Featured Company

ALL Fuels & Energy Company

ALL Fuels & Energy Company (OTCBB: AFSE) is a development-stage ethanol company organized to operate as an ethanol producer, focusing primarily on the production and sale of ethanol and its co-products. To date, AFSE has: obtained $2.3 million in private equity funding; purchased 150 acres on which to build its proposed ethanol production facility in Manchester, Iowa; signed a five-plant engineering and design agreement; engaged Natural Resources Group to handle water-related environmental matters relating to the proposed Manchester ethanol production facility; engaged Yaggy-Colby to handle air-related environmental matters relating to the proposed Manchester ethanol production facility; and investigated and become involved in the potential acquisition of one or more existing ethanol production facilities.

"Super" Enzyme

ALL Fuels & Energy has selected a specific "super" enzyme on which it's conducting testing to determine its capacity for boosting production of corn and cellulosic ethanol. This selected super enzyme is the first in a suite of ten super enzymes identified for testing by AFSE Enzyme, LLC, a subsidiary of AFSE. The company has stated that testing is on course for completion in May 2008.

The company believes that the super enzyme could reduce ethanol production cost to less than $1 per gallon if proven successful in upcoming trials. New plant construction cost, including ALL Fuels & Energy's current Manchester, Iowa plant in development, could potentially be reduced by nearly 30% using this new super enzyme technology.

One of the key benefits is that this super enzyme will allow the use of items such as household garbage which then eliminates the cost of the more traditional component -- corn. By eliminating the corn component then one could expect savings in excess of 50% in certain circumstances. When considering the worldwide ethanol production is approximately 35 billion gallons per year, the company will look to immediately target a portion of this potential $40 billion in savings through licensing arrangements and other partnerships should this technology become technically and commercially viable.

Newly Formed Subsidiary - AFSE Enzyme, LLC

In March, ALL Fuels & Energy formed ASFE Enzyme, LLC as a subsidiary to complete the commercialization of the ethanol super enzyme, producing cellulosic ethanol with a possible savings of up to 50% reduction in production costs. Ethanol using the super enzyme will be manufactured from Sustainable Non-Food biomass and surplus waste products, such as wood chips, household garbage and sugarcane waste, which are abundantly available domestically and internationally.

"We are pleased with the rate at which our super enzyme project is progressing. As we continue to pursue acquisitions and vertical integration opportunities, we believe this super enzyme project greatly enhances our business model of risk management and low cost production," said Dean Sukowatey, ALL Fuels & Energy President.

Proposed Business and Implementation Strategy

ALL Fuels & Energy has set a goal of becoming a significant producer of ethanol in the U.S., that is, a producer of 500 million gallons per year of ethanol. To acheive this, they have developed a strategy that they intend to pursue. The strategy, which is dependent on the company's ability to obtain significant additional capital, has the following important elements:

Low-cost production capacity

It is the company's intention to capitalize on the growing demand in the U.S. for ethanol by establishing increasing production capacity as quickly as possible over the next several years. In pursuing this expansion strategy, the company will seek to build and/or acquire large-scale facilities with design elements that incorporate technology improvements and continue to build and/or acquire facilities in locations with access to multiple rail services. They believe that using similar facility designs will permit them to lower the costs relating to spare parts and to take advantage of their operations experience to be gained at other future facilities.

Focus on Cost Efficiency

ALL Fuels & Energy's corporate challenge will always be to seek greater economies of scale in their operations and to maximize energy efficiency and increase yield. Included in this challenge will be to purchase corn during peak supply periods to reduce the corn costs and to reduce the per-unit energy and transportation costs where possible.

Implement Risk Mitigation Strategies

Once the company nears completion of the Manchester production facility, their management will begin its efforts to mitigate the company's exposure to commodity price fluctuations by purchasing a portion of their corn requirements on a fixed price basis and purchasing corn and natural gas futures contracts. In addition, it is expect that, to mitigate the ethanol price risk, the company will sell a portion of their future production under fixed price and indexed contracts. Should the company be successful in managing its exposure to commodity price fluctuations, the company expects that its operating results will be less volatile. There is no assurance that they will be successful in these efforts.

Seek Beneficial Alternative Technologies

ALL Fuels & Energy's management intends to investigate the feasibility of implementing, at some time in the future, new technologies that would serve to augment or replace natural gas usage. It is expected that these technologies would allow them to reduce their energy costs. Capital costs and engineering issues must be adequately addressed prior to any implementation of any such technology.

Seek to Expand Market Demand for Ethanol

As the company's rate of growth and their access to capital permit, the company's management intends to take actions it believes will create additional demand for ethanol, including, investing in new technologies that use ethanol and employing institutional advertising that focuses on, and promotes the use of, ethanol.

Pursue Potential Acquisition Opportunities

Assuming that the company has capital available, they believe that, as the ethanol industry matures, opportunities for expansion of the business through acquisitions will be available. Such an acquisition could involve additional ethanol production, storage or distribution facilities and related infrastructure, as well as potential facility sites under development. The company's current efforts in acquiring ACE Ethanol, LLC are an example of this plan.

In Particular

The ethanol produced by the company's first, the Manchester facility, and likely any future, ethanol production facility, will use corn feedstock. The distiller’s grains byproducts, which are the remnants of the corn after the ethanol-producing starch is removed, will be sold to dairies, cattle lots and hog operations as a valuable protein feed supplement.

ALL Fuels & Energy has entered into an engineering agreement with a project engineering firm to provide the ethanol process technology for five future ethanol production facilities proposed to be built by the company, including the Manchester facility. In addition, this project engineering firm is to provide training in plant start-up and operation. These plants’ designs will include the latest technology from the project engineering firm that fractionates the corn into more value-added products that allow the value of the Dried Distillers Grain with Solubles (DDGS) to increase significantly over the current value. Also, the project engineering firm, intends to integrate new technologies that allow for improved natural gas consumption into the company's plant designs. If beneficial, the project engineering firm intends to implement biomass boilers and/or anaerobic digestion to promote increased operating efficiency at a particular plant. Also, it is expected that each plant’s design will accommodate new ethanol feed stocks, as the economics change among the various feedstock commodities.

First Proposed Ethanol Production Facility Construction

ALL Fuels & Energy has purchased approximately 150 acres of real property located near Manchester, Iowa, on which to build the Manchester facility. This property has the following characteristics:

Property Location: Adjacent to Manchester, Iowa, midway between Waterloo and Dubuque, Iowa.

Property Size: Approximately 150 acres.

Purchase Price: $954,000.

Ingress/Egress: Easy access to Iowa State Highway 20.

Market Availability: Highway access for trucking ethanol and DDGS; situated in Northeast Iowa with close proximity to feed markets for Wet Distillers Grain with Soluables (WDGS).

Power Supply: Electricity supply is ample for the proposed production facility and there are two nearby natural gas pipelines.

Water Supply: Well water is available, with back-up water supply available from the City of Manchester.

Sewer: Available, if needed, from the City of Manchester.

Corn Availability: Our commissioned project feasibility study indicates that there are ample corn supplies in close proximity to the Manchester facility, as proposed.

Annexation: In March 2007, this property was annexed by the City of Manchester. As a result of the completion of this annexation, approximately $17,000,000 of Iowa state and local tax credits have been awarded to us.

Local Government: We have entered into a Development Agreement with the City of Manchester whereby we have been granted tax abatements and infrastructure improvements in and around the Manchester facility site. Specifically, the City of Manchester has agreed to provide the Manchester facility with sewer service to the facility site, roadway improvements in and around the Manchester facility site and a 10-year property tax abatement, a total incentive package in excess of $6.6 million. In addition, the Iowa Department of Economic Development has awarded a sales and use tax credit in an amount in excess of $10.4 million for High Quality Job Creation.

Facility Characteristics

ALL Fuels & Energy requires approximately $250,000,000 in financing, either debt, equity or a combination thereof, to construct the Manchester facility. The company cannot provide any assurance that it will be able to construct the Manchester facility, as proposed, as they have not obtained any commitment for any such funding. Should they obtain needed financing, the Manchester facility is expected to have the following characteristics:

Annual Ethanol Production Capacity: Design capacity of 100 million gallons per year, with an anticipated annual ethanol production rate of 124 million gallons.

Ownership: 100%.

Production Process: Dry Milling.

Primary Energy Source: Natural Gas.

Estimated DDGS Production (Dry) per Year: 381,000 tons.

Estimated Corn Processed per Year: 42.4 million bushels.

The Manchester facility is to be the first ethanol production facility that is part of the company's five-plant project development agreement with their project engineering firm. Under the development agreement, the project engineering firm is to provide design engineering services. It is intended that Pacesetter Management Group, LLC, a company affiliated with the project engineering firm, will manage five of ALL Fuels & Energy's ethanol production facilities, including the Manchester facility. However, the company has not yet executed a formal agreement with Pacesetter in this regard. The company's management has begun the process of selecting the construction firm that will be hired to build the Manchester facility. As of the date hereof, the company has not entered into any contract with any such construction firm. However, with the respect to the Manchester facility, the company has entered into working relationships with two construction firms, one based in Minnesota, the other in Wisconsin, as they continue the process of completing the design of the Manchester facility

 

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