Bringing It All Together - A Financial Summary of Our Business PLan

Market Evaluation

Our market evaluation has placed FREDsense Technologies in the highly regulated field of oil and gas water quality monitoring due to the high potential impact our technology could play in this market. We have assessed that the general toxin sensing market represents a $50 Million opportunity based on data collected evaluating the Alberta oil and gas market in addition to international water quality management markets. This is specific to the Alberta oil and gas monitoring and does not include other potential market avenues including waster water monitoring, sampling for individual private companies, or agriculture monitoring streams all of which are potential market opprotunities for our diverse platform technology.

Cost To Develop Our Product

From our manufacturing analysis which was done in collaboration with ACAMP, we were able to determine the potential cost of bringing our prototype into an actual determined product. From this analysis we have been able to predict that a single catridge for the detection of toxins in a water sample could cost approximately $7.95 and a detection system which could be used in conjunction with multiple numbers of cartridges could cost approximately $150.00. The sales price of our cartridges and detector systems were set at $150 and $1,500 to be competitive and more cost effective than other products presently used in this market. Being almost 20x and 10x below our sale price, respectively, these number appear reasonable to obtain profitability and were used in determining our profitability in the market (see below).

Company Profitability In Our Market

By 2015, there will be well over 500 sampling sites mandated to be monitored for their water quality in the province of Alberta. Each one of these monitoring sites are required to take a variable number of samples at different locations around the sites as well as a variable number of periods throughout the year. By estimating the potential number of sites that could use our technology, our group estimates that the total market potential of our general toxin sensor is $8.75 Million annually. If our technology could displace 30% of this market, their is the potential of producing a $2.6 Million annual profit for our general toxin sensor alone.

Net Profitability and Financial Barriers To Market

Numerous hurdles exist in being able to bring this technology to market, the largest of which being the necessary regulatory assessment hurdles needed to for our technology to be used as a standard (a single EPA application could cost as much as $350,000 posing a critical issue in developing our company). In addition, marketing will be a critical aspect to ensure that the market adopts our technology. Government indorsement, and industry backing from end-users will aid in this development. A summary of the findings of major barriers to entry into the market is below:

Technology Development (Biological, Engineering, Hardware, Software)

Prototype Development - Bench Scale and Up-Scale

Regulatory Approval (EPA, Health Canada, Environment Canada, etc.)

Marketing

IP Protection

Team Selection, Attracting and Retaining Talent

Below is a breakdown of the expected expenses of the business for the years of 2014-2016, dictating the amount of capital that will be required in order to achieve our goals. This was also inspired by our milestones timeline whereby we expect to have a product ready for the market by 2016.

The budget places emphasis on numerous components of the company's development, namely those listed above the detailed expenses list. The budget requires that we raise significant capital funding for our business, requiring $3 million to bring our product to market by the year 2013. The budget reflects a number of assumptions. These include being able to supply ourselves with numerous laboratory equipment through government granting programs and university technology transfer programs available in Alberta. This also assumes that for up-scale of our prototype towards commercialization, we have the ability to partner with a manufacturing group to supply the scientific (i.e. bioreactor) equipment required to produce our product. Additionally, the expenses of becoming certified through numerous government programs may be variable depending on the particular legislation. Therefore we plan to tackle Environment/Health Canada certification prior to more expensive certification programs such as those offered by the Environment Protection Agency in the United States.

With this financial assessment and our annual predicted revenue from the product once it has reached the market, it will take approximately 1.5 years to recoup the cost of investment prior to the company becoming profitable. Beyond this timeline, our group aims to establish international connections in other areas of the world where this technology would be useful.

Funding Our Venture

In order to gain the funds required, a financial commitment is required. To achieve this we have demonstrated a need for multiple rounds of funding from government granting programs, industry collaboration and partnerships, angels, and venture capitalists.

At our present stage, we plan to facilitate the need for our approximately $350,000 start-up costs through government granting programs, personal funding, and industry collaboration. Our team aims to use numerous provincial and federal opportunities to subside salaries, reagent and equipment costs, as well as the legal and administrative concerns.

In the subsequent years we plan on strategically targeting angel investment as a method to ensure our technologies development. Manufacturing opportunities will allow for decreased cost of prototyping development and producing our product.

After release of our product into the market in 2016, we aim to seek venture capital funding to