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Confidential Memorandum. Contains Proprietary Company Information Subject to Non-Disclosure Agreement. Not for Distribution.

Caledonia Tall Ship

Buiness Plan


Caledonia Tall Ship

Index

Introduction 3

Customers 4

Marketing Partnerships 5

Management Team 6

Relocation Map 7

Investment 8

Summary 9

Appendix

Cruise Liner Analysis 10

Caledonia History 11

Ship Specifications 12

Caledonia Pictures

Under Sail 13

In Port 14

Deck Views 15

Bridge 16

Hospitality 17

Cabins 18

Drawings 19

Mainbrace Yachts Ltd

Company Certificate

Memorandum of

Incorporation

Articles of Association

Share Certificate

After 12 months of intensive feasibility study of the Superyacht, sailing tourism and Superyacht designs, Mainbrace Yachts Ltd was registered in the UK as a Limited Liability Company and is a new company in the Maritime, Ocean Liner, Ship and Superyacht Charter industry providing both the passenger services, design and building of our Superyachts and Ships.

The company was formed by Arthur Dyason who exceeds 10 years in the Tour Operators industry, 40 years in IT and 30 years sailing and racing yachts. In August 2015 Arthur founded the iClass Yacht Association for the promotion of single design racing in the over 42m yacht sizes.

Although registered in the UK the accounts and operations are currently run from Australia and in the near future operational bases will be setup in the ports and harbours we visit.

All vessels will be secured by Maritime Mortgage, hull and contents Insurance provided by Lloyds of London as well as Mainbrace Yachts Ltd being insured for public and third party liabilities.

Stage 1 - We have the opportunity to purchase Caledonia , a 75m tall ship, at a fraction of its true value and to setup a unique business in the Ocean Liner, Superyacht Charter and Tourism industries.

To be based primarily in Sydney Harbour where there are 5 other tall ships, Caledonia will be the largest in Australia and the only tall ship with a full professional crew and SOLAS (International Convention for the Safety of Life at Sea) compliance.

Two ships, the James Craig and HMB Endeavour are part of the Maritime Museum and sailed just a few time a month by a volunteer crew while the STS Young Endeavour is operated by the Royal Australian Navy and is primarily used to provide sail training to Australian youth through the Young Endeavour Youth Scheme, with up to 30 youth supplementing the small naval complement on a voyage.

The 2 commercial tall ships located in Sydney Harbour are the Søren Larsen (42.7 LOA) and the Southern Swan (39.6m LOA) which are classed as tall ships as they are both 3 masted requiring a minimum of 10 crew to sail. However they compete with Sydney Harbour taxi boats, Superyachts and Ferries for harbour tours so operate with the legally required minimum of three professional crew with all other crew being untrained volunteers. Both these ships are very limited in space with NO commercial kitchen and extremely basic accommodation for 20 or so passengers and day trip top deck capacity of approx. 50.

Caledonia is a NEW modern passenger tall ship with a 4 star hotel accommodation for 76 passengers and 24 crew and a day trip capacity on top deck as well as the upper internal deck of over 200 passengers. She also carries a variety of water toys for use when anchored.

We will be relocating her from Canada to Sydney Harbour where she will be extensively used for commercial tall ship charters in the harbour as well as extended ocean charters along the east coast of Australia, New Zealand and other South Pacific Island Nations like Fiji.

Caledonia is valued at over US$10 million and is amongst a very small number of sailing ships worldwide with SOLAS certification.

Stage 2 – when established our intension is to upgrade Caledonia s appearance to that of a high end Superyacht with hardwood decking, fold away davits, waterjet tenders, a single action evacuation system, a new central deck house and roller furling system to reduce the crew numbers required increasing safer and more efficient sailing.

Stage3 – will be to build a new modern tall ship to add to the fleet.


https://en.wikipedia.org/wiki/STS_Young_Endeavour

Although a large percentage of customers will come from promotions via the many tens of thousands of sailing clubs worldwide, the interest in Tall Ships and large sailing Superyachts is immense and the majority of customers are predicted to come from our media advertising, Social Media, website searches of those wanting adventure holidays or excotic alternate voyages.

Sydney Harbour already has the marketing of the harbour well established with both the 4 million residents and the 3 million yearly tourists knowing what is available from day excursions, whale watching, sail training, corporate events, team building, weddings and the many hospitality cruises including food and drink at the numerous festivals and events held in Sydney Harbour each year.

Google searches for Adventure Tourism, Sailing Vacations, Sailing Yachts, Luxury Yachts, Ocean Racing, Sailing Adventures, Sailing Around the World, Adventure Travel, Adventure Holidays, Tall Ship Cruisers, Ocean Cruises, Yachting World exceed 100,000 searches per month with 250 million Facebook users indicating an interest for the various Round the World yacht races.

Google searches specific to sailing activities in Sydney Harbour including christmas, party, new years eve, lunch, whale watching, dinner, weddings, corporate events, etc, exceed 20,000 searches per month with most of these search keywords are not secured by any of the Sydney based tour operators.

Add to this the on-board TV production crew recording these charters and cruises on a regular basis for global viewing on Youtube and TV channels like the Discovery Channel will allow many tourist visiting Sydney Harbour to already be booked for one of our charters or cruise.

Our goal is to dominate the search engines to the point of excluding all other operators from the first page of any search results.

Our online booking system enables customers to browse, select and pay for their tickets with an easy and efficient manner as well as approved ticket agencies the same easy of booking and reserving tickets while automatically receiving their pre-set commissions.

As our online booking system is fully intergrated with our online administration and the ship is internet capable this enables the cabin crew and ships master to know the exact customer list and requirement for each voyage allowing the cabin crew a more personal service for each and every customer.


Customers

Marketing Partnerships

Our fleet are not just massive mobile billboards and events venue seen and attended locally but a global platform for our Marketing Partners.

Due to the size of the media attention where ever our ships go, allows our Marketing Partners, whose brands we are advertising on these billboards, to not only promote their brands but also brings attention to our fleet.

Our Marketing Partnership is designed for the global market and will attract maximum media attention at every harbour and port the fleet visits primarily due to the spectacle of these ships.

Add to this the Corporate Hospitality Days and promotions with the Marketing Partners inviting their guests aboard the ships for the day, weekend or voyage.

Because Caledonia is the largest tall ship based in Sydney Harbour the public will not be able to miss them ensuring many private and public pictures and videos will include Caledonia if not as the focus point at least in the background.

There are also many Webcams around Sydney Harbour as well as helicopter based news camera crews who will be capturing Caledonia either moored up or sailing as part of everyday life on the harbour.

We will also have a fulltime TV production crew on-board with both mobile recording as well as a large number of fix position cameras around the ship for optimum capture of events while on board covering not just the exciting but the mundane like routine maintenance of the vessel.

Due to our unrestricted copyright policy for video and pictures and Caledonia having full internet connectivity we also expect major social media use by the crews and passengers on board.

Due to the cost of adorning Caledonia with advertising, logos, images and promotions there is a minimum 3 year term for Marketing Partnerships unless specifically agreed.

The Marketing Partnership

Includes – Company logo or image on selected sails Company logo / promotion on crew clothing Company internet links on the Mainbraceyachts.com website with a Company

webpage. In harbour/port Corporate Hospitality days/events. All crew members participate in the promotions. On-board promotional products and material Giveaways.


Marketing Partners

Arthur Dyason – apart from 42 years as an IT Specialist consulting to many Fortune 100 corporations, Arthur has put his analyst skills to a wide variety of businesses including Sales and Membership administration for The Civic Trust and Safety Net for Children charities and a number of his own companies.

These include Pathfinder Coaches which ran guided tours all over Europe designed and schedules by Arthur with his three executive coaches as well as UK summertime excursions in London, UK were he created the tours and organised accommodation, entertainment and feeding of over 800 American tourists each week requiring contracting of an additional 20 coaches from other London based coach companies.

Also, during most European summers, Arthur worked with ADRA using his coaches for humanitarian purposes carrying up to 200 of their volunteers to places needing help building schools and medical facilities in Eastern Europe.

Being an Institute for Independent Business Associate (IIB), Arthur extensively uses the international network of over 3500 active IIB Associates for specialist requirements for many of his clients and is also used by many IIB Associates for consultancy to their clients.

Arthur also owns his own software house developing bespoke solutions for many clients as well as

developing his own ERP system. He is currently training his youngest son to take over this business.

Colin Manie - has a successful sponsorship marketing career that includes a 10-year-stint in the UK and Euoropean sports industries, where his focus was winter sports events, multinational commercial retail and alpine guiding.

Since returning to Australia he has established SEAMS, Sponsorship Marketing, which has excelled in the highly competitive sponsorship marketing industry.

SEAMS oversees event development and management, activations, branding, media placement, planning and strategic analysis. In doing so it brings success to clients marketing investments with corporations, sports organisations, community and the arts.

SEAMS has managed numerous events and projects, including FIS World Cup Freestyle Skiing events, sports television co-productions, various Australian Rules Football events and teams, Melbourne s famous St. Kilda Festival and Moomba Community Festival in association with the City of Melbourne and State Government.

SEAMS has also been deeply involved in a series of successful made-for-television skiing events including X Games , the celebrity-driven Quiksilver Surfing Series for Charity, Emirates Australian Film Awards, Melbourne Cup Spring Racing Carnival, multiple sport and entertainment conferences, Asian Cup Soccer, and the national Hyundai A-League.

Colin s mission is to facilitate sports and entertainment events, branding venues and activations that are creative, ethically-sound and enduring.

Garry Farrar - Garry is an experienced media executive with a long and distinguished career in television broadcasting, the entertainment/sports sectors, and advertising.

As marketing and publicity director of Network Ten, Garry boosted ratings and advertising revenue through promotions, event launches, publicity schedules, and advertising campaigns.

Garry played an integral role in the start-up team that launched Foxtel. As national promotions director he spearheaded brand creation, promotion and events execution and led a national support team to create strong subscriber numbers.

He also partnered with major channel brands including Nickelodeon, National Geographic, Discovery and Fox Sports, to launch on Foxtel in the Australian market.

In 2003, Garry established Splash Entertainment Australia, an events, promotions & production consultancy. He grew the business by securing major clients including National Rugby League, Waratahs Rugby Union and Central Coast Mariners.

In 2010, Garry successfully launched boutique advertising agency The 360 Degree Marketing Group, which specialises in media planning/buying, events, promotions, production & publicity.

Garry now owns and operates a new activation business, Brands on Tour (BOT), with offices and factory on the Northern Beaches of Sydney. 


Management Team

South PacificPanamaSanta Cruz, GalápagosHanga Roa (Easter Island)Pitcairn IslandPapeete, TahitiAvarua, Cook IslandsNuku'alofa, TongaNadi, FijiNoumea, New CaledoniaBundaberg, AusBrisbane, AusCoffs Harbour, AusNewcastle, AusSydney harbour, Aus

Atlantic and CarribeanToronto, CanadaNew York, USAMiami, USAHavana, CubaPort au Prince,HaitiKingston, JamaicaPanama

Caladonia North Atlantic, Carribean & South Pacific Voyage

As Caledonia is currently located in Toronto, Canada we have two options for the ships relocation to Australia. These

are to sail with minimum transport crew with the most direct route or create a Life Time Experience cruise for up to

74 passengers with a TV production crew recording the voyage.

The direct option is roughly 12,000nm and at 7kts will take approx. 75 days with costs for transport crew, insurance,

fuel, mooring, visas and the Panama Canal fees over $400,000 and loan and interest payments exceeding another

$400,000 giving an approx. relocation cost of $835,000 but being ready for business 4 weeks earlier than the cruise

option.

On the other hand the Relocation Cruise will allow a Marketing Partner to take full advantage of the month before we

sail being located in Toronto, and the other 20 major ports we will be stopping at for 2 days at each port, for

promotion of their Brands.

The voyage has been designed to have 7 full cruises with a potential of 74 passengers on each cruise. These cruises

are:- Toronto to New York. - New Your to Miami. - Miami to Havana. - Havana to Port au Prince -

Kingston and Panama. - Panama to Santa Cruz, Hanga Roa, Pitcairn Island and Papeete. -

Papeete to Avaruna, Nuku alofa and Nadi. - Nadi to Port Vila, Noumea and Bundaberg. -

Bundaberg to Brisbane, Coffs Harbour, Newcastle and Sydney Harbour.

and at $300 per day per person require 37 passengers to be at a similar cost as the direct option with a 100% capacity

actually making a profit.

In addition to this we also finish with a fully record of the journey for showing via TV companies like the Discovery

Channel with 6 months worth of TV episodes.

reference – Caledonia.xls page Relocation Cruise .


Although Caledonia has a real value exceeding $14 million (US$10m) we only require $5.64 million (US$4.5m) to purchase her and relocate her from Canada to Australia. This can be achieved either by Bank Loan, Bank Overdraft, Investment Partner in Mainbrace Yachts Ltd via convertible bond or Venture Capital or via investment in a Maritime Mortgage registered on Caledonia.

Our P&L file provided (Caledonia.xls) is based on Bank Loan or Bank Overdraft type lending facilities to provide realistic figures for the evaluation of the operation of Caledonia in Australia and more specifically Sydney Harbour.

Private Investment via Bank Loan type lending is acceptable however we are also open to Convertible Bonds and Maritime Mortgage facilities as well and will discuss other forms of funding.

For Convertible Bond investment we are prepared to pay $360,000 per annum (8% of the investment) and 30% convertible shares at the end of a negotiated period of 3 to 5 years.

Lloyds of London Maritime Mortgages are divided into 32 shares which allows registration of investment with Lloyds on Caledonia with the number of shares invested.

With the true value of Caledonia at $14 million (US$10m) each share will be set at $437,500 (US$312,500) but to bring the Maritime Mortgage in line with Bank Loans and Convertible Bonds we are setting the share value at $392,000 (US$280,000) with a discount of 20% for those investing the 24 shares require for the purchase of Caledonia. The share value remaining higher due to the higher yearly ROI received over Bank Loans and Convertible Bond alternatives.

Maritime Mortgage ROI per year is guaranteed for the first 5 years as shown in the table below and then reduced to a 2.5% (negotiable) of the annual profit per share owned.

ROI % shares20 3218 24 to 3116 15 to 2314 8 to 1412 3 to 710 1 or 2

Maritime Mortgage - Exit Plan

At the end of the ROI guarantee period of 5 years we will offer 100% buy back of the initial investment or allow the investment to transfer to a new ship (if available) for an additional 5 year guarantee period for the investment. Alternately the shares can just carry on with profit sharing or be sold to another person who will then receive the profit sharing.


Investment

With the purchase of Caledonia by early 2016 we will need to sail her from Toronto to Sydney Australia.

By taking 6 to 8 weeks of advertising and promotions we will be able to offer a voyage leaving Toronto, Canada during April or May of 2016 and arriving Sydney, Australia sometime during August or September 2016 giving time for a tropical facelift before the high season in Sydney Harbour.

This facelift will include hardwood decking, new fast exit liferaft system to enable a 200 person daytrip licence for Sydney Harbour as well as various other touch ups.

The cruise will take in the following stops with a stay of 2 days in many of the locations and take approx. 120 days:-

Toronto, New York, Miami, Havana, Haiti, Kinstown, Panama, Santa Cruz, Galápagos, Hanga Roa (Easter Island), Pitcairn Island, Papeete - Tahit, iAvarua - Cook Islands, Nuku'alofa, Tonga, Nadi – Fiji, Port Vila – Vanuatu, Nournea - New Caledonia, Bundaberg, Brisbane, Coffs Harbour, Newcastle and Sydney Harbour.

At a fee of $300 per day per person we have a breakeven of 38 passengers out of a possible 76 when comparing the cost of relocating by sailing direct with no passengers. With 64 or more passenger the relocation would actually cost nothing and produce a small profit.

The tropical facelift will cost from $1 million to $1.5 million and take 6 to 8 weeks. During the facelift we will still be able to offer limited charters. However this facelift is not vital for Caledonia to be chartered successfully but would elevate the appearance of the ship to Superyacht status.

The appendix Caledonia.xls shows an investment requirement of $5.64 million. This includes the tropical facelift if we book 64 or more customers for the relocation voyage as well as the purchase price and explains the different type of charter available by other operators in Sydney Harbour using the average fees to their customers.

If we remove all income from the Marketing Partnerships at 42% booking capacity the calculations show a total yearly cost of $7,929,993 and a yearly income of $7,970,100 giving a net of $40,107 which will increase to $1,524,219 net after year 5 once the funding has been repaid.

At 100% booking capacity the yearly costs increase to $10,422,843 with the yearly income increasing to $16,873,100 giving a net of $6,450,267 increase to $8,924,130 net after year 5.

These costs are over estimate to include misc. items not included in the specifics.

With these figures in mind and a build time of 2 years, if we are operating at 100% for the first 3 years Stage 3 could be implemented which for a similar sized ship but with the latest technology would cost in the region of US$30 million and be capable of being sailed with a crew of only 5 with average reductions in fuel use by 80% or more due to solar and hydro generation.


Summary

Financial Breakdown of a Typical Ocean Cruiser

The following is used to determine the typical ticket price passengers on Ocean Cruises are currently paying

and is applied to overnight and extended voyages on Caledonia. It does not compare the type of cruises just

the money spent.

This estimate is for 2015 average cruise revenue and expense per passenger for all cruise lines world wide.

The average per passenger per day Income is projected to be $222.00 (Australian $310), with $168.43 ticket

price and $53.57 on board spending (average cruise duration 8.0 days).

Prices on this page are in USD.

A financial breakdown of typical cruiser (worldwide, across all cruise lines)

Revenue Expenses

Ticket $1,350

Onboard Spending $429

-Casino & Bar $236

-Shore excursions (cruise line portion) $86

-Spa $43

-All other onboard spending $64

Total spending $1,779

Other operating costs $258 14.5%

Agent commission $231 13.0%

Ship fuel costs $192 10.8%

Corporate Operating Costs $206 11.6%

Payroll $196 11.0%

Depreciation/Amortization $171 9.6%

Victualing (food) $107 6.0%

Onboard and other $78 4.4%

Other and transportation $59 3.3%

Interest Expense $55 3.1%

Total Expenses $1,553

Profit before taxes $226 12.7%

Sources: Royal Caribbean Cruises, Ltd., Carnival Corporation and plc, NCL Corporation Ltd., Cruise Lines

International Association (CLIA), The Florida-Caribbean Cruise Association (FCCA) and DVB Bank.


Caledonia is a NEW sailing passenger ship with accommodation for 76 passengers. She complies with the latest SOLAS requirements. The hull was built in 1947 and had a long and active career as a fishing vessel and research ship before her conversion to a sailing ship began in 2002. She was stripped to the bare hull. New decks, bulkheads, pipe works, electrical wiring, mechanical and electrical systems we installed along with accommodations, sailing rig, superstructures, etc.

Essentially the entire ship with the exception of the lower hull is new. The entire conversion was overseen by Transport Canada Surveyors and was completed in March 2010 to the highest international safety standards.

Caledonia is rigged as a three masted Barquentine with three headsails and topsail, gallant and royal square sails on the foremast, staysail and gaff mainsail on the main mast and marconi mizzen sail on the mizzen mast.

HistoryThe ship was built and launched at the well known Cooks and Welton shipyard (Hull, UK) as Akurey : in 1949. The ship was built for Icelandic owners for the herring fishery.

In the early 50's the vessel changed hands but remained in the Icelandic flag. She was then used for carrying fish for a period. By the late 50's Akurney had been renamed Petrel and was working under Norwegian owners from Tromso.

The Norwegian owners made significant modifications to the ship and brought her into trade as a seismic research vessel. She worked on and off as contracts availed themselves until 1972 when she was sold to interests in Quebec.

From 1972 until 2001 Petrel V was the pride of the owner of Techno Navigation.

The ship spent the better part of 30 years in the freshwater basin at Quebec City. Roger Raymond used the vessel on occasion for marine biology research missions in the Great Lakes and Atlantic Basin. Raymond kept the vessel crewed and very well maintained whether at the dock or underway. In 2001 Cape Harrison Marine of St.John s Newfoundland purchased the ship from Techno Navigation and renamed her Cape Harrison .

They refitted her to meet the new requirements by the Offshore Petroleum Board for use as a chase and seismic vessel. In September of 2002 the current owner was in St.John s for business and happened on the vessel. The ship was exactly what he was looking for to strip down and build into a new sailing passenger ship for use on international trade.

The vessel was surveyed extensively and found to be in immaculate condition. It was then decided that the vessel was an appropriate candidate for transformation to a 75m sailing Barquentine for up to 100 (total crew and passengers).

CALEDONIA as she is now known by was launched in 2008. The vessel is a 4 star floating boutique hotel inside. The ship was designed to the highest standards to ensure that it could trade anywhere and do anything (passenger, education, trade mission, etc).

Our purchase of her will give us an immediate income by relocating her to Sydney Harbour

she will be the largest tall ship in Australia ideal for large Corporate Events, weddings, private

charter and during the high season sight seeing day trips and whale watching for up to 200

passengers while also being available as a boutique hotel and restaurant.


The Ship

LOA: 245' (74.7 m) Mfg: COOKS & WELTONLWL:Beam: 30' (9.1 m) Model: BarquentineDraft: Min 16' (4.9 m) Type: TallshipClearance: 131' (42 m) Staterooms: 30Hull Mtrl: Steel Fuel Cap: 600001(15852 g)Tonnage: 810 Water Cap: 800001(21136 g)Cockpit: Aft Engines: I x DeutzSBV8M 545Flag: Canada Speed: Cruise 10 knotsYear: Mfg-1947 Refit-2008 ISM: Yes

Electronics and NavigationFuruno GMDSS A3 Area Console RC 1815 Furuno VHF Radio Telephone x 2 FM 8800SFuruno SSB Radio Telephone FS-1570/2570 Furuno Inmarsat C Mobile Earth Station Felcom 15Furuno Naxvtex NX 700 Icom VHF Airband Transceiver PS 80/ICA200Ships Intercom & Alarm Zenitel 8000 Furuno Printer Unit x2 PP510Furuno Terminal Unit IB 583 Furuno Control Unit FS-2570CFuruno Alarm Unit IC306 Furuno Distress Message Controller DMC 5Handheld VHF x 3 Oceanus DSC GMDSS Furuno GPS Navigator GP37 Furuno GPS Navigator GP150 Ship Security Alert System Sailor TT 3000 Furuno Doppler Speed Log DS 80 Simrad Steering Tiller (qty.2) S35Simrad Gyro Compass RGC 80 Simrad Auto Pilot AP50 Simrad Digital Repeater DR76

Rutter Voyage Data Recorder System VDR 100G2/G2S Furuno 21 High Resolution Colour Display FR2125 Sat Phone Iridium 9500 Furuno Daylight Display Radar 1832 EPIRB SATFIND 406 PRO Furuno AIS Transponder Monitor Unit FA1502 SART x2

Mechanical EquipmentMain Propulsion Single Deutz SBV8M 545 marine diesel 1500hp Main Propulsion Type Single CPP Propeller Bowthruster 165 HP Rudder 1 PintelFuel Consumption @ Max Speed 5.7 Tonnes / Day @ 10 KtsFuel Consumption @ Economical Speed 2.0 Tonnes / Day @ 7.5 KtsWatermaking 7400 Gallons / day

Deck & HullLiferafts x 12 Viking 25 DKF SOLAS ALiferaft Davits x 2 NDM SCM2.1. SWL 2.1TRescue Boats x 2 Narwhal SV 400Rescue Boat Propulsion Yamaha 40hp 4 StrokeRescue Boat Davit x 2 NDM SCH 1.2. SWL 1.2TShips Tenders x 2 Narwhal HD 580Ships Tender Propulsion Yamaha 70hp 4 Stroke

ElectricalGenerators x 2 Caterpillar C18, 425 Kw 440vac 3ph Emergency Generator Perkins, 100Kw, 440vac 3ph

The following is a basic outline of the work undertaken: The vessel was stripped to a bare shell and sand blasted inside and out. The deck hatches were removed to open up the structure and enable steel to move in and out. A lower deck was constructed - thereby providing for a new accommodation deck. The ship was re-ballasted with steel ingots to enable its intended sailing role. All new vertical bulkheads were constructed to meet the latest SOLAS requirements for subdivision and

stability. Each bulkhead had a new IMS hydraulic watertight door installed (operable from three locations in the ship).

Entire new electrical wire runs, piping, air conditioning were installed. Every wire and virtually every pipe on board the ship was installed new.

A sailing rig (designed to Germanischer Lloyds standards) was designed by Olivier van Meer (designer of Star Clipper), constructed, and installed.

The cabins were constructed in four styles to accommodate various budgets and needs of clients.


Ship Specidications

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