February

29

Investor Proposal
CookClean
An Alternative Solution to Eradicating Hazardous Cook Stoves and Promoting Global Health

D a n a B l e c h , J o h n C o o g a n , F r a n k M a r i n o , T h i b a u t M e n t h e , A l e x a T e s t e r m a n

Business Summary
CookClean Incorporated:
Our main offering is a service: a community micro-lending model for affordable, cleaner, faster and more efficient cook stoves. People living in rural villages and towns in India do not enjoy access to the electric grid. Many households spend a significant portion of their income on solutions that are expensive and severely damaging to users health. Our business model reaches the poorest of the poor, allowing any household to affordably finance Envirofits clean stove solution. Our target customers cannot afford the costs involved in switching from kerosene to highefficiency, clean stoves directly. They can, however, afford small daily or weekly amounts, and therefore require and benefit from a business model that fits their spending patterns and meets this need.

The CookClean Foundation:

To complement the CookClean for-profit social enterprise, we have a 501c non-profit arm that, in addition to accepting tax-deductible donations, also receives a percentage of CookClean's profits. Our foundation trains community ambassadors to educate, empower, and promote global health knowledge and awareness within their own communities. We accomplish this through the provision of clear and comprehensible education resources, skill training, and business incentives for ambassadors to not only become micro entrepreneurs, but community health educators and promoters with the goal of creating disruptive change within their own communities. 2 INVESTOR PROPOSAL

Market Analysis
Energy Poverty and Hazardous Cooking Practices
For nearly half the world, cooking over an open fire is an everyday reality and struggle. Aside from the devastating environmental effects of deforestation and toxic emissions, the poor bear the highly disproportionate burden of disease and death due to respiratory failure, tuberculosis, low birth weight for newborns, and severe burns. These problems also disproportionately affect women and children, as they primarily cook, collect biomass used as fuel, and inhale smoke and toxic emissions in the household1. In a study conducted by the World Health Organization (WHO), fuel stoves can be held accountable for 800,000 to 2.4 million premature deaths annually. To make the scope and impact of the problem stark and palpable, indoor cooking smoke is the number one killer of children under the age of five ahead of AIDS, malaria, malnutrition, and water-borne diseases2which is preventable merely with the use of a clean cooking stove.

Region of Focus: India

In India alone, 120 million households cook their meals every day by burning biomass fuel such as kerosene, wood, animal manure, or agricultural waste. The WHO estimate that indoor air pollution kills over half a million people in India each year, with 56% of these deaths occurring in children under 5. Based on these statistics, we can conclude that India alone accounts for around or greater than half of all premature deaths annually due to

1 Source: www.inforse.dk/asia 2 Source: www.theparadigmproject.org

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 indoor pollution and fuel cook stoves. For this reason, the first market that CookClean intends to target is the rural poor in India living on less than $5 per day.

Targeted Indian States:

Within India, we plan on targeting Uttaranchal, Madhya Pradesh and Uttar Pradesh because these states suffer from extreme cases of both low income and inadequate access to energy. These three states have a combined population of approximately 279 million people and an average yearly income of $500 USD or $1.40 per day.

Wealth (GDP per Capita)

Energy Access (kWh per Capita)

Critical Regions: States in bold suffer from both low income and energy access (shown as red on both maps) Uttaranchal Jammu and Kashmir Madhya Pradesh Bihar Uttar Pradesh Uttaranchal Chhattisgarh Madhya Pradesh Assam Uttar Pradesh

Please visit: http://jacoogan.com/india for more information. 4 INVESTOR PROPOSAL

Product Offering
Envirofit
Launched in India, May 2008, Envirofit International manufactures and sells clean-burning cooking stoves. They have reached 60,000 customers in their first year of operation alone. Their solution has the potential to reduce CO2 emissions by over 400,000 tons and prevent over 85,000 kg of black carbon from entering the atmosphere, all while generating income savings of $18 million. However, the problem that they and other similar enterprises continue to face is the cultural disconnect and low adoption rate long-term. According to the International Network for Sustainable Energy (INFORSE), although improved cook stove projects (ICPs) have been implanted in Asia since the 1950s, too many projects over a long period of time have experienced consistently low adoption rates. Clearly the technology exists, but disruptive innovation requires more than just a technical solutionit requires marketing and the community itself must value such initiatives. It must be seen as an opportunity, a prospect of betterment and hope, where the community has a stake in successful implementation. As other successful social enterprises have demonstrated, without the engagement and initiative of local communities, the project lacks value and commitment within the community itself. Without such value, sustainability long-term is unlikely because ultimately the responsibility lies within the communitynot CookClean to maintain, promote, and sustain such progress. We plan to purchase Envirofits G-Series stove, which is an inexpensive and durable model, and provide investment packages to local micro entrepreneurs within these communities to become ambassadors. The stove we plan to sell (see attached product brochure) is made INVESTOR PROPOSAL 5

 out of metal, which is stronger and cheaper to produce than traditional ceramic stoves, and burns the same materials (like wood) that people are already using. The difference lies within the unique and innovative combustion chamber that uses up to 60% less fuel than other stoves and slashes toxic emissions by up to 80%. Envirofit's G-Series can be purchased for $25 and, although it's expensive for many families who survive on $2 to $5 a day, CookCleans sliding scale micro finance model makes them accessible and affordable on a wide scale. The stoves also offer households fuel cost savings and drastic reductions in toxic indoor air pollution, in addition to the stoves five year life span, compared to the typical six month life span of most ceramic stoves.

The CookClean Social Enterprise

Description & Design
CookClean is a for-profit social enterprise that utilizes a bottoms-up, micro finance community based model focused on education and engagement in communities dedicated to sustaining widespread change in clean technology solutions. CookClean aims to connect the poor to cleaner stoves by partnering with Envirofit and promoting the companys eco- friendly stove technology. For communities willing to commit the time and resources to actively engage and educate their residents, CookClean will provide the means, resources, and skills to help them do so. According to INFORSE Asia, other similar eco-projects reinforce the importance of active community engagement. The last 4 years of experiences in the eco village development project has shown that unless a community has ownership of a program and is involved at all levels from planning, implementation, monitoring and evaluation, long term sustainability is not possible. 6 INVESTOR PROPOSAL

 CookClean aims to directly address and tackle these obstacles preventing long-term impact and adaptation. Similar to other successful community engagement models, if the three states we target accept the terms of the project initiative and express interest, we will commence a project by selecting four volunteers from twelve villages within these communities, for a total of 48 volunteer ambassadors. This group goes through a training and education seminar where they learn the skills and responsibilities of becoming community ambassadors and micro entrepreneurs. They meet at least once a month to learn about the necessity of eliminating indoor pollution, as well as the health, environmental, and economic opportunity and benefits this affords the entire community. Participants in the initial ambassador program are responsible for organizing, educating, promoting, and eventually recruiting village members and future ambassadors. Incentive is created for micro entrepreneurs not only financially as entrepreneurs, but through impact indicators all ambassadors must satisfy which require and encourage educating and reaching the most inaccessible and the poorest of the poor in order to achieve the greatest impact.

Impact Measurement
The impact of CookClean will be measured in several ways: the number of households equipped, the amount of money saved by families using the cleaner stove, time saved by women who typically travel long distances to collect wood and/or other biomass fuels, number of recruited ambassadors and stoves sold, and future positive health effects for clean households. For our initial implementation of the CookClean model, we will choose to define impact as high frequency of use and overall adoption rates in addition to the INVESTOR PROPOSAL 7

 number of new ambassadors, educational and training events, and outreach programs to increase awareness and change within the community. To measure this impact, we will have our micro entrepreneurs conduct simple interviews with each of their clients when they collect their small weekly payments and record the clients usage. Similar to the Grameen model, community ambassadors/entrepreneurs will serve as the lenders. This does not imply simply selling stoves, but rather going through training and continued support to effectively impact the communities and their clients. Weekly visits should ensure that all questions are answered, sanitary conditions are improving, and the stove is being adapted comfortably into daily life. Micro entrepreneurs will also chronicle their clients likes and dislikes of the clean stoves, which allows us to improve and adapt future models to cultural preferences and needs. Recruitment of new stove micro entrepreneurs will be a key indicator of this programs impact, as growing numbers of ambassadors increases access, education, and ultimately change throughout these villages. It also demonstrates individuals and communities stake in improving the health and conditions of their own community. Research and experience supports our prediction that the extent to which a community values and invests in the successful implementation of clean technology correlates with long-term sustainability and overall adoption rates. Our first impact goal will be achieved when we have successfully transitioned 5% of the households within our designated regions (Uttaranchal, Madhya Pradesh and Uttar Pradesh) from using hazardous and economically draining biomass cook stoves to affordable, safe, eco-friendly cook stoves which we predict we will achieve within the first five years. Our ultimate goal is to eradicate the use of hazardous stoves entirely. 8 INVESTOR PROPOSAL

Financial Model
Qualitative Analysis
Our solution generates revenue by selling stoves using a microfinance model that empowers micro entrepreneurs to create businesses selling clean stoves to those most in need. Entrepreneurs initially purchase stoves through us by paying $25 typically over a 30-week period, broken into $1 per week installments. Naturally, once we begin selling these stoves in our target market, we will adjust financing schedules to maximize our impact and optimize profit and re-investment potential. Once ambassadors comfortably transition into the role of micro entrepreneur, they are encouraged to grow their business and buy more stoves under the same original financing terms to scale their business and impact. Regardless of how long we allow for repayment, we will eventually receive a total of $30 on our initial $25 investment. Estimating other expenses to be factored in as well as the average length of time for repayment, we predict a 20% rate of return, which we feel represents a safe and sustainable reason to pursue funding from a social impact-investing firm.

Quantitative Projections
Of the nearly 300 million people within our target market (Uttaranchal, Madhya Pradesh and Uttar Pradesh) we hope to gain a 5% market share over the next 5 years, meaning total stove sales of 15 million units. After a lifespan of 5 years, (as opposed to 6 months for clay stoves), users will likely need to replace or repair their stoves and hopefully will return to their community ambassadors to do so through CookClean. This means that, once our business is mature and stable, we predict an average of 3 million stoves sold per year. At a INVESTOR PROPOSAL 9

 total price of $30 per stove, these sales will earn CookClean $90 million in revenue. Each stove costs $25, meaning that our annual cost of goods sold will equal $75 million. This leaves us $15 million dollars in operating profit that will be used to fund future growth through marketing (selling expenses) as well as cover our general and administrative (G&A) costs. Assuming $5 million in selling expenses and another $5 million to run the company (G&A), CookClean will generate $5 million in net income per year. Naturally, scaling to 3 million units will be no easy task, but the table below summarizes what we believe are reasonable growth projections over the next 5 years.
Year Target Market (Pop) Market Share Sales (Units) Revenue Cost of Goods Sold Operating Income Selling Expenses G&A Expenses Net Income 2012 2013 2014 300,000,000 300,000,000 300,000,000 0.01% 0.05% 0.10% 30,000 150,000 300,000 $900,000 $4,500,000 $9,000,000 ($750,000) ($3,750,000) ($7,500,000) $150,000 $750,000 $1,500,000 ($50,000) ($250,000) ($500,000) ($50,000) ($250,000) ($500,000) $50,000 $250,000 $500,000 2015 2016 300,000,000 300,000,000 0.25% 1.00% 750,000 3,000,000 $22,500,000 $90,000,000 ($18,750,000) ($75,000,000) $3,750,000 $15,000,000 ($1,250,000) ($5,000,000) ($1,250,000) ($5,000,000) $1,250,000 $5,000,000

In order to benchmark our financial performance, we compared our operating and profit margin drivers to the financial performance metrics of Room 2 Read in the table below. CookClean CoGS / Revenue G&A / Revenue Selling / Revenue Profit Margin Margins 83.3% 5.6% 5.6% 5.6% Room 2 Read3 Program Expenses Administrative Expenses Fundraising Expenses Profit Margin Metrics 84.5% 6.9% 8.5% 0.0%

3 Source: http://www.charitynavigator.org/

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Management Team

Dana Blech
Chief Executive Officer

John Coogan
Chief Financial Officer

Alexa Testerman
Chief Operating Officer

Thibaut Menthe
Chief Technology Officer

Frank Marino
Chief Stove Giver4

4 Source: BlakeMycoskie.blogspot.com

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Appendix:
References:
1. First Stoves: http://www.firstenergy.in/ 2. The Paradigm Project: http://www.theparadigmproject.org/more-about-the-problem 3. Aprovecho Labs: http://www.aprovecho.org/lab/index.php 4. US EIA, India Country Analysis Brief: www.eia.doe.gov/cabs/India/pdf.pdf, 5. Central Electricity Regulatory Commission: http://cercind.gov.in 6. Government of India, National Statistical Organization: http://mospi.nic.in/ 7. Government of India, Ministry of Power: http://powermin.gov.in/ 8. The Registrar General Commissioner, 2011 Census of India: http://censusindia.gov.in/ 9. UN Eco-friendly Fuel Efficient Stove: http://www.unv.org 10. Envirofit Clean Stoves: http://www.envirofit.org/

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Statement of Work

Name Dana Blech Thibaut Menthe John Coogan Alexa Testerman Frank Marino

Contribution Business Name, Initial Business Proposal, Business Model, General Research Financial Modeling, Design, Impact & Sustainability, Market Segment, Logo Design Financial Modeling, Market Sizing, Charts & Maps, Graphics, Organization Financial Modeling, Impact Research, Introduction, Impact & Sustainability Stove Research, Impact Measurement, Creative Design, Cultural Research

Signature

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