Business Plan

“Advanced food safety testing services”

2

INDEX

Page

Executive summary 3

Introduction 4

1. Who are we? 5

2. Market opportunity 6

3. FIDES LABS’ innovative business model 14

4. Porter analysis 25

5. Fides labs replication and scalability inside the food industries and into other industries. 27

6. Financial requirements. 29

7. FIDES LABS´project evaluation. 31

8. Other considerations. 32

9. What are we seeking? 32

3

Executive summary

FIDES LABS provides cost-effective food safety testing services for agricultural and food companies based on mass spectrometry (MSMS). As pesticides residues, antibiotic residues, contaminant and restrictive substances that under new regulations as EC1886/2006 agricultural and food exporter companies must to analyze through the whole supply chain vertically and horizontally.

Chile being the 15th worldwide food exporter with over US$ 12.000 million food exports annually will increase food exports to US$ 60.000 million for 2030. However Chile and the Latin American region lack of a world class mass spectrometry food safety testing laboratory (LC-MSMS, GC-MSMS), required to comply with international regulations in a cost-efficient way and with the right technical support.

The demand from agricultural and food companies for food safety testing services based on LC-MSMS/GC-MSMS is over MMUS$ 100 a year in Chile, > US$ 3 billion in Latin America and over US$ 10 billion globally, increasing 25 % yearly.

The revenue model is through sample analyzed in an average price of US$ 200 per sample and with special pricing for contracts.

FIDES LABS is a commercial MSMS food safety laboratory with competitive advantages that has been gotten through an open innovation approach with experts around the world, the innovative business model allow to offer to the clients answer times from 2-5 working days (and not weeks), in 20 % less costs with better technical support services.

Fides labs requires an investment of US$ 4.2 million, it has a NPV (15 %)= MMUS$ 34,4; ROI= 79% and a payback period of 3 years.

Fides labs has the feasibility to grow to a company with annual sales of US$ 10-30 millions in Chile, US$ 20-200 million in a Latin-American level and 50-500 million worldwide, with high margins, if is combined with an organic and acquisitions growth strategy.

We are seeking an anchor investor with a common and/or complementary vision and capabilities to execute and expand Fides labs.

4

Introduction

BBG through its founder has developed relationships with leading agrifood companies, with worldwide R&D centers in food and biotechnology, as well as it has implemented LC-MSMS, GC-MSMS laboratories and expanded the business associated for the biggest quality control and certification companies on the planet.

Combining technical, executive and strategic experience in biotechnology, LC-MSMS, GC-MSMS and agri-food industries, with innovation management methodologies we implement blinded technological business models for food safety testing services that allow generating competitive advantages in the Latin American markets.

It is important to consider that these types of projects are based on detailed knowledge of local customers, local-global markets, industry context, national and international regulatory frameworks, open networking, cutting-edge technical knowledge, high- performance teams, business models and innovation management methodologies. These intangibles are the added value to the project, and not just the equipments.

This project represents investments in technology infrastructure and the latest LC- MSMS, GC-MSMS equipments, laboratory design and workspaces as the center elements in the success of the project. However, the value is not in the equipments, but in the technical and strategic knowledge, in the ability to generate high performance teams, in the optimum configuration of the equipments for integration with a business model that creates competitive advantages and its integration with an innovation management system that generates sustainable growth. All this primarily focused on close relationships with local food companies, and an understanding of their explicit and implicit needs.

These intangibles available by BBG will be detailed below.

5

1. Who are we?

Bio Business Group specializes in the businesses´ creation and expansion in the areas of molecular biology and mass spectrometry testing oriented to quality control and food safety. BBG has the experience of having designed, implemented and expanded these business lines for the largest quality control and certification companies on the planet.

Our Vision

“Become the largest food safety testing provider in Latam”

Mission

“Increase the competitiveness of agriculture and food companies”

Director

Lesley Robles Sedan is the founder and director of Bio Business Group, chemical engineer and civil engineer in biotechnology at the University of Chile, with specialization in innovation management at the University Adolfo Ibáñez. 10 years professional experience in business development and expansion based on mass spectrometry (LC-MSMS, GC-MSMS) technologies combined with innovative business models for Latin American and international markets. Before founded BBG, Lesley Robles held several executive positions in Chile and in Australia, in entities such as the State Agricultural Biotechnology Center at Murdoch University, Australia, Corthorn Quality and SGS.

Lesley Robles has a global and multicultural vision because of his experience of life in 40 countries and 4 continents.

6

2. Market opportunity

a. Market opportunity context

New food safety regulations

In the 90's, Europe, Japan and the United States strengthened research in the areas of quality and food safety, which led to strict new regulations on pesticide residues, antibiotic residues, contaminants, banned substances, mycotoxins and allergens, among others. These regulations have been issued globally (CE1881/2006, Japanese Positive List Testing, CE 396/2005) and affect all food industries vertically and horizontally, as milk and dairy products, meat, corn, seeds, fresh fruits, processed foods, nuts, feed, fishmeal, wine, water and wastewater, fisheries and aquaculture.

Agriculture and food exporters must complain with these regulations and do these food safety testing’s through the whole supply chain.

To comply with these regulations are required new technologies (LC-MSMS, GC- MSMS) rarely available in South America.

To meet these regulations, especially for exports to developed countries, are required new technologies as mass spectrometry (LC-MSMS, GC-MSMS).These technologies are rarely available in South America where traditional laboratories operate primarily traditional microbiology and chemistry areas, without qualified human resources in areas such as biotechnology, molecular biology and mass spectrometry. As an example, we can mention that Australia with similar agri-food exports than Chile, has hundreds of the latest LC- MSMS & GC-MSMS equipments to comply with international food safety regulations. In Chile, however, there are 9 of these equipments but only 5 are engaged in commercial laboratories. Also, it is important to note that the LC-MSMS models and their configurations existing in Chile and South America are NOT suitable to meet in a cost- effective way quality requirements demanded internationally (SANCO 10232/2006,2002/657 EC) and specific market needs or specific methods of analysis.

7

Multinational quality control companies are customers, not competitors, operating an efficient laboratory and under the right business model

The largest multinational companies in these areas – such as SGS, Inspectorate, Bureau Veritas, Intertek Calebret, do not operate these advanced labs in South America, do not have the local knowledge and the ones operating these business lines, lack of the right technological packing and the right business model. Which we handle locally and globally.

Growing demand in food safety

As advisers of food exporters and quality control companies, we have seen a growing need for food safety management and cost – effective food safety testing services in Chile and the Latam region.

Chile, with the creation of the Agency for Food Safety (ACHIPIA) is increasing its food safety policy, standardizing its regulatory framework to levels equivalent to those of the European Food Safety Authority (EFSA). A similar situation is happening in other South American countries.

Competitors

Globally there are four main companies in the area of quality control and certification: SGS, Bureau Veritas, Intertek-Inspectorate and Alex Stewart, which have sales of U.S. $ billion and operations in > 100 countries, providing four main types of services:

Inspections Verifications Laboratory testing Certification

These services are delivered to various industries such as mining, pharmaceutical, food, environmental, petrochemical and automotive. Depending on the country, these four companies are positioned differently in distinct industries, mainly providing traditional services from inspections or laboratory testing. For example, the largest multinational quality control and certification company worldwide is SGS, with a network of 625 laboratories in 140 countries, but SGS has only 4 Laboratories (Taiwan, France, Germany and Belgium) operating correctly in the area of applied mass spectrometry for food safety testing.

These is the reason because appear local specialized laboratories in the areas of mass spectrometry (LC-MSMS, GC-MSMS) for food safety testing. Particularly in Australia, country that has the same level of food exports that Chile, a local laboratory that began 15 years ago, Assure Quality, today has annual revenues over US$ 100 million.

8

In Chile and Latin America, the situation is rather particular, because large corporations donot operate specialized businesses in the region, limited to traditional businesses such asinspections, especially in the food industry. Also these companies have a rigidorganizational structure and philosophy that focuses on low-cost professionals, managers who do not allow the flourishing of high performance teams. Technically, they do not haveprofessionals with expertise in the area of mass spectrometry and high technologybusinesses. Their development strategy does not allow them setting more advanced businesses, both in medium and long term.

Because an increase in demand for food safety mass spectrometry testing services, there have been family owned businesses that have established laboratories, which servepartially and unsatisfactorily the country's needs. Table I summarizes these companies.

Table I Laboratories that provide some agricultural and food analysis in Chile

These laboratories have the following common features:

• Lack of right equipment (LC-MSMS, GC-MSMS models) and deficient laboratory design.

• Several are family owned labs without major financial and management capabilities

• Lack of high qualified professionals at technical and management level.

• Services limited to a few methods

• Long answer times.

• No technical support after analysis

• Growing disappointment from clients

9

Testimonials

"We have not found a laboratory in Latin America that gives us the answer times, advice and technical support that we need for our pesticide residues analysis"

Cecilia Duran, Chief Quality Control Anasac.

"We ask for a veterinary antibiotic residues study to Inspectorate, we explain them all the associated protocols and they were not able to offer the service“

Francisco Gonzalez, Chief of Quality and R & D Drag Pharma.

"We lost a shipment of several U.S. $ million, because in Japan certain pesticides exceeded the maximum residues limits, even though we had shipped because the analysis in Control Andes Lab in Chile was satisfactory. Then we found that the method of analysis used in Chile, did not meet the standards of the Japanese Positive List Testing "

Chief Quality, Andes Foods

“Fides labs is not just a business, it is a Latam agri-food industry´ infrastructure needs and to protect consumers, the region requires urgently a world class LC-MSMS, GC- MSMS Laboratory”

Lesley Robles, Director BBG

a

1

S

n

b. Market estimation

Strict new global regulations on quality and food safety as CE 1881/206, JapanesePositive List Testing and CE 396/2005, the demand of international markets that requirecertification in food processing safety standards such as GLOBALGAP, I O22000:2007and British Retail Consortium (BRC), and national regulations as the resolution 187 ofMinistry of Health, requires that all food-processing establishments implement HACCP1

under standard Nch 2861, generating an increasing demand for mass spectrometry food safety testing services. In addition, the limited availability of these technologies and the lowlevel of knowledge in the m nagement of these business models, make Chile and LatinAmerica, considering their growth rates in agri-food exports, the best cou try to expandglobal business based on mass spectrometry oriented to agriculture and food industries.

Chile corresponds to one of the five Mediterranean regions worldwide and has exceptionalsanitary conditions for the food production. These factors, coupled with its economicstability and its open economy, has made Chile grow dramatically, from food exports in the80's from $50 million to be the 15th agrifood exporter in the world with over U.S. $ 12.000million today. Projections indicate that Chile will be within the top 10 worldwide agri-food exporters by 2017 achieving U.S. $20.000 million and US$ 60.000 million for 2030.

Table II Main agricultural and food exports2

in Chile

1 HACCP: Hazard and control points analysis2

Ref. Odepa, SAG, Chilealimentos, SalmonChile

1

The agricultural and food Chilean industry growth in average rates > 10% and some industries as poultry > 35 %, production for domestic use is U.S. $ 18.000 million per year and agri-food imports U.S. $6.000 million, representing an annual agrifood trading above US $36.000 million and growing. This provides a growing market for FIDES LABS. It is also important to consider that 70% of Chilean’s agri-food exports go to highly regulated markets like USA, Europe, Japan and Korea.

Market research

We developed a three years market research of analysis based on mass spectrometry as pesticides, mycotoxins, antibiotic residues and banned substances required by the agricultural and food companies. The study was conducted through personal meetings with key companies, online surveys, analysis of regulatory frameworks, seminars, workshops and other mechanisms.

Examples of demand for MSMS food safety testing services are listed below:

Pesticide residues

The 7 main fresh fruit exporters of the country as Rio Blanco and Subsole spend on average US $ 600.000 a year in pesticide residues analysis each one. This represents a demand > U.S. $ 4.2 billion in annual pesticide analysis required by the 7 biggest Chilean fresh fruits exporters.

The country has 13,538 fresh fruit producers, who spend on average $ 1,000 a year in pesticide residue analysis, which represents a demand > U.S. $13.5 million in pesticide residue analysis.

The country has 534 fresh fruit exporters. On average each spends U.S. $ 50,000 in pesticide residue analysis, which provides a demand > U.S. $ 26.7 million annually.

Anasac, spends an average of $ 250 000 annually in pesticide residue analysis and another U.S. $500 thousand in MSMS specific services, provided by foreign laboratories.

1

Contaminants and banned substances

CCU is a beer producer; it requires spending just in a single operation in its silos inSan Pedro, US$ 200.000 in mycotoxins analysis in rice imported from Uruguay.

Skretting, salmon feed supplier, spends U.S. $ 750.000 annually in the analysis of melanin, crystal violet and leuco malachite green. Four other companies spend similar values, which represents a demand > U.S. $3 million annually from these 4 companies actually.

The European Community by the directives 96/22/EC and 96/23/EC establishes that countries wishing to export to the EC agricultural products of animal origin, must implement a national residue monitoring program (pesticides, antibiotics, hormones) and contaminants in these products. This program in Chile is carried out by the Agricultural and Livestock Service (SAG) and SERNAPESCA to products of agriculture and aquaculture, respectively. The program is implemented through the accreditation of private testing laboratories, which are accredited by the SAG, to carry out certain analytes / matrices testing. The combination of analyte / matrix requires the constant development of new tests under validation standards required by the European Community. Also, other countries like Japan and Korea have set even more demanding standards for certain analytes / matrices. For these reasons it is necessary to constantly generate new tests and methodologies. The number of analytes / matrices required being monitored increases every year and currently there is a limited number of analytes / matrices in our national capabilities. This monitoring analysis generates a demand for MSMS testing services of US$ 6 million annually, growing every year about 10%.

APA-ASPROCER, the association of poultry and swine, spend > US $1 million annually in MSMS food safety testing and increasing expenditure > 20% year.

Due to new SAG´s regulations, the producers of veterinary medicinal products must do drug residue studies locally. For this reason, the company Drag Pharma in the next 4 years, need to perform these studies for at least 150 of its 300 drugs. Each study requires U.S. $ 50.000 in MSMS analysis, which represents a demand> U.S. $ 7.5 million. At least 7 companies are in a similar situation, which represents a demand> U.S. $ 52.5 million over the next 4 years, and this situation is increasing because every year come along new regulations.

SGS has two clients in the fishmeal industry and due to new regulations in China, these clients require the analysis of nitrofurans, what is outsourced to other laboratories, representing U.S.$ 200.000 annually.

1

Requirement of mass spectrometry (LC-MSMS, GC-MSMS) testing services as pesticides residues, antibiotics, mycotoxins and restrictive substances span vertically and horizontally throughout the whole production chain (fresh fruit, wine, milk, nuts, processed foods, babyfoods, cereals, salmon, meat , seeds and grains).

This represents a market with thousands´ control points, where testing are required.The market is heterogeneous and consists of large companies, small and mediumproducers. FIDES LABS can generate large contracts, as well as provide individual and specific analysis. The variety of choices, needs, profiles and customer volumes, makespossible reduce the business risk.

Based on our market research, meetings, INE statistics, ODEPA, SAG, Chilealimentos, Fedefruta and analysis of regulatory frameworks, we estimated the demand for mass spectrometry food safety analysis for Chile, and Latin American demand was extrapolated by a factor of 30.

Table III Foods safety testing actual demand based on mass spectrometry in Chile and Latin America.

Increasing rate is > 25 % yearly.

The increasing demand for MSMS food safety testing is > 25 % annually.

1

3. FIDES LABS´ innovative business model

FIDES LABS is a unique business model of its kind, obtained through a process of open innovation with worldwide experts in mass spectrometry (MSMS) applied to food safety.

The technological heart of FIDES LABS is based on an optimal configuration of the latest models of LC – MSMS and GC – MSMS equipment for the area of food – safety testing in Latin-America. This optimal technological packing increase in 30 % sample processing capabilities, reducing costs by 25%, providing an order of magnitude major sensitivity and giving the option to provide specific services for niches markets. This configuration is part of the technological packaging offered by BBG and generates competitive advantages. (Technological packing not available in any laboratory in South America).

The element composing the Fides Labs business model is described below:

a. Optimal technological packing

i. Technical and economical analysis of LC-MSM optimized for food safety testing, focusing on the Chilean and South American markets.

A technical-economical analysis of 8 LC-MSMS models from 4 different suitable suppliers was conducted for 2 years. The process includes collection and analysis of technical and market information, meetings with providers, meetings with laboratories of international excellence, expert network consultation, attendance at seminars specialized international competitor

analysis, technology monitoring, visits to laboratories equipped with LC-MS, meetings and consultations with local and international users.

The study considered the following factors:

• Price

• Equipment usability for applications in the context of local industries• Criteria and technical factors (eg, sensitivity)

• Local support and experience of local support• Support for global networks

1

• Technological obsolescence

• Additional services such as facilities, guarantees and others.• Complete technical configuration of the equipment to operate optimally

service lines.• Integration of technologies and auxiliary features for:

i. Reduced method development time ii. Increase productivity andiii. Build a blinded and competitive business model.

The study took two years through an open innovation approach, where information was crossover analyzed with worldwide experts in LC-MSMS, applied to food and agricultural analysis. The result was an optimal configuration for LC-MSMS equipment oriented to agri- food applications, thereby reducing implementations method from months to weeks, operating costs reduced in 20%, production capabilities increased at 30%, sensitivity by an order of magnitude higher, and allowing access to specific market niches. All these features, integrated with methodologies to generate high performance teams, thus offering faster & higher quality services at a lower price to the customers.

The main features incorporated in the optimized LC-MSMS model are shown in Table IV.

1

Tabla III Differentiating elements incorporated in the optimized LC-MSMS equipment forFides Labs

1

3.1.2 Technical and economical analysis of GC-MSMS equipment for an optimized food safety laboratory in the Latam markets.

A two-year technical-economic analysis was done to 6 GC-MSMS models belonging to different providers. The processincluded collection and analysis of technica and marketinformation, meetings with suppliers, meeting with international laboratories of excellence, consultation to worldwide experts, specialized seminars attendance, visits to laboratories with GC-MSMS equipment, meetings and consultations with local

and international first level users. Factors considered in the analysis were the same as described in section 3.1.1.

The study took two years and as a result was an optimal configuration for a GC-MSMS equipment oriented to agrifood applications that complement the capabilities of LC-MSMS, generating a suitable module (LC-MSMS, GC-MSMS) that allows to offer complete services packages to the food industry, reduce methods deployment, savings in operating costs of consumables. All these features associated with a business model that allows usoffering higher quality services with competitive advantages to the customers.

The main features incorporating the optimized GC-MSMS model are:

Table V Elements of an optimized GC-MSMS for Fides Labs.

1

3.1.3 Sample preparation equipments technical-economical analysis

One of the critical point in the technological packing that is required for a commercial MSMS laboratory is to have a high throughput sample preparation room.

The sample preparation room is the biggest bottleneck in a commercial food safety testing MSM laboratory. BBG through market trends analysis, regulatory and client meetings identified the needs of local markets, the testing required and analytical methods to meet these needs. This scenario sets up a series of sample preparation requirements.

Experience in implementing MSMSM laboratories for quality control and certification companies, was turned into a three-year study to identify and design an optimal high throughput sample preparation room for a commercial MSMS food safety testing lab. The study´s methodology included visits to international laboratories, meeting with international experts, meetings with agri-food companies, an extensive literature methods´ review, visits to fairs and conventions in mass spectrometry applied to the agri-food sectors.

The study identified 17 sample preparation equipments critical to meet the wide range of sample preparation techniques, required for the different food safety testing methods. After this identification, we conducted a technical and economic analysis of each sample preparation equipment from different local suppliers, achieving a cost optimization, because the price difference between equipments or technically identical equipments have difference in price from local suppliers.

1

3.1.4. Laboratory design, conditioning rooms and operational areas

BBG overturned its experience in the design and implementation of laboratories, towards the design of an optimized food safety testing MSMS laboratory oriented to the local needs of the agricultural and food sectors.

The study took two years of technical analysis, the methodology included meetings with international experts, architects, specialized professionals, visits to international laboratories, analysis of regulatory frameworks, work flows analyses, all orientated to generate an impact in the technological packing, the business model and finally the financial results. The result was optimal design and technical specifications for each one of the areas required for the Fides Labs, including:

• LC-MSMS room• GC-MSMS room• Samples preparation room• Samples reception room• Samples grinding room• Stowage and storage requirements• Wash room• Refrigeration and freezing requirements• R&D rooms• Baths, support and administrative areas

For every room is available a data sheet with the technical specifications as dimensions, environmental conditions, electrical conditions, temperature, gas systems, furniture, between other factors, and its spatial interrelationship to generate an optimal laboratory design.

2

3.1.4. Technical-economical analysis of food safety methods

A three years study to identify the optimal food safety methods was carried out. The methodology included extensive literature review, exchange of information/methods with global experts, costs analysis with suppliers, visits to laboratories, visits to clients. The feasibility of method implementation was evaluated considering the following parameters:

• Number of steps involved to obtain a suitable purified sample for its injection in the LC-MSMS or GC-MSMS system.

The numbers of steps determine the general method evaluation. This criterion includes the identification of number of reagents used, the number of purification systems, instruments numbers, and glass material involved to obtain the purified extract.

o A method with a minor number of steps generates:

Less execution costs:• Less time

• Minor numbers of inputs and involved instruments.• Minor numbers of critical steps. Improving method reproducibility

• Major final implementation feasibility.• Minor rate of accumulated uncertainty• Major percentage of success in its respective validation.

Level of complexity of the analytical technique

Methods were prioritized by a suitable relationship between complexity of its application and results expected from its application. The ideal expected relationship corresponds to a low level of complexity associated with the ability to determine several analytes. The analytical methods with a high level of complexity and involving a low number of analytes were rejected.

Number of reagents involved in the analytical method.

The methods were prioritized by a limited use of incidental reagents (understanding itself for incidental reagent, a reagent that is not related directly to the extraction and purification of the sample, for example, derivatizing reagents).

2

Number of analytes belonging to the same chemical family, involved in a unique analytical technique.

We prioritized the selection of methods that involve the major number of analytes of the same chemical family, for example, pigments antifungals and bactericidal (Crystal violet, leuco violet, malachite green and Leuco malachite leuco green). The expected result is the selection of a major number of methods that possess a wide spectrum of analytes of one or more chemical families, instead of a high number of methods with a limited spectrum of analytes.

3.2. Innovation management system for FIDES LABS

FIDES LABS considers a quality management system in accordance with ISO 9001:2008 and ISO 17025, as also management & financial control models, which give course to generate an operational excellence. This operational excellence will be integrated with aninnovation management system to generate sustainable growth.

This is how FIDES LABS is the combination of an optimal technological packing focused in the reality and needs of the target markets, integrated with soft management skills and aninnovation management system for the continuous and sustainable growth.

Figure 1 Innovation management system for Fides Labs

2

3.3. Human resource management and high performance teams.

The heart of FIDES LABS is based on human resource management and the capability to generate high performance teams, central element of our differentiation. The majority of the national and international laboratories fail in talent management.

Fides Labs considers the latest soft management skills applied to business, as positive psychology, integrity management and high performance teams management methodologies.

FIDES LABS is based in the following values and principles, which all professionals and workers must fulfill independently from their technical skills:

• Client orientation• Respect• Leadership• Confidence• Aptitude to listen• Humility• Integrity• Teamwork• Orientation to results• resilience• Excellence• Optimism

3.4. Commercial networks and marketing innovation

Commercial networks

BBG, through his founder, has 10 years generating local and global networks in the agriculture & food industries. For four years in Chile, and previously in Australia, we have devoted ourselves to realize market research studies for high technology business oriented to the agricultural and food sectors, and due to our different experiences in quality control and certification companies and weekly meeting with agricultural and food companies, we have developed a commercial network. Some of them are:

Networks with the global quality control and certification companies operating inChile and Latam: SGS, Inspectorate, Eurofins, Bureau, Intertek, Alex Stewart and others.

A contact database with 15.000 key executives from agricultural and food companies.

Personal networks with the main agricultural and food companies (agrosuper (US$1700 millions in sale), Nestlé, Agroprodex (US$ 50 millions in sale), CCU, Coca Cola, Invertec (US$ 400 millions in sale), Multiexports, associations like Chilealimentos,SalmonChile, Fedefruta, Chilenut, and others) and other dozens of companies.

BBG and its executives, support an average of three meetings a week, with key members of agrifood companies of interest for Fides Labs.

We have important contacts with companies and associations, needing high volumes of analysis based by mass spectrometry. Requirement of expenditure in LC- MSMS, GC-MSMS analysis over US$ 0.5 million a year.

Marketing innovation

In general the laboratories possess technical profile, neglecting commercial and marketing elements. FIDES LABS considers the combination of the best traditional marketing practices combined with the latest digital marketing strategies and tools as:

• Web 2.0, e-commerce• SEO, web analytics• Adwords• Videos• Online seminars• Email marketing• Social networks• Online publicity• Online content management

We want to become a reference information center in food safety for the agricultural and food industries.

2

3.5. Technical & sales support

Great clients dissatisfaction exists regarding the technical and sales support received from food safety testing laboratories in Chile and Latam, basically these laboratories do the testing, but they do not have a technical support department or qualified people that can give assistance or explain the testing meaning to the clients. FIDES LABS considers a sales and technical support center that gives orientation to the clients about food safety and testing results, so they can use the information for food safety management. This is complemented with a training strategy through courses, seminars and workshops in food safety.

The figure 2 describe the FIDES LABS business model.

Figure 2 FIDES LABS business model

INFRASTRUCTURE NETWORKS OFFER CUSTOMER RELATIONS CLIENTS

CENTRAL CAPABILITIES

•First class technology

optimized• Technical expertise•People management•Innovation management• Library of methods available•Knowledge of local markets•Learning curve overcame

•Business associations•I+D Centers•International Universities•Expert network• Reference Laboratories• Quality control and certification companies.•MSMS suppliers•Agrifood associations

SETTING VALUE

• Competitive methods• Build knowledge that adds value to customers• Generate technical expertise

food safetytesting services, based on mass spectrometry

with lower pricethan competitors, faster

answer times, fulfilling

international standards,

supplemented with technical advice and

support.

• Long – term•Level strategic partner•Technical reference•Specialized and personalized attention.•Social media, web 2.0

DISTRIBUTION CHANNELS AND COMMUNICATIONS

•Operations at national level•Technical e – newsletter• email marketing• Member associations•Seminars workshops• Specialized magazines• Partnership with other labs

TARGET MARKETS

• Agrif ood exporting companies

companies• Customers requiring ppb analysis.• Vulnerable niches, babyf oods, and others.•I+D centers, public entities, universities•Quality labs

• Equipment depreciation• Leases• Permanent HR•Variables HR• Fixed and variable trade costs• Variables analysis costs•Operational costs

COST STRUCTURE FINANCES INCOME •Sampling•Sample analysis•Technical consultancy

2

4. Porter analysis

STRENGTHS:

Fides Labs is a world class center of excellence in MSMS food safety testing services, not available at Latin American level. Its technological packing, commercial and management approach allow to Fides Labs offering MSMS food safety testing services under competitive advantages as:

o Lower answer times. 2-5 working days, regarding 1 or 2 weeks local or international laboratories.

o 30 % more sample analysis capabilities

o 25 % less costs

o Specific methods for niche markets

o Technical and sales support

Few professionals exist worldwide that handle technically and commercially mass spectrometry food safety testing laboratories. Having these professionals is one of the principal FIDES LABS´ strengths.

Knowledge and networks with the local industries and business culture.

Knowledge in ISO 9001:2008 and ISO 17025, including regulatory frameworks and accreditation´s mechanism.

Deep knowledge of competitors.

International networks with the principal R& D centers, private laboratories and global experts in MSMS.

The creativity, digital marketing knowledge and a culture centered in the client´s implicit and explicit needs is one of our strength.

OPPORTUNITY

Historically food safety has been a traditional area mainly based on microbiological and traditional chemist analysis. Nevertheless, in the decade of ' 90 Europe, USA and Japan, between other developed countries, initiated a strong R&D in food safety, which has given origin in the last years to new and strict regulations, which the food exporting countries must fulfill as residues of pesticides, mycotoxins, antibiotics residues, pollutants and restrictive substances regulations. To comply with these international regulations, testing based on technologies as mass spectrometry (LC-MSMS, GC-MSMS) are required, which are technologies rarely available in Chile and Latam. No existing in the Latam region a world class commercial MSMS food safety lab.

2

Chile is the 15th worldwide food exporter with > US$ 12.000 million annually, will achieveUS$ 60.000 million in food exports for 2030. By the other side regulations as CE1881/2006, internal regulations requiring HACCP, GLOBALGAP, ISO 22000 implementation generate actual demands for MSMS testing in Chile > US$ 100 million, increasing 25 % per year. In a Latin American level the demand is over 30 times the Chilean market.

WEAKNESSES

Be a new player in the industry is one of the weaknesses of the FIDES LABS project, nevertheless, in view of the advantages of operational efficiency, the technological and management model, the commercial strategy, the marketing, the knowledge and the networks already established with the potential clients, we will be able to accelerate the market entry process.

For diminish these risks we are considering to execute an acquisitions´ strategy of local laboratories, merges with international laboratories and/or formation of a consortium.

We also expect that the ANCHOR INVESTOR that we are seeking in this first round will bring to the table not only financial capabilities, but also global networks that will help to catalyze the company expansion.

COMPETITORS

A risk is that an international laboratory or multinational quality control company enters into the Chilean and Latam markets. Nevertheless, this risk is mitigated by the following context: the professionals who possess the technical knowledge in the area of masses spectrometry in developed countries, in general are professionals from the scientific area tied to R&D centers, public institutions and/or universities without the management skills to set up a commercial MSMS food safety testing laboratory.

By the other side, exist a few privately owned MSMS food safety testing laboratories, that generally operate in 1-10 countries, with sales between US$ 20-100 millions, considering other countries and other regions of the world as a priority for business expansion, being unlikely that they are going to enter into the Chilean and/or Latam market, because distance, cultural knowledge and ignorance of local markets. Inclusive after get an anchor investor, we will be targeting these laboratories to make a consortium if is required and strategically convenient to generate a global network and catalyze the expansion process in Latam.

Furthermore, the biggest quality control and certification companies as SGS, Bureau and Intertek, they do not handle more than 3 MSMS's laboratories applied to the agrifood sector in an efficient way, and principally they are located in developed countries of Europe. For example SGS has good MSMS laboratories in Belgium, Taiwan and Germany.

2

However in Latin America they are positioned in other more traditional business, as for example basic inspection services, and in other industries such as mining or construction. The local country managers do not visualize as priority to expand these businesses in the region or high technology business. These companies do not have high qualified professionals in the areas of biotechnology, MSMS or technology management to develop these businesses locally. Considering the business development stage of these companies in the Latam region and the corporative business development alignments, they are not allowed to execute these sophisticated projects.

This is how the biggest quality control and certification companies are potential clients and commercialization channels more than competitors in the Latam region.

5. Fides labs replication and exponential expansion inside the food industries and into other industries.

FIDES LABS is a world class MSMS food safety testing laboratory center of excellence designed to grow exponentially. Once FIDES LABS is constructed, growing every US$ 5 million in sale, above the US$ 10 million annual revenue starting capacity, it will need marginal investments of US$0.9 million.

Furthermore, the variety of MSMS applications integrated with an innovation management system, will allow to us grow vertically and horizontally inside the agricultural and food industries, but also generate collateral expansion into another industries as environmental, life sciences, biotechnology, pharmaceutical, petrochemicals and chemical industries, among others.

It is important to emphasize that this business also is replicable to other regions of the world. Fides labs has the feasibility to grow to a company with annual sales of US$ 10-30 millions in Chile, US$ 20-200 millions to Latin-American level and 50-500 million worldwide, with high margins, if is combined with an organic and acquisitions growth strategy.

2

Figure 3 Fides labs collateral expansion possibilities

Other agrifood applications•Functional food, nutraceuticals, active ingredients, I+D+i•Enviromental applications•Containers safety

Life sciences•Bioequivalence, PK/PD studies•Clinical assays, medicaments quality control•Toxicology , forensic service

Petrochemical, gas industry and various other applications• Quality control•Other applications

2

6. Financial requirements

INVESTMENTS

Assets US$ Thousands

High technology equipments 2 LC-MSMS y 1 GC-MSMS optimally 1.500 configured.

Sample preparation equipments 200

Other minor investments, licenses, IT platforms. 200

Total Investments 1.900

HUMAN RESOURCES

Fixed Human Resources US$ Miles annuals

General management and development (at the beginning the generalmanager will act also as development manager supported by the 101 partners’ network).

Technical HR (This includes a technical manager, chief laboratorymanager, quality coordinator, 2 LC-MSMS chromatographers, 1 GC- 390

MSMS chromatographer, 4 analysts, 4 sampling preparers)

HR operations ( 1 project manager, 2 inspectors) 43

HR Commercial and marketing (1 commercial boss, 1 marketing boss,4 sales executives, 2 telemarketing). 130

HR finance and administration ( 1 finance manager, 1 accountant, 1 65 control management manager)

TOTAL annual fixed HR 729

OPERATIONAL AND COMMERCIAL REGIONAL OFFICES FIRST STAGE

Regional offices US$ Miles anuales

Office south zone placed in Concepción 84

Office north zone placed in Antofagasta 84

Office for Peru and Bolivia placed in Lima 84

Office for Argentina placed in Buenos Aires 84

TOTAL annual regional offices first stage 336

3

OPERATIONAL AND COMMERCIAL REGIONAL OFFICES SECOND STAGE

Oficinas Regionales US$ Miles anuales

Office for Colombia 84

Office for Ecuador 84

Office for Central America placed in Costa Rica or Panama 84

TOTAL annual regional offices second stage 252

Rental US$ Miles annuals

Building rent and others 120*

LAUNCHING FIDES LABS

Start Up (8 months) US$ Miles annuals

Reagents and Inputs for methods implementation 120

Accreditation expenses 50

RRHH 485

Buildings rent 80Design, architecture, permissions, remodeling, construction, LABfacilities 800** Start up regional offfirst stage ( 4 months) 112

Budget initial Marketing 100

TOTAL annual regional offices 1.747

* Rent costs depend of the final location to be chosen.

* *This value depends on the conditions of the building or space to rent, and if it decided to remodel existing facilities or to construct a new laboratory. Depending on these factors this article can change between US$ 0.5-1.5 millions.

3

7. FIDES LABS´project evaluationItem/ year 0 1 2 3 4 5 6 7 8

SALES (1) MUS$

LC-MSMS y GC-MSMS testing 2.000 6.000 12.000 13.800 15.870 18.251 20.988 24.136 27

Sampling and inspection 200 600 1.200 1.380 1.587 1.825 2.099 2.414 2

Consultancy and training 100 200 230 265 304 350 402 463

R&D services 200 400 460 529 608 700 805 925 1

Total income (MUS$) 2.500 7.200 13.890 15.974 18.370 21.125 24.294 27.938 32

Operational costs

Fixed costs (hr, rent, others) 1.185 1.437 1.437 1.437 1.437 1.437 1.437 1.437 1

Variable costs 395 1.090 2.019 2.321 2.669 3.070 3.530 4.060 4

Inspection and sampling costs 200 600 1.200 1.380 1.587 1.825 2.099 2.414 2

Management and marketing costs 250 720 1.389 1.597 1.837 2.112 2.429 2.794 3

Total operational costs 2.030 3.847 6.044 6.735 7.530 8.444 9.495 10.704 12

EBITDA 470 3.353 7.846 9.238 10.839 12.681 14.799 17.234 20

EBITDA (%) 19 47 56 58 59 60 61 62

Amotizations and depreciation

Depreciation 230 230 320 320 320 330 330 330

Start up amortization 175 175 175 175 175 175 175 175

Total amortizations and depreciations 405 405 495 495 495 505 505 505

Total operations costs, depreciation and amortizationsMUS$

2.434 4.251 6.539 7.230 8.025 8.949 10.000 11.209 12

EBIT 66 2.949 7.351 8.744 10.345 12.176 14.294 16.729 19

EBIT (%) 3 41 53 55 56 58 59 60

Company tax (17%) 11 501 1.250 1.486 1.759 2.070 2.430 2.844 3

Profit after taxation 54 2.447 6.101 7.257 8.586 10.106 11.864 13.885 16

Plus depreciation and amortization 405 405 495 495 495 505 505 505

INVESTMENTS (3)

Equipment1.900

900900

Start up 1.747Working capital 500

Investment recovery (4)

NET CASH FLOW -4.147 459 2.852 5.696 7.752 9.081 9.711 12.369 14.390 15

NET CASH FLOS ACTUALIZED YEAR 0 -4.147 383 1.981 3.296 3.738 3.649 3.252 3.452 3.347 3

Results Results

ROI 79% ROI 79%

NPV (20% ) kUS $ 25. 451 VAN (15%) kUS$ 34. 406

Pay back period: 3 years Pay back period 3 years

• Sales at all times are considered under a market share below 15%. There are agricultural and food companies that alone spend over US$ 700 thousand in these analysis annually.

• Variable costs are 15% of sales. Inspection and sampling sales were considered equal to the costs.

• Administrative and marketing costs were considered as 10% of total sales. (Considers that people and expenses will be incorporated in these items, proportionally to sales).

3

8. Other considerations

• FIDES LABS losses control: If the project does not become profitable after three years, exists the possibility to liquidate all assets, especially high technology equipments are convertible to cash. For these reasons, the maximum loss that can produce the project is bounded to US$ 2 millions.

• High technology invest Chile grant available: Being a high – tech project with positive externalities throughout the agricultural and food industries, the FIDES LABS project can be co – financed by a non – refundable government grant up to US$ 2 million.

The cash flows presented before do not consider co – financing contribution through government grants. If deemed, the project risk becomes positive, even in the worst case scenario the losses control become less than US$ 0.5 million.

9. What are we seeking?

An anchor investor with a common and complementary vision to execute the Fides Labs project.

3

Further details please do not hesitate contact us:

Bio Business GroupEliodoro Yañez 1742, ProvidenciaSantiago de Chile+56 2 2042034 i nfo @ b i o b u si ne ss gr o u p. c o m ww w .b i obu si ne ss gr oup. c o m