To Potential Investors

To potential investors

Business plan Initial investment assigning request for project realization

Project name Shallow ground geothermal energy exploitation by utilizing single well system (SWS) for collecting, and heat pumps for energy promoting

FOR MORE INFORMATIONS ABOUT TECHNOLOGY ITSELF Visit site

www. hyy.com.cn

...

by ‘’HYY ‘’Company from China, which is owner of unique world’s patent right 441164 PCT for single well system (SWS) (SWS)

Investment data 1.

Business plan name

Shallow ground geothermal energy exploitation by utilizing single well system (SWS) for collecting, and heat pumps for energy promoting

2

Firm location

Kragujevac, SERBIA

3.

Forward term plan

Investment means activating 01.01.2008. Object renting 05.01. 2008. Equipment purchase and assembling 10.01.2008. Activeness starting 10.01.2008.

4.

Company owner

Investor or as agreed

5.

Project lasting

5 years

6.

programme values

January 2008. - December 2012. Currency in programme - EURO

7.

Investment period

2008. - 2012.

8.

Investment preliminary estimate

125.000 EURO

9.

Finances source

Investor with 125.000 EURO

10. Person for contact

Gordana Jakovljević , tel: 034 348 825; 063 16 76 989

”HYY“- China as a strategic partner  Our choice of geothermal energy utilizing programme – Single Well System



 



(SWS) - should be officiated and regulated by signing Confidentiality Deed, Heads of Agreement and, finally, Project Installation Contract with the HYY Chinese Company, Beijing which is unique world patent right owner 441164 PCT, with which we have an active business relations since the April 2007. By Contract signing we’ll be recognized as a strategic HYY partners for Serbia and Europe. In this process we expect very strong backup from Chinese Embassy in Belgrade, and Serbian Embassy in China. In next phases of Serbia geothermal potentials exploitation programme, we expect qualitative backup from resource ministries and Republic of Serbia Agencies, due to HYY and Chinese Embassy have shown a desire this programme to be serious and important institutional and economical China and Serbia linkage. Before signing Contract HYY delegation will visit our new form firm, to make sure we posses all the elements in skills and productivity, in marketing and institutionallity, all unnecessary for assigning patent and technology using rights. That occasion we’ll organize technology possibilities presentation for potential geothermal energy end users. With the most of potential users we’ll have signed Intentions Letters for implementing shallow ground geothermal energy installations for heating, cooling and hot water obtaining. Upon satisfaction of the conditions, within six months, anticipated by the Heads of Agreement, we will sign Project Installation Contract with HYY, according to which we get all legal rights for exclusive representing of their SWS.

Market needs analizing Market energetic needs have changed drasticallly in last decade, especially in last couple of years, from FOUR basic reasons :



NEED FOR HUGE ENERGY QUANTITIES - Traditional fossil fuels resources have already exhausted, but needs have increased, due to world population growth. Exploited by centuries, even today they are the most widespread, unfortunately. The assumption is, latest for 60 years, they will be completely exhausted. Ground energy is practicaly inexhaustible!



NEED FOR CHEAP ENERGY SOURCES - Traditional fossil fuels costs increase uncontrollable, because there are less and less of them and become more and more inaccessible. Those resorces owners monopoly is bigger and bigger. Ground energy requires 1kW of imputed electric energy, for drawing 3kW of geothermal energy more from itself. Therefore, for 1kW of imputed and paid energy, you get 4kW of available ones!



NEED FOR ECOLOGICALY PURE ENERGIES - Glass garden effect, arises due uncontrolled air pollutant leaving out into the atmosphere, brings to planet global heating. Situation has already became alarming. Market seeks for new energy sources which do not damage. SWS does not pollute. It even possesses technology solutions for wasted and sewage water energy utilizing for objects needs.!



NEED FOR SECURE HEATING SYSTEMS- With no danger of fire or explosion, SWS performs with no combustion processes, no exhausted gasses, no possible explosions. SWS IS BASED UPON UTILIZING UNEXHAUSTABLE, RENEWABLE, AVAILABLE, QUALITATIVE, CHEEP, RELIABLE, SECURE AND ECOLOGY PURE ENERGY, WHICH IS EVERYWHERE BENEATH US - SO, THER’S NO NEED FOR TRANSPORTING, STORAGING... THAT IS SHALLOW GROUND (SOIL) ENERGY. FOR MORE INFORMATION *...

See material ’’Information about project...’’

Market concurrence analyses  Competitors



  

– There are certain areas in Europe where geothermal energy is in use. Somewhere traditionally (wind, water flow, solar, bio mass and similar energy using ). But, considering to possibilities, new technology appliances all kind of geothermal energy utilizing are in a beginning. - In relation to other forms of natural and renewable energies exploitations ( such are wind energy – windmills, water flows energy – small hydro power plants, or solar energy – solar panels ), shallow ground geothermal energy has universal purpose and it is undependable of seasons, meteorology conditions, and other fallowing nature influences. Considering shallow ground energy, it exploits in some European states by utilizing BHE (bore hole heat exchanger system - horizontal, vertical or coil ) and multi well system. But world protected SWS patent 441164 PCT of ’’HYY “ hasn’t paved its way to Europe, and we are going to be SWS technology pioneers in Serbia and Europe. - Related to multi well system and other energy types, SWS has a plenty advantages *. Strengths – programme actuality and human resources - started at 24. 04. 2007. we spent five very usefull days, when the most powerful HYY Company representatives, from Beijing, China, Mr. Sun Ji, and Mr. Eric Yu visited us. In straightforward contact we altogether consulted all technology possibilities reflecting, they explicated to us each of our doubts, and explained all details, technological ones and those related to our potential mutual future cooperation. We have kept contacts to them in last period of eight months, wishing to realize our strategic partnership. Possibilities – huge potential in geothermal energy exploitation in SERBIA. Weaknesses – uninformative about subversive global planet heating damages and rescues in new technology utilizing; lean Serbian payability; non existance of Law regulationes for renewable energy utilizing. Denuncinations - not observed.

FOR MORE INFORMATIONS INFORMATIONS ABOUT COMPARING TO OTHER ENERGY FORMS FORMS ... See material ’’Information about project...’’

Project goals A ) Implementing SWS technology goals:  Ecosystem protection* - such programme      

has absolute priority and approach to all benefits and founds anticipated by European Commission according to Kyoto protocol; Energy resources state-owners domination decreasing* (coal petroleum, natural ground gas) at world economy stage; Security and simplicity * in complete system functionality; Huge savings * related to existing conventional models; Employing a great number of workers, different profiles, or unemployment rate decreasing; More knowledge acquiring in specific technology domain, by screening and analyzing;

Institutional and economical Serbia and China contacts fortifying. B ) Contacts to resource Ministries goals:  Bringing up Law regulations in field of using renewable and ecologically pure energies;  Obtaining more convenient tariff systems for electricity consumption due using this or other renewable and pure energy forms;

New standards adoption in technology and ecology. C ) Media presentation goals:  Influence to wide auditorium awareness* about planet global heating damages, ways for its decreasing and 

importance of individual participation;



Spreading knowledge about renewable, ecologically pure energies and technologies for their utilizing*, for informing all society structures, potential end users and investors.

FOR MORE INFO

*...

See material ’’Information about project...’’

Project realization phases This This is is timing timing phases phases chart chart in in complete complete project project realization realization programme, programme, first first business business year year..

It It is is necessary necessary to to accent accent we we have have determined, determined, by by project, project, to to make make demonstrative demonstrative installation installation in in second second phase of first business year, where interested and potential investors, users and other individuals phase of first business year, where interested and potential investors, users and other individuals could could cognize with SWS functioning itself. This is a BRAND NEW TECHNOLOGY ON THE S E REGION cognize with SWS functioning itself. This is a BRAND NEW TECHNOLOGY ON THESE REGIONSS,, and and itit would would be be unprofessionally unprofessionally from from us us not not to to let let them them real real insight insight into into the the functions functions of of something something for for what they are ready to dispatch financial goods and to determine themselves to implement it in their what they are ready to dispatch financial goods and to determine themselves to implement it in their own own spaces. spaces.

Phase 1 - Preparings - 3 mon Phase 2 - Object installation realization - 6 months. Phase 3 - Analyses and preparings - 3 months

2008. year

Jan

Feb

Mar

FOR MORE INFORMATIONS... See next slides

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

PROJECT REALIZATION PLAN AND PROGRAMME ’’S ’’SHALLOW GROUND GEOTHERMAL ENERGY UTILIZING’’ IN 9 STEPS TEPS

1. 2. 3.

4. 5. 6. 7. 8. 9.                    

Providing means for new firm registration, authorized for utilizing, contracting and installing SWS system in Serbia and Europe, registered for activeness in projecting and detailed geothermal energy exploitation documents creating for heating, cooling and hot water supplying of all kind of objects. Object renting which will have an administrative rooms as well as projecting bureau supplied with all needed electronic and other added technical devices. Inside of particular object it is predicted space for installing equipment storage as well as all spare parts complete assortment with documentation administrating. Providing means for realization of all necessary business-technical cooperation contracts, prior to Chinese strategic partner ’’HYY’’ Company, which is protected SWS system patent right owner, as with appropriate Serbian institutions (Geological Institute of Serbia, Mining-geological faculty in Belgrade, Engineers Chamber of Serbia, Serbia Geothermal Association and others), and with individuals such are distinguished professionals in this area, already employed in other facilities and institutions in state and in abroad. Accomplishing cooperation with appropriate institutions for getting accordance and permissions for geothermal water using according to suggestion of Project ’’Municipal services modernization’’. Contacts to resource Ministries and imposing Governmental agencies into programme, for gaining strong support for new programmee realization and for all benefits yielding, consider to savings and total ecological effects. Professional team consolation, which will consist of enginners and technical staff, economists, translators, as well persons for defining all commercial and financial parameters due contracts signing. Providing means for periodical engaging firms registered for people and equipment transport during realization phases, and transporting during maintenance and services within guarantee and after guarantee periods. Participating at constructing and technic fairs, for presenting a new technology there, and other media presenting in purpose to inform wider community and popularize new technology. Constant attending to technical literature and other publications from this area, published by eminent world institutions, meaning prepaid, as well visiting and overlooking to finished systems or those ones which implementation is still current. ***This ***This plan and programme comes under compensation and superstructure depending of market needs.

PROJECT SINGLE PHASE MILESTONES  Phase 1 - project preparation comprehends milestones predicted by steps 1-6.  Beginning first phase, initial investment of min. 50.000€ is needed. 



Phase 2 - realization of installment project comprehends following milestones: 1. creating technical - technologic project 2. producting exploring bore hole 3. creating main project 4. equipment acquisition 5. equipment installiation 6. primary and secondary installment realization 7. finishing works 8. providing consumption permission.

 Latest to beginning second phase it should be invest 75.000€ more, so total invested means mount 125.000 €.



Phase 3 - previous phases analyzes and making more detailed project realization plan Based on acquired experiance due project realization, in this phase we do analyzes of previous from different aspects - economy-financial, technical-technological, management, marketing etc. We do critical review, with detailed analyzes of eventual mistakes and omits, and based on those analyzes we accept measures for their overcomes. We make strong marketing propaganda and prepare ourselves for forward projects.

Estimated outcomes in first business year 2008. No.

Item

1

Firm registration costs

2

Renting offices expenses by month (cca.50m2 )

3

Quant.

Cost

Total

Subtotal

1

800.00

800.00

12

350.00

4 200.00

Office furniture equip expenses

1

2 000.00

2 000.00

4

Computer equipment and technical expenses

1

3 000.00

3 000.00

5

Telephones ( mobile, desk phones, fax )

1

800.00

800.00

10 000.00

6

Public utilizes expenses

12

600.00

7 200.00

7 200.00

7

Business trips in Serbia expenses

12

250.00

3 000.00

8

Business trips in abroad expenses

2

3 000.00

6 000.00

9 000.00

9

Consulting and marketing expenses

12

1 000.00

12 000.00

12 000.00

10 Director and chairman fees

24

800.00

19 200.00

11 Employees fees

36

400.00

14 400.00

12 Fees taxes and contribute expenses

800.00

20 160.00

53 760.00

13 HYY partner staying expenses

2

4 000.00

8 000.00

8 000.00

14 Demo center expenses

1

25 000.00

25 000.00

25 000.00

TOTAL EXPENSES

125 760.00

Producing services expenses ( 14 )

25 000.00

Gross employees fees ( 10, 11, 12 )

53 760.00

Material expenses ( 3, 4, 5 ) Non material expenses ( 1, 2, 6, 7, 8, 9, 13 )

According to this expenses structure table we have made estimates for next years.

5 800.00 41 200.00

Investment structure

   This is not about classical investment project

but project which requires certain preparing period, before concrete first and fallowing projects realization, which runs with no financial incomings while financial outflows are considerable.

1. New workers employment plan For this project realization, realization, firm plans to employ specialists, by phases, for doing jobs as fallow: No.

Job type

speciality grade

Proffesion

1.

Project engineer

VII / 1

Mechanical engineer

2.

Project engineer

VII / 1

Electrical engineer

3.

Project engineer - static

VII / 1

Constructing engineer

4.

Financial accounting

VII / 1

Economist

5.

Law and general

VII / 1

Lawyer

6.

Maintenance

VII / VI

Mechanical or electrical engineer

8.

Operating project realization

IV / III

Mechanical or electrical

9.

Installs, isolating and plumbing

IV / III

Constructing or similar

10.

Vehicle driving

V / IV

’’D’’ ’’D’’ category driver

12.

Vehicle driving

IV / III

’’C’’ ’’C’’ category driver

13.

Material managing and storage

IV / III

Mechanical or constructing engineer

Employment of new workers will continue according to dynamic and project realization scope.

2. Planed incomes 2008.-2012. No.

Term

Year 2008

2009

2010

2011

2012

10.000,00

20.000,00

20.000,00

20.000,00

1

Planed realization in m2

0,00

2

Gross income in €

0,00

800.000,00

1.600.000,00

1.600.000,00

1.600.000,00

3. Planed outcomes 2008.-2012. No.

Type of outcomes

Year 2008

2009

2010

2011

2012

0,00

500.000,00

1.000.000,00

1.000.000,00

1.000.000,00

5.800,00

15.000,00

20.000,00

20.000,00

20.000,00

53.760,00

80.000,00

110.000,00

110.000,00

110.000,00

1

Purchased value of sold goods

2

Material outcomes

3

Employed gross fees

4

Amortization and reservation outcomes

0,00

12.000,00

12.000,00

12.000,00

12.000,00

5

Production services outcomes

25.000,00

100.000,00

200.000,00

200.000,00

200.000,00

6

Non material outcomes

41.200,00

45.000,00

80.000,00

80.000,00

80.000,00

125.760,00

752.000,00

1.422.000,00

1.422.000,00

1.422.000,00

Total outcomes

( in € )

Incomes and outcomes analyze represents more inconvenient case for investor, with 30% of fed security in outcomes, and without added incomes from chinese components retail trade.

4. Capital investment plan In first tree years in programme realizing it is not planed to interponate in capital investments. Considering, starting from 2009, we finance ourselves entirely from SWS installment outcomes estimated investor profit in first five years would remain the same, even in case of double investment - in constructing (or adapting ) an object for demo-center, and in implementing SWS in it. Owing to much higher initial investment, it would be achieved much less average yearly profit rate on deposit, while estimated complete object market value, which will be in investor’s hold, could not achieve the same effects as less investment, with no constructing (adapting) part. That is the reason why we dropped this option after studious analyze. Extremely, such double investment could have much better effects if demo center location is in some of perspective tourist places. That will be scope of our next study, and we will deliver it to you, if you are inerested. But, in case that, during 3 years starting from 2010, we could realize 30.000m2 each year , what is by 10.000m2 more than predicted, from higher yearly incomes, for about 200.000€ more, constructing of object, in investor’s ownership, could be optional. That kind of capital investments depends of investors decision.

5. Project financial streaming 2008.-2012. No.

Position

Year 2008..

2009

2010

2011

2012

1

Means incomes

125.760,00

800.000,00

1.600.000,00

1.600.000,00

1.600.000,00

2

Means outcomes

125.760,00

752.000,00

1.422.000,00

1.422.000,00

1.422.000,00

3

Gross means incomes

0,00

48.000,00

178.000,00

178.000,00

178.000,00

5a. Project financial streaming chart 2008.-2012. 2008. 1.600.000 € 1.400.000 € 1.200.000 € 1.000.000 € 800.000 €

1 .6 0 0 .0 0 0  €

600.000 €

2012

1 .4 0 0 .0 0 0  €

2009.

400.000 €

1 .2 0 0 .0 0 0  €

200.000 €

1 .0 0 0 .0 0 0  €

0 €

8 0 0 .0 0 0  € 6 0 0 .0 0 0  € 4 0 0 .0 0 0  € 2 0 0 .0 0 0  € 0  €

2008. 2009. 2010. 2011. 2012

2011. Means incomes Means outcomes

2010.

6. Cash streaming projection 2008.-2012. No.

Position

1

Balance at starting year

2

Income from selling goods and services

3

Business expenses

4

Gross profit

5

2008

2009

2010

2011

2012

125.760,00

0,00

0,00

0,00

0,00

0,00

800.000,00

1.600.000,00

1.600.000,00

1.600.000,00

30.200,00

600.000,00

1.200.000,00

1.200.000,00

1.200.000,00

-30.200,00

200.000,00

400.000,00

400.000,00

400.000,00

Employees net fees

33.600,00

50.000,00

68.750,00

68.750,00

68.750,00

6

Other expenses

36.000,00

45.000,00

80.000,00

80.000,00

80.000,00

7

Credits and interests

0,00

12.000,00

12.000,00

12.000,00

12.000,00

8

Fees taxes and increments

20.160,00

30.000,00

41.250,00

41.250,00

41.250,00

9

Other categories of expenses

5.800,00

15.000,00

20.000,00

20.000,00

20.000,00

10

Profit

0,00

48.000,00

178.000,00

178.000,00

178.000,00

11

Profit tax

0,00

14.400,00

53.400,00

53.400,00

53.400,00

12

Net profit (total income )

0,00

33.600,00

124.600,00

124.600,00

124.600,00

7. Investor’s total profit 2008.-2012.

Year

Total investment ( in € )

Total implemented ( in m2 )

Investor’s profit ( in € )

2008

125.760,00

0,00

0,00

2009

0,00

10.000,00

33.600,00

2010

0,00

20.000,00

124.600,00

2011

0,00

20.000,00

124.600,00

2012

0,00

20.000,00

124.600,00

125.760,00

70.000,00

407.400,00

∑ Investor’s total profit in €

Total profit coefficient over invested means Average yearly profit coefficient over invested means

281.640,00 2,240 (223,950 %) 0,448 (44,790%)

7a. Investor’s total profit chart 2008.-2012. 2008. 140000 120000 100000 80000 2012.

124.600,00

60000 40000 20000

2009. 33.600,00

0

124,600.00 2012.

124.600,00 2011.

124,600.00 2011. 124,600.00 2010. 33,600.00 2009. 0 2008. 0

Profit 

20000

40000

60000

80000

100000

120000

140000

2008.

2009.

2010.

2011.

2012.

0

33,600.00

124,600.00

124,600.00

124,600.00

124.600,00

2010.

Respected ones,

Due to analyzing and comparing of world known technical solutions, and gathering real potentials and needs in Serbia, as the most qualitative from technical, economical and ecological point of view appears to be shallow ground geothermal energy utilizing. SWS technology is our orientation in which we deposit plenty of efforts, because we posses analyzes that programme will have extraordinary good market classification, it is perspective and very profitable. Project’s nature do not allow precise business and financial plans till at least couple of realization phases past. That is also an experiance of ’’HYY’’ Company, our strategic partner to be. Hope you like this project we are willing to run. We also hope you wish to be a part of it. Previous realization plan is approximative, but we start planning from the most inconvenient versions to all of us. We are ready to begin cooperation with you as soon as possible. This is a right time for that. All aspects of possible contract among us would be legal formulated, for mutual satisfactory. We speak english, and we are ready to answer your questions. FAITHFULLY YOURS,  

   Gordana Jakovljević descphone: +381.34.348.825, mob.+381.63.16.76.98

[email protected]

Thank you for your time and attention!