The McConchie Stroud System has been successfully trialled in the research and development stage but has not yet been operated as a full scale commercial facility. The purpose of the Offer is to raise funds:

• for the construction of a demonstration plant at one of several sites under investigation possibly located in eastern Australia. The focus will be on demonstrating algae productivity and yields which have been achieved during research and development and confirming the potential for commercial production. The Company is targeting May 2011 for completion of this demonstration plant; and
• to progress negotiations with selected CO2 emitters in Australia and the USA with a view to obtaining approvals for a commercial, scaled up facility of 200 or more modules.

The Company is confident that the McConchie Stroud System has strong commercial potential on the basis of the following competitive advantages:

• Research and Development: the McConchie Stroud System has been designed following extensive research and development that has included bench-scale and pilot plant trials, process optimisation and the testing and selection of appropriate microalgae species;
• Exceptional algae productivities and yields: bench-scale and pilot plant trials have produced exceptional algae productivities and yields of algae and algal products; and
• Minimised production costs: the McConchie Stroud System has been carefully designed to minimise commercial production costs. In particular, the enclosed reactor module is water efficient, climate controlled, low maintenance and produces high yields of microalgae on a compact footprint.

There are also potential environmental benefits from using the McConchie Stroud System to produce algae for biofuel applications such as biodiesel, jet fuel and bio-ethanol. These include:

• Fossil fuel replacement: the biofuels produced from algae-based feedstocks can directly substitute certain fossil fuels, reducing the use of those fossil fuels and reducing dependence on external fossil fuel supplies;
• Use of waste CO2: the McConchie Stroud System has been designed with a view to using waste CO2 gas emissions generated by the combustion of fossil fuel (eg from coal, gas and fuel oil fired power stations and other major CO2 generating sources);
• Food chain advantages: algae products are not based on human food crops and so do not compete with human consumption; and
• Protection of forested and arable land: the production of algae via the McConchie Stroud System does not rely upon the use of arable or deforested land and can be located on industrial properties or other areas unsuitable for agricultural crops.