CH4 Global Inc

CH4 Global Inc. (CH4) is seeking to impact global climate change in a significant, urgent and disruptive way. The Company is building a global, multi-billion dollar red seaweed (Asparagopsis armata and Asparagopsis taxiformis) aquaculture and processing business. These specific species of seaweed, when freeze dried and fed to cows as a daily supplement can produce up to 90% reduction in methane emissions translating to a significant positive impact on global climate change.

We are optimizing a market scale demonstration facility now (in Australia) as a result of our developed key know-how on (1) how to aquaculture Asparagopsis vegetatively and reproductively (we have "cracked" the life cycle); (2) know-how on how to process the seaweed (care is needed to ensure the key actives - halogenated bromines such as bromoform - are preserved in the processed material) and (3) our key formulation developments to enable product delivery for three key 'cow' market segments (beef feed-lot, dairy and free-grazing)

We now have; (1) regulatory approval for the use as a supplement for ruminants in Australia; (2) the worlds ONLY license to sell Asparagopsis under the CSIRO USE patents; (3) we are building a market demonstration facility now and (4) we have commercial customers now (existing purchase orders and others under development

The total market for the 1.5 billion cows globally is $1.1 trillion. The market is massive. it can be broken down into 3 “rough” segments. The 100 million or so beef feedlots cow globally that the current product version is relevant for represents a $73 billion market. the approximate 300 million dairy cows, which is our next target with some formulation modifications we are doing this year represents an additional market of $220 billion. the remaining 1.1 billion segment of ‘free-range’ cows represents an additional market of approximately $800 billion.

Our initial target in 2022 is within Australia and New Zealand – a total market size of approximately $7.5 billion in the first two market segments (dairy and beef feedlot).

This is a ‘new’ market segment – driven by need, demand and impact for reduction in methane from ruminants to mitigate global warming over the next decade.

The world has a large and growing GHG gap as defined by the annual published UN "emissions Gap Report". Currently, that gap, after all commitments to the Paris agreement are made, is STILL an annual 13 Gt CO2-e... and that's to keep the world from warming on 2oC by 2100.

The opportunity is to address the methane output from ruminants (specifically cows). 1.5 billion cows releasing out annually (on average) 100 kg methane = 150 million tonnes of methane that contributed to global warming in the short term. The UN defines the global warming potential of methane over the next 20 years (even though we only have 9 before 2030) as 86. So, 150 million tonnes x 86 = 12.9 gt CO2-e. That's the opportunity to scale the methane mitigation (>90%) platform we have created for ruminant animals.

Asparagopsis seems unique amongst seaweeds in showing unequivocal convincing data shown in sheep, beef-fed lot and dairy cows that feeding less than 1% (100 g/day, or less) of Asparagopsis results in a 90+% reduction in methane emissions. The most recent studies in 2020 and 2021, using high quality Asparagopsis has shown effective doses as low as 25-50 g/day producing 90+% reductions in methane with no compelling safety concerns or changes in taste or texture of the milk or beef).

This specific opportunity is larger than any other feasible single intervention that could be achieved on climate change and can be realized in the next 10 year time-frame with coordination, commitment and scale. We seek to facilitate that. Dramatic and significant methane mitigation from ruminant animals over the next 10 years will allow the world to have a few extra decades for longer-term CO2 mitigation solutions to gain traction and have impact - and keep the world a viable place for generations to come. And it’s a one trillion dollar opportunity.

There are three elements required to scale Asparagopsis for global methane mitigation and these are a focus for our Market Demonstration Scale facility in 2021/21:

Can we grow enough of it? The short answer is, Yes, we can. We have now successfully managed to grow Asparagopsis (both species) across their lifecycles and are now finalizing the approaches to trigger spore release onto substrates in a hatchery. This is how seaweed is aquaculture today - the “new” is the management of the lifecycle of Asparagopsis.

Can we process it? The short answer is Yes, we can. A key challenge for the global development of this newly-developing industry is the effective end-to-end processing of cultivated seaweed. CH4 is fully engaged in understanding the nuances and requirements for end-to-end processing which provides us with one area of competitive advantage. It is now well known that bromoform is the primary ‘active’ ingredient in Asparagopsis that reduces ruminant methane though characterized actions on enzymatic inhibition of the last step of methanogenesis. In order to preserve bromoform in the seaweed, it is critical to understand the material handling requirements from point-of-harvest to the time the Asparagopsis material is fed to the ruminant. Every step of this process must be carefully managed to optimize output and CH4 has been investing resources in understanding the entire end-to-end process with a leading freeze drying manufacturer.

Can we sell it? In order to sell this product in a market, there are three key things that need to be true: (1) regulatory approval; (2) a license from Future feed to sell product; and (3) product supply and off-take partners.
• Regulatory Approval: Regulations in Australia now allows us to sell the product as a feed supplement. This is not the case currently in any other geography.
• Granted Use License: We have no known encumbrances to the cultivation, processing and shipping to regions/companies/suppliers around the world. However, those proposing to use an Asparagopsis product for methane reduction will require a license from Future Feed, the holder of this IP, to sell into the market. CH4 has now secured the world’s first license for the sale of Asparagopsis under the existing FutureFeed use patent for Australia and New Zealand (will expand to global licenses after 3 years).
• Off-take partners: To facilitate speed-to-market we are developing key partnerships to accelerate the distribution of product using well-established sales and marketing channels. We have secured off-take now with a regional beef feedlot processor and are well underway with significant sized companies in both the Australian and New Zealand markets for commercial sale of pilot scale levels the product this calendar year as we begin to scale production

methane mitigation from ruminants is not a market today. to address the globes need to achieve 2030 GHG targets this segment will grow dramatically, especially after we validate the market demonstration facility we are building now.

That said, There are a growing number of companies seeking to impact ruminant methane emissions. We see this as a good thing. There are 1.5 billion cows on the planet and a multifaceted approach with more companies participating simply means methane from more cows is able to be reduced, resulting in a greater impact on GHG and global warming.

Non-Asparagopsis: There are a variety of approaches under development and in market around the world that are focused on the reduction of methane from ruminant animals. There approaches cover areas such as:
Feed: natural and bred/crossbred grasses; Biologic: cow and sheep breeding programs, vaccines; Supplements: synthetic chemicals, probiotics, garlic, tannins etc; Devices: capture methane. No matter the technology approach, the available published data suggests the impact of these approaches of many of these is in the 5-10% reduction range with a couple showing benefits up to a maximum of 30%. These reductions are insufficient to impact climate change sufficiently in the next 10 years.

Asparagopsis: We are aware of at least 7 companies now seeking to aquaculture and process Asparagopsis for supply into commercial markets. our differentiators and advantages are below.

Our advantages over others is the Asparagopsis space are: (1) We are further along building the channel to market and value chain; (2) We are focused on ocean farming in non-polluted waters (vs land only); (3) We understand the challenges at scaling having scaled businesses before; (4) We are aligning commercial partners across the value chain for scale and; (5) We have preferred access to large areas of aqua space to scale quickly.

Our key differentiators are: (1) We are focused on the urgency of the current globa warming circumstance (knowing that revenue will follow); (2) We are partnering with Indigenous Nations in regions where we operate (for a portion of our business potential in those regions) and (3) We are focused on putting money in dairy and beef farmers pockets with our business model.

At scale, revenue will come from 3 streams:

(1) sale of the various product streams globally
(2) sale of large amounts of aggregated verified carbon credits
(3) licensing/partnership fees to build and operate in selected geographies

revenue from only stream 1 at years 5 is aticipated to be in excess of $1 billion. we have a full revenue/financial model we can share at later stages

CH4 is developing a scalable solution to bring an Asparagopsis seaweed product to market globally and the key milestones in 2021 are focused on mitigation of the commercial and technical risks resulting in building the first world’s Market Demonstration facility.

Our business model is based on creating mutually-dependent partnerships along the supply chain to facilitate speed to market, risk mitigation and leveraging of existing assets.

Aquaculture - We will be partnering with existing aquaculture (finfish and/or shellfish) farmers to leverage their existing assets (people, boats, infrastructure and relationships) to grow Asparagopsis on their available leases (and also on leased water space we have/are acquiring). We will provide these partners with seaweed spores from our hatchery to use on their compatible infrastructure and they will grow the seaweed to maturity and harvest the seaweed selling it to us at a profit.

Processing and Formulation – this is our space – we build, own and operate these facilitates. The key know-how and IP resides in this space. The ability to process the wet seaweed in ways that maximize the retention of the active materials is a key set of know-how. The formulation of the dried seaweed requires specialized skills to have it be stable in the market and also to have the product commercially-viable for the beef feedlot, dairy and broader free-range beef markets. This is key IP for CH4 Global.

Market Use and Distribution – On the market side, we are exploring partners along the supply chain. Supplement providers, beef feedlot and dairy operators, retail stores/supermarkets and CPG companies with an interest in both the dairy and beef markets are all in exploratory collaborations with us to provide market access.

10% CAPEX
40% human capital (hires and paying current employees)
40% with our development partners
10% legal etc/overheads

seeking $6-10 million on pre-money of $25 million

We are focused this year on mitigation of all known technical and commercial risks by building the Market Demonstration-scale facility. The key technical risk we see now (that we are addressing) is can we achieve the yield of growth for the product in aquaculture. The key commercial risk is can we meet a COG price point that enables the business model.

No incubators an accelerators.

None applicable/entered.

The technology premise from CSIRO who won the million dollar Food Planet prize on the Asparagopsis benefit. See: https://www.csiro.au/en/news/news-releases/2020/million-dollar-food-planet-prize-awarded-to-csiro-innovation

We are operationalizing the technology platform to bring product to market.

We have licensed the USE patent for Asparagopsis - use of asparagopsis for the purpose of methane reduction in ruminant animals. We are the ONLY company to have this license which enables us to sell in commercial markets utilizing our technology and product platform.

We are filing patents on the key formulations that enable to to access all three key segments of the global cow market: (1) formulation patent applications that stabilize the product for the 100 million sized beef-feed lot market; (2) formulation patents that address bolus dosing (once per day) for the 300 million sized dairy cattle market to provide product only when food is in the rumen (first cow stomach) and will sustain delivery over a 24 hour period and; (3) formulation patents for the 1.1 billion 'free-range' cattle market that will provide sustained delivery for weeks after dosing.