2013 Sustainable Fish Farms

British Columbia, Canada Fanny Bay Coho Salmon Farm

OUR MANDATE

SUSTAINABLE FISH FOR GENERATIONS TO COME

Aquaculture, or farming of fish and other seafood, holds great promise as a solution to the ever- increasing pressures on our ocean resources. Today, half of the seafood eaten in the U.S. is farmed, and the practice is growing fast. Just as we raise cattle and chickens to eat, we’re now raising seafood to meet the growing global demand. Fish are the most sustainable choice moving forward as 1.15 pounds of fish feed will yield 1 pound of edible meat. There is no other farming option that yields such efficient returns.

We believe, when the environment is considered and good practices are used, it’s possible to create sustainably farmed organic seafood. Our proposed land-based closed containment systems will offer the potential for substantial economic and social benefits but also has great potential for complex ecological impacts. The long-term sustainability of aquaculture depends on a balance and synergy of these costs and benefits.

Overall, maximizing the social and economic benefits of aquaculture continues to be the driver for, and focus of, both subsistence and industrial production.

SeaStar Organic believes that Aquaculture could be a solution to the ever-increasing pressures on our ocean resources and aims to create an organic, healthy, abundant alternative for everyone.

SeaStar Organic* responsible organic fish farms.

FORWARD - EXECUTIVE SUMMARY

This report documents an investigation into the feasibility of land-based closed containment aquaculture facility slated for Fanny Bay British Columbia, Canada.

Seastar Organic proposes to grow, process and distribute Coho Salmon Oncorhynchus Kisutch, also known as, Silver Salmon, to supply ready markets in the United States and Canada. Exclusive rights to proven Monterey Bay Aquarium “Super Green” technologies, a superior genetic strain, 100% certified organic fish feed, coupled with our team of industry experts in the science, construction and operations of land-based aquaculture has been secured to facilitate with planning, implementation and management of land-based operations.

Our proprietary land-based closed containment design presented would allow for substantial reductions in both capital and operating expenses.

The associated economics allow an investment of approximately $12 million to provision a farm that yields 1,000 MT of full-size 3 kg* of fillet fish per annum. This harvest allows revenue streams of between $9.5 million and $11.5 million per annum depending upon the harvest and supplementary crop production strategies that are adopted. Yearly operating costs are less than $3 million. Final annual income after costs ranges between $5.5 million and $ 6.5 million, also dependent upon harvest and supplementary harvest strategies.

Our plan proposes a four phase growth model commencing with a 1,000 annual metric ton (MT) facility and increasing to 5,000MT. We will accelerate the first phase by initiating the project at the smolt life stage instead

The 1,000 MT farm is comprised of multiple production modules which are bio- isolated to protect against total production loss in the event of an internal infectious disease outbreak that may occur due to pathogens introduced via egg- line or broodstock, or resulting from stress-inducing conditions. All water pathway mechanisms are designed optimal capital expenditure regime, as equipment pricing reaches economic scale for water pathway equipment, while oxygenation equipment reaches economic scale at farm size.

This executive summary proposes the building of Phase 1, a 1,000MT operation. The intent is to first demonstrate the viability of this fish farming technology on the island and once the model has been proven we would then proceed to Phase 2 and 3.

Consumers are more aware than ever of the

environmental and sustainability issues

associated with seafood.

A recent survey revealed that Americans believe

their seafood purchasing decisions impact ocean

health, and they are willing to buy and pay

more for seafood that is healthy and sustainable.

SeaStar Organic* responsible organic fish farms.

Presented by Integrated Sustainability cc SEASTAR ORGANIC Sept 2013 Sustainable Fish Farms

British Columbia, Canada Fanny Bay Coho Salmon Farm

BUSINESS MODEL RATIONALE

Our business model is founded on three fundamental certainties:

i. INCREASING GLOBAL DEMAND FOR SEAFOOD AS A HIGH PROTEIN FOOD The United Nations projects that a 100% increase in fish farming is necessary over the next ten years to maintain current growing demand (please see below for issues with most other current farming practices). In 2011, nearly 167 million metric tons of seafood worth more than $371 billion was consumed globally, over double the volume of a decade earlier, and this number is forecast to continue to rise. On average, each person on the planet is eating four times as much seafood as was consumed in 1950 and aquaculture has been the driving force behind the growth in this industry.

II. INABILITY OF WILD OCEAN STOCKS TO SUPPLY GROWING DEMAND FOR SALMON

Traditional fish stocks have collapsed due to over fishing and contamination from open net farming. In nearly one-third of all sea fisheries and the rate of decline is accelerating at the same time that demand is growing. International limits are set lower every year for the allowable fishable salmon, however the proposed farm design will enable a sustainable yield for future generations.

iii. INHERENT PROBLEMS WITH CURRENT OPEN PEN (NET CAGE) FISH FARMING

Problems persist with traditional open pen fish farms that currently account for over 95% of all farmed salmon. Disease, toxins, waste and escapement and the resultant impact on the product quality and the oceans ecosystem have resulted in serious scrutiny being leveled at the industry bringing its long term viability into question. Survival rates of traditional open pen fish farming are as high as 75% and as low as 25%. Working with the UBC Department of Land and Food Systems we’ve developed a systems that consistently yields a survival rate above 95%.

SeaStar Organic* responsible organic fish farms.

Presented by Integrated Sustainability cc SEASTAR ORGANIC Sept 2013 Sustainable Fish Farms

British Columbia, Canada Fanny Bay Coho Salmon Farm

OUR ADVANTAGES

Working closely with UBC and the Canadian Department of Fisheries and Oceans as well as propriety technology exclusive to the project enables the following advantages over the rest of the market:

A 100% closed containment system which inherently avoids contamination; free of any contaminants, antibiotics, certified “super green” CSA technology, a unique freshwater strain of wild Coho; the only DFO Certified disease free genetic strain of Coho. fastest growth rate in the industry; fish available every 13 weeks, Fish certified 100% organic and Montery Bay Aquarium’s “Super Green”, (highest rating in the industry), rich in colour and flavour while also high in natural anti-oxidants and Omega 3 oil, proprietary sustainable, organic, DHA enhanced feed; sourced within 100 miles of the project site.

i. CLOSED CONTAINMENT SOLUTION

The closed containment system proposed for the Fanny Bay project is a proven and viable technology. Indeed, the proprietary technology proposed is unique in the world for its ability to recycle 98% of the water used as well as exhibiting the lowest power draw.

The ability to control the temperature year round, reduce and potentially eliminate diseases and parasites and control oxygen and carbon dioxide, results in the fish growing to harvest size six months sooner than it takes in an ocean net-cage. Because of these advantages, as well as advances in the technology itself over the last several years, closed containment has become widely regarded by scientists, conservationists, some salmon farming companies and the public as a more responsible alternative to net-cage aquaculture.

ii. OUR UNIQUE “SUPER GREEN” TECHNOLOGY

SeaStar Organic has the rights to a patented Bio-Filter System developed by our Science and Technical Advisors, Dr. Scott McKinley and John Holder. Its unique operation and efficient engineering design employs a proprietary ‘Recirculating Aquaculture System’ (RAS) that can clean and recycle up to 99.9% of water used in the system while eliminating 100% of the waste matter. This technology further reduces electrical pumping and treatment costs to less than 2 kWh per kilogram of fish produced as compared with the industry average of 8 kWh per kilogram. This energy savings translates directly into significantly lower costs of production making our land-based operations competitive with the traditional net-cage system.

This proven system employs a proprietary technology offering the following advantages:

100% active filtration surface area per cubic foot of media 1/2 the size of standard bio-filters presently employed* Low maintenance cost and no recurring operating cost UV and Ozone water treatment Up to 99.9% re-circulated water Efficient oxygenation Power requirement is less than 50% of nearest competitor Production system is closed and does not discharge active chemicals or by-products

*There is no Bio-Filter system used in aquaculture today that provides for this level of operating efficiency and risk reduction while producing the highest quality product and yield in a cost effective and profitable business model.

SeaStar Organic* responsible organic fish farms.

Presented by Integrated Sustainability cc SEASTAR ORGANIC Sept 2013 Sustainable Fish Farms

British Columbia, Canada Fanny Bay Coho Salmon Farm

iii. OUR SUPERIOR GENETICS

Our farm will be stocked with a freshwater strain of Coho salmon originating from certified disease free strains. Furthermore, our genetically based breeding program will ensure that all individuals (salmon) on the farm will exhibit traits of enhanced and consistent growth and survivability. Our breeding will not involve GMO (genetically modified organisms) practices. In addition, our organic raised fish will be free of antibiotics and all contaminants. Because of the diversity of genetic material available to us from our breeding facility (sixty+ distinct families), we will maintain hybrid vigor over several decades. The genetic variation present in the population will be traced and allow the user to create breeding regimes that will optimize use of the genetic variation present on the farm to achieve our breeding goals.

Food traceability will become an important feature in the fish industry, similar to current requirements with other agricultural industries. To this end we will compile data into a farm management computer software database. The genetic data obtained from our fish will be used to generate a DNA barcode therein providing a measure of product traceability. In addition to a genetic management module, the software will also compile data on management of feed consumption, growth, water quality and other important criteria.

iv. IDEAL LOCATION

Reliability on reasonably priced land and access to clean water supply making B.C. the ideal location. Please refer to Appendix B. Property Description

Fanny Bay, British Columbia is advantageously provisioned with key attributes that will continue to attract and retain the aquaculture industry. The proposed farm location, siting and licensing was based on ecological principles, including the strictest of Environmental Impact considerations. The land parcel of 153 acres, strategically selected for this project meets all the requirements for a robust, profitable and expandable inland fish farm including;

a pathogen-free groundwater source both fresh and salt water wells on site, graded and cleared areas of over 30 acres, connected to a highway while also being shielded from the road for security, 20 minutes from Nanaimo ferry (transport route), area already world renown for oyster and other shell fish (in an environmentally protected bay), connected to major electrical and natural gas lines, regional low cost experienced labor.

v. HARVESTING PROTOCOLS; SEQUENTIAL HARVEST AND ACCELRATED GROWTH PLAN

Closed System Aquaculture (CSA) readily allows a continuous sequential harvest strategy to be employed. The fish are moved through the farm from smaller to larger water volumes as the fish grow, allowing to continuous sequential production. Continuous sequential production also allows for “plugging in” smolts half way into the squence to bring the project into a positive revenue position early (15 rather than 18 mos).

SeaStar Organic* responsible organic fish farms.

Presented by Integrated Sustainability cc SEASTAR ORGANIC Sept 2013 Sustainable Fish Farms

British Columbia, Canada Fanny Bay Coho Salmon Farm

vi. THE MONTERREY BAY AQUARIUM “SUPER GREEN” AND “BEST CHOICES” ACCREDITATION*

SeaStar Organic will be the only salmon to achieve Monterrey Bay’s “Super Green” status; a universal market distinguisher. Wild-caught Alaskan salmon are the only salmon listed as “Super Green”, no other salmon are considered sustainable by Seafood Watch with wild-caught BC salmon achieving a second ranking as a “Good Alternative.”

SeaStar Organic is committed to inspiring conservation of the oceans. To this we follow the recommendation of the, Seafood Watch® Criteria for Aquaculture, a program of the Monterrey Bay Aquarium, which researches and evaluates the sustainability of aquaculture products and shares these seafood recommendations with the public and other interested parties.

In addition, modification of our patented algal omega-3 super feed will ensure the product also maintains it’s label as “Super Green” and Certified Organic. These accreditations elevate our product beyond wild-stock due to the general healthfulness and high levels of omega-3 fatty acids.

* Combining the work of conservation and public health organizations, the Monterey Bay Aquarium has identified seafood that is “Super Green,” meaning that it is good for human health and does not harm the ocean. The Super Green list highlights products that are currently on the Seafood Watch “Best Choices” (Green) list, low in environmental contaminants and good sources of long-chain omega-3 fatty acids.

vii. AUTOMATION

To minimize labour costs and ensure that an accurate and regular feeding schedule is maintained, automated fish feeding systems are utilized. This supports fish health and maintains a low-stress environment. A computer monitoring system that measures on a minute-by-minute basis all water quality parameters. This allows oxygenation rates to be automatically adjusted or flow rates to remove waste to be increased rapidly in response to changes in water conditions.

viii. PROJECT POTENTIAL

There is a ready and enthusiastic market for organic Coho salmon grown in a closed containment environment. The Company has secured multiple letters of intent (LOI) from large wholesale companies to take 100% of our production up to 5,000 MT per year. Initially we will sell a blend of “head-on gutted” product and fillets.

Given this product is unique in the market place, the wholesale companies have advised to apply at 20 to 30% premium to the average market price of wild coho salmon. This premium has not been factored into the financial model. *Please refer to Appendix C for letters of intent. both capital and operating expenses.

SeaStar Organic* responsible organic fish farms.

Presented by Integrated Sustainability cc SEASTAR ORGANIC Sept 2013 Sustainable Fish Farms

British Columbia, Canada Fanny Bay Coho Salmon Farm

MARKET OVERVIEW

Progressive companies are making responsible seafood purchasing the norm rather than the exception.

Consumers are more aware than ever of the environmental and sustainability issues associated with seafood. A recent survey revealed that Americans believe their seafood purchasing decisions impact ocean health, and they are willing to buy and pay more for seafood that is healthy and sustainable.

The media is raising these issues with the public on a regular basis. This is true in both mainstream and trade publications. As a proxy for this expanded coverage, a simple survey of the frequency of the phrase “sustainable seafood” in the print media shows a dramatic increase between 2002 and 2008.

Leaders within the conservation community have developed a common vision for a future with sustainable seafood — a vision that major seafood buyers are embracing. Mainstream companies have removed unsustainable seafood items from their shelves.

Others are asking their suppliers where their seafood comes from and how it was fished or farmed. Most of the top grocery retailers and food service operators have recently developed sustainable seafood sourcing policies or guidelines that dictate from which fisheries and farms they will buy seafood.

Sustainably caught and farmed seafood has moved from a niche market to a priority of mainstream retailers, restaurants and food service operators. Restaurants, retailers and wholesalers anticipate significant growth in the percentage of their seafood coming from sustainable sources within five years (Seafood Choices Alliance, 2007).

Two of the largest food service companies in the U.S., Compass Group North America and ARAMARK, have made sustainable seafood commitments through agreements with the Monterey Bay Aquarium. Several leading supermarket retailers in the U.S. now have sustainable seafood sourcing policies in place; others will likely follow suit.

Continued on next page >>

SeaStar Organic* responsible organic fish farms.

Presented by Integrated Sustainability cc SEASTAR ORGANIC Sept 2013 Sustainable Fish Farms

British Columbia, Canada Fanny Bay Coho Salmon Farm

GLOBAL FISH CONSUMPTION IS ON THE RISE

3 billion people depend on fish for at least 15 percent of their average animal protein intake (FAO, 2011).

In the 1960s, the average person ate about 22 pounds of seafood each year; in 2009, the global average had risen to 38 pounds per year. 1 Over the next decade, demand for seafood is expected to grow by as much as 10 percent annually, or an additional 11 million tons per year (FAO, 2008), although the sluggish global economy has slowed the rate of increase in the last few years (FAO, 2011).

Though increases in per capita consumption have not been uniform around the world, seafood is becoming more popular in both developed and developing countries. In the developed world, there is already sizable demand for seafood produced to high standards of safety, freshness, convenience and sustainability.

During the last century, conventional wisdom was that the oceans’ far reaches supported a wealth of fisheries ripe for exploitation. Landings of wild fish rose steadily throughout the 20th century before hitting a plateau in the 1990s. Over this time period, the number of overfished stocks increased and the number of underfished and moderately fished fisheries decreased. Over the last decade, these trends have continued and the wild fisheries catch

has fallen slightly from its peak (FAO, 2011). Not all the seafood we catch is eaten by people. About 30 percent of the fish caught each year is ground up into fishmeal and fish oil, commodities fed to farmed fish, poultry, pigs and livestock (Malherbe, 2005; Alder et al., 2008). Over the last half-century, dramatic increases in farmed seafood have allowed global seafood consumption to increase despite the decline in wild-capture fish. In 1950, less than one million tons of fish were farmed per year; by 2009, production was more than 55 million tons, with a value of nearly $100 billion (FAO, 2011b).

Despite stagnating wild fish landings, total world seafood supply (for direct human consumption) rose to about 117 million tons in 2009, the highest figure on record — over seven times what it was in 1950 (FAO, 2011). The FAO predicts that by 2030 the world will need an additional 37 million tons of farmed fish per year to maintain current levels of per capita consumption (FAO, 2007). While it is possible that landings of wild fish will increase as we rebuild overfished stocks, future increases in global seafood production will almost certainly come from aquaculture. Indeed, a milestone is approaching: Humans will soon eat more seafood from farms than from the oceans (Naylor et al., 2009, OECD/FAO 2011). In geographic terms, global seafood production is dominated by Asia. China is by far the world’s largest producer of wild seafood, followed by Peru, Indonesia, the U.S., India, and Japan (FAO, 2011b). Asian countries collectively account for just over half of the global catch. This trend is even more dramatic for farmed fish: the Asia-Pacific region produces nearly 90 percent of all farmed fish, with China alone responsible for approximately two-thirds of the world’s aquaculture.

SeaStar Organic* responsible organic fish farms.

Presented by Integrated Sustainability cc SEASTAR ORGANIC Sept 2013 Sustainable Fish Farms

British Columbia, Canada Fanny Bay Coho Salmon Farm

THE INDUSTRY - THE FUTURE OF AQUA CULTURE

Growth in seafood supply from wild fisheries has stagnated; aquaculture is taking the lead.

Growth in global seafood supply has outpaced the world’s population growth since 1950. Since wild fishery landings hit a plateau in the 1990s, a boom in aquaculture has supported the increase in global seafood supply (FAO, 2011b; U.S. Census Bureau, 2011).

These numbers do not include illegal fishery landings, which may account for another 11 to 26 million tons. Non-food uses of fish include utilization of aquatic products for reduction to meal and oil, for feed and bait, for ornamental purposes, withdrawals from markets and any other non-food uses of fish production (e.g. fertilizers, medical uses, etc.).

SeaStar Organic* responsible organic fish farms.

Presented by Integrated Sustainability cc SEASTAR ORGANIC Sept 2013 Sustainable Fish Farms

British Columbia, Canada Fanny Bay Coho Salmon Farm

Presented by Integrated Sustainability cc SEASTAR ORGANIC Sept 2013 Sustainable Fish Farms

British Columbia, Canada Fanny Bay Coho Salmon Farm

CONSERVATION ALLIANCE

For most companies, it is a

challenge to define and institute a meaningful sustainable seafood

policy. To assist businesses, a

collaboration of 16 leading U.S.

and Canadian organizations,

called the Conservation Alliance

for Seafood Solutions (www.

solutionsforseafood.org),

developed the Common Vision for

Environmentally Sustainable Sea-

food. The Common Vision outlines

six clear steps companies can

take to develop a comprehensive

corporate policy on sustainable

seafood. Steps in the Common

Vision include: (1) make a

commitment to sustainability; (2)

collect data on the sustainability

of seafood products; (3) buy

environmentally responsible

seafood; (4) be trans-parent; (5)

educate customers, suppliers and

employees; and (6) engage in and

support policy reform that supports

the sustainable management

of fisheries and aquaculture operations.

Since its launch in 2008, more than

20 companies have pledged their

support for the Common Vision,

including Walmart, Overwaitea

Food Group, Compass Group

North America and Giant Eagle.

ASSOCIATIONS

The project was spawned from research being done by the University of British Columbia and the Canadian Department of Fisheries and Oceans (DFO). These groups have been working for three decades on this tested and proven fish feed and containment system. The Fanny Bay project would have the direct support of the DFO (currently the only pre-approved fish farming method in Canada) and the University of British Columbia Department of Land and Food Systems.

University of British Columbia Faculty of Land and Food Systems

As one of UBC’s three founding faculties, Land and Food Systems (formerly Agricultural Sciences) changed its name in 2005 to better reflect its interdisciplinary research and focus on sustainability. The importance of healthy and sustainable land and food systems cannot be underestimated as the foundation that touches almost every area of our lives and the lives of our local and global communities. Faculty researchers are focused on finding viable solutions to pressing global crises and are known worldwide for their innovation and leadership in areas such as dairy, aquaculture and wine research.

Canadian Department of FIsheries and Oceans

The Department’s vision for aquaculture is “to benefit Canadians, now and in the future, through the culture of aquatic organisms, while upholding the ecological and socio-economic values associated with Canada’s oceans and inland waters.”

Fisheries and Oceans Canada takes the lead in ensuring that aquaculture is managed sustainably across the country. The Department creates the conditions necessary for aquaculture to take place in a way that respects the environment and benefits everyone. 13

SeaStar Organic* responsible organic fish farms.

Presented by Integrated Sustainability cc SEASTAR ORGANIC Sept 2013 Sustainable Fish Farms

British Columbia, Canada Fanny Bay Coho Salmon Farm

Seastar Organic Presented by Integrated Sustainability cc

For Further information

Please contact Ahmad Chabaan

Project Liaison

[email protected] #1- 778-859-5495