Invest in Woodland Biomass Innovations

Table of Contents

1. Why Are We on Wefunder?
2. How Does Wefunder Support Our Project?
3. The Opportunity
4. The Solution
5. Operations
6. Forest Sustainability
7. Market
8. Capital Cost
9. ROI
10. Company Valuation

Appendix

1. Market Research
2. Advertising
3. Competition
4. Biomass
5. Biochar

Video & Information Links

Want the chance to hear a presentation and ask questions? Check out the event page to see upcoming webinars and public forums: https://www.woodlandbio.com/events

Watch a podcast interview with the Woodland BIO Founder, Luca Pandolfi, to learn more about his background and the company vision: https://www.woodlandbio.com/media

Watch the extended 10-minute version of our pitch, which includes a more detailed explanation of the engineering process: https://www.woodlandbio.com/for-investors

1 - Why Are We on Wefunder?

Instead of fundraising privately online or in closed-door meetings, we wanted to be open about our company and offer everyone the opportunity to invest in a project that will be a win-win-win-win, for the environment, the community, the economy, and investors. We hope you will join us on this journey to develop pathways for sustainable fuels that contribute to healthier ecosystems and communities.

2 - How Does Wefunder Support Our Project?

We are seeking investments to complete the last two phases of engineering on the project. The phases, cost, and deliverables are broken down in the above slide.

Once construction drawings and permits are in hand it becomes easier to raise the required construction and commissioning capital as institutional investors have the confidence needed to make multi-million dollar investments and grants that will be used to build the facility.

Our initial goal of $250,000 is the minimum that we need to move the project through phase two. Completing phase two would allow us to access a variety of public and private opportunities to finance phase 3. There is also the option to launch a second Wefunder campaign. Our ultimate goal is $2.5 million to complete all of the engineering in one process.

3 - The Opportunity

Current gasoline supply chains are linear, relying on complex transportation networks between extraction sites, refineries, and distributors that span the globe. After the fuel is burned there are no widely-implemented methods for recapturing CO2 released throughout the process. This all leads to excessive CO2 in the atmosphere that otherwise would have remained trapped underground.

4 - The Solution

Woodland BIO’s vision is to create local circular supply chains for carbon-neutral drop-in liquid fuels.

5 - Operations

By using renewable biomass the Woodland BIO system would use carbon that is already a part of the natural cycle, rather than extracting fossil fuels, which releases new carbon into the atmosphere. The scale of a single Woodland BIO facility was calculated to be the optimum commercial scale for under-cutting existing fossil fuels and minimizing risk. In other words: Woodland BIO gasoline will cost less than fossil fuels at the pump, and customers will save money by switching to this locally sourced and sustainable option.

This design was made in line with the environmental and economic philosophy of circular economies, learn more here: https://www.woodlandbio.com/circular-economy

The pilot plant is designed to convert low-grade woody biomass into sustainable gasoline, specifically using dirty wood chips made of secondary materials from sawmills and loggers around Tioga County, PA. This first Woodland BIO facility will use proven refining processes to create gasoline that meets existing RBOB specifications, meaning that it will work with existing vehicles and infrastructure.

Learn more about our sustainable gasoline here: https://www.woodlandbio.com/sustainable-gasoline

6 - Forest Sustainability

The material that will be fed into the system is known as “dirty wood chips”, an industry term for chips that include parts of a tree that are normally discarded like small diameter stems, bark, and tree tops. Creating a market for these materials not only supports the forest industry but also helps support the forest ecosystem by financing the extraction of unwanted and invasive species that pose significant problems to Pennsylvania's forest habitats.

You can learn more about Woodland BIO's positive impact on Pennsylvania's forests here: https://www.woodlandbio.com/forest-sustainability

7 - Market

According to the Energy Information Administration (EIA), around 2.12 million gallons of gasoline were consumed per day by Pennsylvania in 2019. At full capacity the first Woodland BIO system would be able to fill an estimated 2% of this market, leaving lots of room for expansion, and that is just looking at Pennsylvania. In the future, the same model can be replicated in practically all regions, and take advantage of the forms of biomass that are most widely available at the local level to produce the type of liquid fuel that is in the highest demand.

8 - Capital Cost

The following graph shows how the expected $250m total capital cost for the first system is broken out by phase. The initial $2.5 million in Phase A is the development cost and includes the work outlined in Section 2.

The cost estimates after engineering are based on quotes from our technology suppliers, and general construction estimates, however, the “±” at the end of each estimate indicates that this number might change during engineering.

Renewable Identification Numbers (RINs)

Before we can talk about how we make money back and achieve profitability, we have to discuss "RINs". They are an accounting system for the EPA’s Renewable Fuel Standard (RFS) program, implemented through the Energy Policy Act in 2005. The RFS requires that a certain percentage of the transportation fuel sold in the US contain blended renewable fuel. In cases where a blender cannot meet the required ratio of renewable fuel in their product, they have to purchase RINs to meet the requirement. RINs are generated by renewable fuel producers, like Woodland BIO, which gain a new source of revenue to finance the rapid expansion of renewable fuel production capacity. Estimates indicate that RINs should increase gasoline revenue by 100-150%. It will, however, add some bureaucratic hurdles, primarily on our supply, which would increase the cost of materials and administrative expenses slightly.

Overall, RINs are a net positive for the Woodland BIO, allowing the model to achieve the objective of the EPA program: rapid growth of sustainable fuel production capacity.

9 - ROI

The following chart explores the years, from the start of the operation, required to reach 100% ROI of an initial facility based on the wholesale price per gallon of gasoline and compares the results with and without RIN credits. We ran both scenarios to show how the project does not depend on the subsidy program to become profitable, however, the EPA program is still extremely beneficial for achieving profitability on a significantly shorter timeline.

10 - Company Valuation

The following graph models organic growth over the first 20 years at a $3/gallon price point, with no incentives, showing how profits would be invested into new facilities to increase the company’s valuation and profitability. The graph starts when engineering is complete because the timeline becomes more accurate after that point.

The first point of note, is that if you invest in engineering here through Wefunder you would be joining at the "you are here" sign, when the valuation is around $60m. If we are successful in building just the first facility, we would be adding approximately $250m in assets to the company valuation, which means if you invest in engineering and only wait the 3-4years to when we start operation you would be looking at an approximately 5X growth in the value of your shares.

The graph above then illustrates how the initial $250m investment for building the first facility would grow into over a $1b valuation without any further investments, over 20X gain in valuation for the Wefunder investors that finance engineering over 20 years. This is achieved by investing all profits into new facilities as soon as the cumulative profit permits, using the profits from previous facilities to self-finance future growth.

This shows the kind of expansion that can organically be achieved with the Woodland BIO system, without any incentives. However, the financial story becomes even more enticing when RINs are included in the growth calculus, as shown in the second graph below. Indeed, this kind of rapid growth in the production capacity of sustainable transportation fuels is the exact objective of the RIN program. If successful, Woodland BIO could be an example of success for the overall initiative.

The initial growth between now and starting operation of facility no. 1 is still 5X, but with RINs, the valuation would reach over 160X in 20 years, and that is if you peak growth at 5 facilities/year. Year 20 would be a crucial point for Woodland BIO, as the company will need to decide between adding facilities at a rate of X+2, or re-investing those funds into a research and development program to develop next-generation technology.

Questions? Contact us! Details above.

Appendix

A1 - Market Research

Internal market research indicates there are several motivations behind a customer’s choice in transportation fuel, and they loosely correlate with age group:

• 20-40 Are motivated primarily by environmental impact and are generally willing to pay more for sustainably sourced products.
• 60+ Are motivated primarily by price.
• 40-60 Can be motivated by price, impact, or, in some cases, functionality (what is best for my vehicle and requires the least long-term maintenance?).

By offering a product that is more sustainable, cheaper, and chemically identical to fossil fuel gasoline, Woodland BIO should appeal to all motivations.

However, even though it seems like a market fit on paper, there is always the final question of how a customer will react once they find out the gasoline at a pump was made from a tree: Even though the sign says it is gasoline, will they trust the product enough to put it in their tank?

Internal research indicates that yes, they will, but to independently verify a market study conducted by a third party is budgeted into Phase A.

A2 - Advertising

Woodland BIO will also have to raise awareness among end-consumers: coordinated marketing efforts to promote the benefits of Woodland BIO low-carbon fuels with pump-side banners and signs will be undertaken with the distributor. Online, direct marketing will encourage customers to fill up on Woodland BIO fuel at the partner gas stations while raising overall brand awareness. Sponsoring local non-profit organizations that align with company values will also provide valuable social proof of Woodland BIO’s good intentions in the community while raising brand awareness.

Target Market: Woodland BIO’s direct customers are gasoline retailers, who would buy the gasoline wholesale and distribute it using their existing gas stations. The retailers have three options for how to sell Woodland BIO gasoline listed in the slide above.

A3 - Competition

We have written a 5-part article about the challenges facing a 100% adoption of electric vehicles (EVs) and why we support a diversified approach to decarbonizing transportation, including the development of sustainable fuels. Read the articles here: https://www.woodlandbio.com/blog

A4 - Biomass

This same process can be adapted to work with a variety of sources of biomass in future systems, woody biomass is simply the best material to start with thanks to some key factors mentioned on the slide above. The graphic above is organized so that the types of biomass are in clockwise order of preference for future development, but the exact combination will be adapted on a regional basis, based on what type of material is most sustainably available directly around the new plant. You can learn more about biomass and the advantages of woody biomass here: https://www.woodlandbio.com/understanding-biomass

Similar to how the input can be modified to meet local needs, the plan is to use profits from the gasoline operations to develop alternative outputs in future systems, mainly sustainable diesel and aviation fuel. Diesel in particular would crack the code of achieving carbon neutrality for the entire Woodland BIO process, as diesel consumption during extraction and transportation of the biomass is the primary source of continued carbon emissions.

Until a sustainable option for diesel is developed, the project currently has an estimated 1/3 the carbon impact of traditional gasoline, hence the "low-carbon" status. This is a massive achievement that could instantly reduce the impact of billions of cars already on the road, with a clear road map for how to eventually achieve complete carbon neutrality with future research and development.

A5 - Biochar

Biochar is a versatile product made up of pure carbon left over from a variety of processes that involve biomass. There are many environmentally beneficial uses for this ‘wonder’ material, ones that involve sequestering that carbon in the ground, helping to reduce the carbon footprint of everything coming out of the Woodland BIO systems.

Learn more about the environmental benefits and applications of biochar here: https://www.woodlandbio.com/biochar