AlgaStar is pursuing a business model as a licensor of technology.  In this model, we intend to out-license our technology rather than own and operate algal fuel farms or processing plants. With this goal in mind, we intend to complete a pilot project and a demonstration scale project as a proof-of-concept and design, plus a business development tool.  Obviously, some strategic alliances will emerge between multiple companies that own solutions in different parts of the equipment and technology value chain (e.g., an algal bio-reactor manufacturer, algal dewatering technology, oil extraction system, downstream fuel marketer). We also anticipate revenues from patent royalties or other forms of income or benefits derived from the potential results of our successful research and development activities.

Screen Shot 2013-03-18 at 10.01.49 PMTo this end, we intend to achieve commercialization of algal oil production in three phases over 24 to 48 months. While the entire program has been divided into three phases in order to identify clear milestones, this project is a 2-4 year plan to deploy an anticipated $30 million investment that will lead to the creation of a commercial-scale profit-generating algae biofuel plant.

Phase One: We expect to complete the current R&D efforts on the single 4000 gallon SolarMagnatronTM bioreactor unit by adding the remainder of the equipment and system control requirements and completing the remaining single unit production tests on system performance.  We anticipate this phase to require 4 to 9 months at an estimated cost of $1.5 million.

Phase Two: We will migrate from the pilot plant site to a new commercial site to enable us to add four additional bioreactors into the system for purposes of conducting pre-commercial tests of the SES Project technology.  This pilot plant will already be income producing as a significant amount of biomass will be generated daily in addition to being used for R&D purposes. We anticipate this phase to require 6 to 12 months at an estimated cost of $3.5 million.

Phase Three: We plan to initiate the construction on a single site of a commercial-scale SES demonstration project consisting of 200 SolarMagnatronTM units containing 1 million gallons of sea water committed to intense and continuous algal biomass production. We anticipate this phase to require 12 to 18 months to build at an estimated cost of $25 million plus land cost. 200 SolarMagnatronTM units are expected to require approximately 2 acres, with access to water and CO2.  Like for the previous phase, this will showcase and ultimately demonstrate AlgaStar technology and in-line integration on a commercial scale.

Completion of these three phases is subject to our obtaining requisite financing and successfully completing each phase of the commercialization process.

It is very possible that clients decide to in-license our technology from our pilot-plant demonstration stage as phase three will be, in the end, only a larger scale model of the pilot plant. However, it is important to AlgaStar’s mid- and long-term strategy to have access to a range of facilities (pilot and commercial scale plants). Indeed, as AlgaStar clients in-license our technology, we will need to constantly to update and improve our processes. Moreover, it will allow us to adapt and refine our bio-reactor to new strains of algae with specific benefits. Having these essential tools at our disposal will strategically position AlgaStar to respond quickly and efficiently to the needs and requirements of the industry as a whole.

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