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SaladAcres, LLC growing & processing fresh pure produce, bagged salads, EMA juice bases, fruits & vegetables culinary and medicinal herbs for fresh cut, bulk, health food and Farmer's Markets. Not Proof of Concept shovel ready project with self sustaining Bio Combustion System that burns sorted municipal wastes (we are paid to receive), chicken carcasses, or car/truck tires, roofing tiles etc. No pollution, utilizes Solar, Geothermal and can be adapted for Wind Turbine power. Utilizing 1/10th the water for "Organic" grown food, requiring "NO" petro-chemicals, pesticides, herbicides but guaranteeing all food produce to be "Medicinal Quality" containing highly concentrated electrolytes, antioxidants, flavonoids, enzymes and 52 minerals. Growing over 30 varieties of Bagged Salads along with onions, lettuces, radish, spinach, strawberries, blueberries, olives, cut flowers, pet foods etc. Job generator: 200 new positions in first 60 days. Produces Carbon Tax Credits, harvests 12 to 18 times per year can be installed anywhere there is 1800 hours of sunlight per year. Biomass Combustion System produces extra hot water & electricity to power additional 250 homes. 21st Century Agribusiness

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  2. 2. TABLE OF CONTENTS PAGE SUMMARY AND OVERVIEW The Company 3 First Location: Uvalde Texas 3 Market 4 Competition 4 Competitive Advantage 4 Core Products 4 Locations 4 Management Team 4 Investment Opportunity 5 SALADACRES FUNDAMENTALS 5 MARKET ANALYSIS SUMMARY 6 Market Types and Customers 6 Industry Analysis 7 Health Benefits 8 COMPETITION 9 Competitive Edge 9 Pricing 10 Buyer Beware of Imported Produce 10 BUILDING EQUIPMENT AND DESIGN 11 Range Data Specifications 11 Site and Building in Uvalde 11 Design Advantages to Support Production 12 Future Competitive Advantages 14 Patents 14 PERSONNEL 14 Job Description Outlines 15 SALES AND MARKETING 15 Marketing Methods 15 Market Development 16 OPERATIONS AND COSTS 18 SaladacresUvaldeTexas3.2 Jan. 2009 Page 2 of 24
  3. 3. FUTURE DIRECTIONS OF AGRICULTURE 19 Greenhouse Expansions 19 FINANACIAL PLAN 19 Income Summary 19 CONTACT 20 Available Reference Sections APPENDIX A: First Ranges - Capital Cost Projections APPENDIX B: Income Projections APPENDIX C: Management APPENDIX D: Markets and Marketing APPENDIX E: Products and Packaging APPENDIX F: Technology APPENDIX G: Human Resources APPENDIX H: Production Unit APPENDIX I: Location APPENDIX J: Energy APPENDIX K: Diet Related Disease APPENDIX L: Contaminants APPENDIX M: Comparison APPENDIX N: 52 Minerals and Life APPENDIX O: SA and Diet APPENDIX P: EMA APPENDIX Q: New Directions in Agriculture APPENDIX R: Cancer Prevention APPENDIX S: Field Channels SUMMARY AND OVERVIEW The Company SALADACRES LLC (SA) specializes in the growing and processing of fresh pure produce such as; bulk produce, bagged salads, complete meal salads, EMA juice bases, (fruits & vegetables), culinary and medicinal herbs as well as processed products for the fresh cut, bulk, & health food markets Our Company is at the beginning of a multi-billion dollar industry in North America. We will produce the freshest foods of the highest natural nutritional value and herbal medicines for health and longevity. This is not a proof-of-concept project. The Company’s proven combination of biology and engineering allows the growing of 12 to18 crops per year, harvested monthly, using renewable energy and recycled water, in an environmentally friendly manner without the use of harmful chemicals and without soil. Unlike traditional farming, which yields 1 or 2 field crops per year grown in uncontrolled conditions, our facility monitors and controls all conditions resulting in maximum yields – in any climate. Labor in the facility is highly productive including those trained in the monitoring and controlling process. By design and engineering, SA consistently grow the most nutritious foods known in the world using our own formulas and methods protected by trade secret, copyright, and patents pending. Location: Uvalde, Texas In mid summer, light intensity levels in the Uvalde area are intense. Under the blazing sun they can reach 10,000 fcp (foot candle power). This is twice that of Northern areas. In our system, these intense sunlight levels will enhance the growing of medicinal herbs. The Saladacres growing system is perfect for the growing of medicinal herbs because we can grow herb varieties consistently, with pure, strong, active ingredients. Uvalde has the potential of becoming the medicinal herb capital of North America and the powerful South Texas sun is a key factor. Sunlight levels in the winter are also good and for this reason the Uvalde area is traditionally known as the Wintergarden of the U.S. SaladacresUvaldeTexas3.2 Jan. 2009 Page 3 of 24
  4. 4. Definitions: One Range: A group of 20 greenhouses, 1 nursery, and 1 service building covering a net area of 1.5 acres, and a gross area of 2 acres for each range Intent of Plan The Uvalde and area project will be built in 3 phases: Year Ranges Total Gross # Greenhouses Built Ranges Acres In Ranges 1 2 2 5 40 2 3 5 12 100 3 5 10 24 200 3.5 10 20 50 400 5 50 75 200 1500 Value added products will be the priority because they maximize income. These are bagged salads, herbal products, and products requested & made in association with partners. The sale of commodity case lots of produce will not be emphasized because the incomes are lower. However, some products such as green onions will be sold unprocessed. Acknowledgements in Uvalde Mario Morales USDA Manager; Rio Grande Nueces Resource Conservation and Development Leigh Ann Sanderlin USDA; Rio Grande Nueces Resource Conservation and Development Phyllis Varnon International Bank of Commerce Uvalde Juan Martinez Building contractor; Uvalde Stephanie Sickenius Sales and marketing associate Juan Garcia Welding and fabrication Data: Project name Saladacres Uvalde LLC Address 105 Weeping Willow, Uvalde TX, 78801 Trade name Saladacres; the name used on product labels and advertising Capital Required $5.8 million for first 2 Ranges (1.5 acres each range) 1.5 acre ranges to be built 2 Eventual number of ranges 100+ Current partners Saladacres LLC Site Statistics: Location: Uvalde Texas Initial acres to be purchased 10 acres near the Uvalde airport; owned by the City Available acres 100+ in same and other locations Transport Next to Uvalde airport and close to Hwy 90 to San Antonio Services City water, electricity, sewer Distribution of products Fed Ex and Ups at the airport for direct deliveries Industry Support USDA Address 105 Weeping Willow, Uvalde TX, 78801 Services and buildings Electricity, gas, town and well water available Staff sourcing Southwest Texas Junior College Climate Winters average 45 F and mid summer 90 F. Bright sunlight levels are over 2800 annual hours at which is more than adequate for our operation. Cooling in the summer will be by mist evaporation. Ground water and collected surface water will be used for cooling and irrigation. Available acres 100+ acres in various locations. Other sites will be added to the project as expansions occur. SaladacresUvaldeTexas3.2 Jan. 2009 Page 4 of 24
  5. 5. Fuel sourcing Biomass fuel in the form of mesquite wood chips is available from the constant clearing of ranchland. The whole state is a solar collector. Other sources are sorted municipal waste. Website Market The North American market for organic produce and associated products alone is at least $44 billion per year. Organic produce alone is increasing at the rate of 24% per year. That means in 3 years the demand for "organic" will double to $18 billion. The demand for pure produce is growing fast because people are now realizing that a diet based on fresh, pure, fruits and vegetables prevents and stop diseases, and promotes health. SA greenhouses will be located within in the South Texas market region and is therefore able to deliver fresh products quickly - fresh to market. Marketing will be direct delivery to individuals, retail stores, and food services. Competition Prices of products from SA will be prices competitive with field produce - but available year round. Traditional Soil-Based Farms - The Company’s competition comes from traditional soil-based farms. But, if quality was based on a scale of 1-10, ours would be 9.5, and soil-based products 2.5. The Company consistently produces high quality products because perfect growing conditions are maintained; which is impossible in field production. Produce Importers - There are no consistent or effective controls on the amounts of insecticides, herbicides, bacteria or parasites found on, and in, imported produce. Also, prices and availability of imports are variable throughout the year. In contrast, Saladacres will be able to guarantee pure salad and herb produce, year around, at consistent competitive prices. Competitive Advantage Better Product Line – No competitor offers bagged mixed salads all from a single grower. Other hydroponic growers offer only one or two products. Better Than Organic Foods – The organically grown food market is likely to crash when consumers discover that crops are grown in soil which no longer has sufficient nutrients. Saladacres uses no soil whatsoever yet grows its crops using 52 high-quality minerals to consistently produce superior produce every time, in any season. We can do this almost anywhere in the world. Less Expensive – Because the production yields are higher the Company can offer its products profitably at prices lower than comparable organic products. Competition Faces Problems – SA is local, operates year round, and uses renewable fuels. We can control production costs and sell affordable fresh food year round. There is unprecedented financial chaos in banking and financing, and energy costs are rising. Centralized farming, often based thousands of miles from customers, is facing rising costs of growing and delivering fresh food. These factors have minimal impact on SA. • Rising interest rates on loans • Tougher credit qualifications • Rising fuel costs (delivery costs of $10,000 per truck can cost more than the produce delivered) • Rising water costs • Rising fertilizer costs • Rising electricity costs • Lower dollar value (imports more expensive) • High interest rates on farm equipment • Higher costs for equipment and parts Core Products Bagged Salads - Over 30 varieties including: spinach, Chinese vegetables, root crops (beets, turnips, etc.), edible flowers, greens, broccoli, lettuces, onions, radish, chard, and more. SaladacresUvaldeTexas3.2 Jan. 2009 Page 5 of 24
  6. 6. Complete Meal Salads - Salads accompanied with bean, pea, chickpea (garbanzo), or lentil (like a half pea) condiments, salad dressings, bread sticks, rice and cornmeal taco wraps, and forks; ready to eat as a full meal. Culinary Herbs - Top quality culinary herbs EMA Juice (Electrolyte, Mineral, Antioxidant) – EMA Juice is a cold pressed, unpasteurized, pure plant juice from the roots and leaves of vegetables and grain grasses. It contains highly concentrated electrolytes, antioxidants, flavonoids, enzymes, and 52 minerals. EMA is made with nanofied water, in which minerals are highly soluble. It is astonishingly high in nutrition. Locations Saladacres will expand from Uvalde and will locate its growing facilities next to city markets. Because the growing facilities are not dependent on natural resources such as arable land and rainfall to determine locations, ranges can be located on inexpensive land outside of town, but close to major customers. In Uvalde, Saladacres will become a large grower and processor of salad vegetables and herbs, supplying products to fresh markets in Texas and other states. Growing will be year round in climate controlled greenhouses. The number of 2 acre greenhouse ranges in the Uvalde area could exceed 500. We have a great opportunity for rapid expansions on the surrounding available acreages. SA will expand throughout the country by developing projects through joint venture partnerships and projects owned by solely by SA. Management Team Ron Tuttle is the master greenhouse builder, operator and expert in hydroponic growing. He has a B.Sc. in Biological Sciences from a major Canadian university; and was a member of the CO2 Synergies Research Network, a government / industry group concerned with the build up of carbon dioxide in the atmosphere. His vision includes operating Saladacres on four continents, growing, processing, and selling fresh pure food and medicines year round. The current technology in the greenhouse package, and operating system, are results of his work. Methods for growing some of the crops are also proprietary and patents are pending. These methods, and the overall design enable SA to grow the best produce in the world. Media coverage of past demonstrator units is available. Managing Members (The Officers in a Limited Liability Company or LLC; there is no President, VPs, Secretary etc.) Alphabetical: Joni Daniels General administration and instructional training Michael Goetz International sales and marketing of joint ventures and projects Stephanie Sieckenius Product sales Ron Tuttle Product sales and development Albert Williams Jr. Business Development Director Southern California Region We will add additional permanent financial and technical experts over the first 6-12 months of operation in anticipation of expansions. We have a diverse advisory team, with proven financial, marketing, accounting, engineering, and business experience. Investment Opportunity Ground Floor Opportunity - The Company is seeking $5.8 million to build the first 2, 1.5 acre greenhouse “range” facility. Each range can supply the fresh produce needs for some 15,000 people based on a consumption formula of 40 pounds of produce per person per year. Growth & Earnings Capacity - The Company will achieve EBITDA (Earned Before Income Tax Debt and Amortization) of between 40-45% on sales from its ranges. The goal is to eventually build one hundred such facilities at an average cost of $2.2 million each. In some areas public funds are available from local bond issues. The object is to maximize the share value of shares held by investors in the first project. Investment returns to investors who invest in the parent company in Uvalde, will come from the parent as well as joint ventures and self owned projects around the world. This business is easily adaptable to most any country, climate and market. SALADACRES FUNDAMENTALS SaladacresUvaldeTexas3.2 Jan. 2009 Page 6 of 24
  7. 7. MAIN PRODUCTS • BAGGED SALADS AND SALAD BLENDS • COMPLETE MEAL SALADS • CULINARY AND MEDICINAL HERBS • EMA Juice (Electrolyte, Mineral, Antioxidant) Hydroponic Greenhouses + 52 Mineral Irrigation + Biomass Renewable Fuels = World’s Best Produce + 30% Profit CLEAN • Produce and herbs are grown in clean, pure, conditions, in environmentally controlled greenhouses. Irrigation water is filtered and sterilized. Our produce is dark green, fresh, and good tasting. HEALTHY • Fresh pure food, combined with regular exercise is required every day for good health and a maximum lifespan (1). They slow aging and are vital for cardiovascular health and strong immune systems. • A strong immune system prevents infection and cancers (2). • We guarantee in our products: a full range of essential* nutrients (indispensable for life; cannot be synthesized in the body); 52 trace elements, Omega 3 nutrients, antioxidants, flavonoids, vitamins, and enzymes. Studies have shown that nutrient dense foods such as ours, slow aging, prevent cancers (1), are vital for cardiovascular health and strong immune systems, and are required every day to attain maximum health and lifespan. PURE • Produce is grown free of synthetic insecticides, herbicides, algaecides, fungicides. We use no manure fertilizers that can contain harmful bacteria (E. coli, Salmonella), hormones, and pesticides. Our main, and associated products are labeled 'pure' and sealed in bags for security - know your source. PROFITABLE • Outstanding returns on investment. COMPETITIVE • Our products are better than field produce in price and quality because we grow about 12 -18 crops per year under controlled conditions, compared to 1 or 2 field crops per year grown in uncontrolled conditions. • Our salad vegetables are the best in the business when it comes to color, taste, crunch, and flavor. • We grow affordable produce YEAR AROUND • Because crops are grown and processed year around, jobs are year round. Winter production is equal to or better than summer production. Our fresh market produce is always in season. Supply self reliance is possible with year round production. MARKETS • Our market is everyone who wants a long, healthy, disease free lifestyle. Our pure salad vegetables are part of a lifestyle that will make this happen. Every living person is our market. • Locations of greenhouses will be next to city markets; climate and land are not concerns. Imports are replaced. Sales are as direct as possible for a rapid and secure cash flow. ENERGY • Renewable fuels such as biomass, geothermal heat, and hot water from solar panels are used for electricity, cooling, and heating. The hot water provides the energy for a turbine that generates electricity on site, making us independent of the grid, and expanding the possible sites on which we can locate. • We can operate equally well in cold and hot climates. SUSTAINABLE • Pollution and land degradation is zero. A facility can operate indefinitely with no harm to the environment because we do not rely on depletable resources such as topsoil, or non renewable energy from fossil fuels. • Lower amounts of fresh water are used for irrigation: ex. we use1/10 of the water used in arid field agriculture. • We can purify water to a drinkable irrigation base from sources such as: lakes, rivers, oceans, lagoons, 'grey' effluent, and ground. (1) USDA (2) World Cancer Research Fund 1997, American Institute for Cancer Research, American Cancer Journal: Cancer Causes and Control SaladacresUvaldeTexas3.2 Jan. 2009 Page 7 of 24
  8. 8. SaladacresUvaldeTexas3.2 Jan. 2009 Page 8 of 24
  9. 9. • • • • • MARKET ANALYSIS SUMMARY Market Types and Customers SaladacresUvaldeTexas3.2 Jan. 2009 Page 9 of 24
  10. 10. From Texas, we will be within a 2 hours trucking time of our major markets. Sales will be handled directly by SA. There will be new sales activity and prospecting daily, combined with attentive, repetitive, personal service. In addition to the direct home delivery market, potential sales contacts available to SA agents are described below. Arenas & Athletic Parks Food Service Mgmt. Hotels Schools - Cooking Railways Schools - Art Bakeries Supermarkets Frozen Fish – Retail Senior Citizen Homes Beach Kiosks Coffee Houses Recreational Tours Lounges Restaurants Night Clubs General Stores Markets – Farmer Sightseeing Tours Gymnasiums Bus Lines & Charter Motels Spas Fitness & Health Schools - Nat. Healing Golf Courses Gourmet Shops Natural Products Superstores Schools Spas Health & Beauty Caterers Health Food Stores Swimming Pools Retreat Centers Grocers Naturopaths Schools Dairies Exhibitions Hospitals Nursing Homes Private Nutrition Consultants Schools - Trade Truck Stops Fish - Wholesale Hostels Festivals Party & Event Consultants Schools - Universities Weight Control Services In estimating the number of ranges for a market, the rule of thumb is a low consumption of about 66 lbs of produce/adult/year. The production of produce from 1 range per year, for example is about 660,000 lbs. Therefore 1 range will theoretically serve 10,000 customers (660,000/66). Using the 10,000 number, a market area of 5,000,000 people could theoretically support over 500 ranges (5,000,000 adults/10,000 per range). However, the ideal number of people supplied with produce per range is 2,400. This is based on the USDA recommendation of 3.5 servings, or 350 grams (12.5 oz.)of raw vegetables per day of the type of vegetables we can grow in a range. This works out to 285 lbs. per year. (From USDA and US Dept. of Health and Human Services 2000). We base our projections on 66 lbs. when the recommendations are for 285 lbs. Direct delivery is (DD) the delivery of a box or boxes of produce to individuals within 24 hours of harvest. The basic unit will be a 10 lb. box consisting of 4 bagged salad units, 4 units of salad vegetables, and 2 quarts of EMA juice. The delivered price would be cheaper than buying the same things at a supermarket, but SA would receive a higher price than wholesale. Also, payment is instant, and done by electronic credit or debit card before shipping. It is estimated the capacity of 1 range for direct delivery would supply 3,000 people. Therefore, direct delivery would involve a large number of ranges. Industry Analysis The demand for fresh pure produce is on the rise. In the past this demand would be filled by existing farms. But today we are facing a whole new set of circumstances that are restricting the supply. These are trends are long term, threatening, and growing. Production of food on farms is threatened by population expansion, climate change, land damage, urbanization, energy shortages, and water shortages. Serious alarms are going off in every one of these areas and a book could be written about each one. These connected forces effect everyone – some more directly than others. Danger levels have already been reached as evidenced by hurricanes, droughts and heat waves. The changes we are experiencing are globally unprecedented in human history and are having a massive effect on agricultural production. However, SA will survive in this changing weather and climate and continue to grow. The use of pesticides and herbicides by farms to insure a “profitable” crop is poisoning the food chain and causing illness and death. SaladacresUvaldeTexas3.2 Jan. 2009 Page 10 of 24
  11. 11. U.S. sales of “organic” produce, from 12,000 organic farmers in 2003 were $13 billion per year and are expected to go to $20 billion in 2005 (1). It is almost impossible for soil based farms to meet this demand because there is not enough unpolluted acreage available that can be classed as "organic” and naturally pure irrigation water is becoming rare. Sales of medicinal herbal remedies are growing by an estimated 15-18% per year and reached $10-12 billion dollars in 1998 (2). Points: 1) we are going toward an integrated health care system. 2) 70% of medical schools in the U.S. are now teaching about herbal medicine. 3) Natural medicine is cost effective and will lower medical costs. The present annual size of the culinary herb and spice industry in the U.S. is estimated at $2 billion (2). In 1984, the demand in the U.S. was on an increase and was not even close to a plateau. Fresh herb per capita consumption grew from 1.0 lbs in l962, to 1.9 pounds in 1999.The U.S. produces only 35% of the herb products it uses. If the supply of fresh herbs triples in the U.S., the demand would still not be met. SA will sell culinary herbs in a ‘living mat’, to food services. Herb mats will stay alive in a room environment if watered. The following herbs and spices were showing increased consumption in 1997: sage, basil, oregano, tarragon, dill, marjoram, and thyme. Almost all herbs crops are grown outdoors in soil. Yet, the amount of fresh herbs produced by Florida (the largest producer) represents only 16% of the national herb product market and only 5.6% of the world market (2). The world's largest producer of fresh culinary herbs in Florida packs more that 2,000 cases per day of herbs. As one producer stated in 1999, if the supply of fresh herbs triples in the U.S., the demand would still not be met. Food safety is a concern for about half of the U.S. population. The increase in sales of organic foods between 2001 and 2004 suggests that consumers are actively seeking out foods they consider to be more nutritious, healthful, or safe for their families (3). The recent breakout of E. coli in bagged spinach and green onions has put the spotlight on U.S. produce growers’ ability to grow safe food. Saladacres will capitalize on the fact that ‘organic’ growing standards alone do not prevent E.coli, and Salmonella contamination in traditional, and organic dirt farming. According to organic standards set forth by the USDA, organic foods include crops grown without the use of conventional pesticides, artificial fertilizers, sewage sludge, ionizing radiation, and food additives. However, a recent decision by the USDA has allowed for six “organic pesticides”. In the U.S., the organic market has more than doubled its size between 2000 and 2006. Sales of organic food increased 139% between 2001 and 2006. U.S. sales of organic fruit and vegetables are predicted to increase 83% at current prices and to increase 54% at constant prices from 2006 to 2011. Within the organic market, fruits and vegetables make up 44.8% ($1.657 billion) of the market in dollar sales. Sales of organic food and beverages grew 85% between 2001 and 2004, far more than most food and beverage categories (3). Saladacres production is better than organic, and yet lower in price. (1) Alive Magazine, Quebec Dept. of Agriculture (2) Herb Market Report (3) Organic Foods-US Oct. 2006 Health Benefits Many people are sick and tired, dying, and living shortened lives because of a toxic, altered, processed, highly advertised, industrial food chain that is based on 5 major ingredients. A 56 page booklet entitled SA and Diet examines industrial food, the current situation, and the fabulous opportunities for SA. SaladacresUvaldeTexas3.2 Jan. 2009 Page 11 of 24
  12. 12. Many people now realize that a diet based on fresh, pure, fruits and vegetables prevents and stop diseases, and promotes health. Every living person is our market, because everyone needs our products to live a healthy life. Without fresh food you die Dietary Guidelines for Americans is published jointly every 5 years by the Department of Health and Human Services (HHS) and the Department of Agriculture (USDA). The Guidelines provide authoritative advice for people two years and older about how good dietary habits can promote health and reduce risk for major chronic diseases. The 2005 edition of the Guidelines was released January 12, 2005. It can be downloaded at . In this document the recommendations on dietary fruits and vegetables are as follows: Fruit and vegetables: One of the first principles of healthy eating is to choose nutrient-dense foods that pack, calorie-for-calorie, the most amount of fiber, vitamins, and other nutrients. That’s why the guidelines say that the 2,000-calorie-a-day reference diet should include nine (!) servings of fruit and vegetables. For the average American, that’s over double the usual number of servings. Many people are placing great personal importance on their health and longevity. They are finding out the answer to good health is not in the hospital. Today’s reality is prevention of disease and self reliance. The constant message is exercise regularly and eat fresh pure vegetables 9 times a day. Pure fresh produce is essential for health - there is no substitute. Cancer is now seen as the result of a diet deficient in fresh plant foods. Saladacres will grow those crops that are known to prevent of cancers as a matter of routine. The medical journal, Cancer Causes and Control, states "vegetables and fruit contain the anticarcinogenic cocktail to which we are adapted. We abandon it at our peril". Our products are the ultimate in nutrition and are a must for a healthy, long life. We guarantee a full range of essential nutrients because we add them to our irrigation water, and we know the concentrations at all times. This is almost impossible with field crops. Without an intake of a complete range of minerals, we will become diseased and die. When you have cancer, or cardio vascular disease, its too late to realize that your diet has been deficient. It is natures law. You are what you eat. It’s a matter of choice of junk foods over ancestral foods. Ancestral foods are the foods that keep us well, and we evolved with them over a period of 2 million years. They are mineral rich fruits and vegetables. Junk food is sold in slick packaging by ad agencies, is empty of minerals, and usually consists of fats and carbohydrates that make you fat and diabetic. At SA we grow our crops with irrigation water containing 52 minerals in which the trace minerals are included in balanced, life supporting proportions. This says it all. Lifestyles involving exercise, combined with a consistent intake of all the mineral nutrients bound organically in plants will contribute immensely to a healthy, long, disease free life. The words chemical, nutrient, element, and fertilizer all refer to minerals. Testing of the minerals in our products can be done at any one of a number of trace element laboratories recommended by the USDA. However, we know the minerals are taken up by our crops because we are constantly adding them to irrigation water. COMPETITION Competitive Edge Today, most greenhouses growing food crops are involved in the growing 'long crops’ because the technology is available, and the incomes are good. Long crops are tomatoes, cucumbers, peppers, and eggplant, and represent 95% of the production of greenhouse food industry crops. SA is specializes in short crops which have little or no greenhouse grower competition - depending on the crop - because growers are few, and most of the short crops are field grown and imported. There are about 1000 acres in the U.S. growing greenhouse vegetables. The majority are in long crops. The U.S. could presently use 10 times that number. The biggest bagged salad and fresh vegetable competitors of Saladacres include: Fresh Express, Dole, Mann’s Sunny Shores, and Earthbound Farms. Their products are mainly grown in California and Mexico. There doesn’t seem to be a price leader in the overall market. Each company offers prices within a few cents difference of one another. Also, each company seems to package their products either in a 5.5-6.0 oz or 12 oz. bag or a rectangular plastic container. Saladacres will package salads in clear bags containing 10 oz. (the original amounts, when bagged salads first started). Because Saladacres plants are healthy and strong, products will have a shelf life of up to 14 days. Many organic products SaladacresUvaldeTexas3.2 Jan. 2009 Page 12 of 24
  13. 13. barely last a week before turning to brown and soggy. It is recommended that Dole products be consumed within 2 days of opening the product (1). According to USA Today, market share in the bagged salad industry at a national level are as follows: Fresh Express (41%), Dole (31%), Private Label (12%), Ready Pac (8%), and Earth-Bound Farms (6%) (USA Today October 23, 2006 article, “Fresh Express Leads the pack in Produce Safety”. (1) Pricing Saladacres plans to offer their products at a reasonable wholesale price to supermarkets. Tentative pricing is as follows: Bagged Salad (10oz. bag): $2.90 Spinach (10oz. bag): $2.25 Onions (bunch of 6): $.50 Culinary Herbs (per mat): $3.40 Research has proven that Saladacres pricing is slightly lower than other organic and natural food suppliers. For example, Whole Foods, Inc. advertised a 5oz. bag of organic salad greens to consumers in Ohio for $2.69/bag (Jan. 2007). A 10 oz. bag would then retail for $5.38. A 10 oz. bag from Saladacres would wholesale for $2.25 and with a 30% markup, it would retail for $2.90. That is compared to $5.98. Buyer Beware of Imported Produce There are no consistent or effective controls on the amounts of insecticides, herbicides, bacteria or parasites found on, and in, imported produce. Also, prices and availability of imports are variable throughout the year. In contrast, SA will sell pure salad and herb produce, year around, at consistent, competitive or lower prices to our customers. We call our products "pure" to avoid conflict or confusion with "organic" produce grown by "organic” farms which use "certified manure" fertilizers. Our produce is pure because we provide our crops with pure nutrients and clean water. Also, organic produce is seriously deficient in minerals because the manure fertilizer is deficient in minerals – the animal extracts the minerals from the plants first in its gut, and the remaining minerals are the leftovers. Successive “organic” crops grown on the same, manure fertilized field, result in weak, nutrition poor plants that look bad and have no taste. Manure fertilizer can also be loaded with deadly bacteria such as E. coli and salmonella that can enter the tissues of produce plants through the roots. More than 11,000 people per year in Canada and the U.S. fall ill or die of E. coli poisoning, and 35% of food-borne illnesses in the U.S. are transmitted by produce. When animals eat plants, they pull out the majority of useful mineral nutrients from the plants in its gut. What remains is mineral deficient manure. ‘Organic grown’ plants are grown in this manure that has already passed through an animal. The manure is mineral deficient to begin with, and plants become weaker and more mineral deficient the longer successive crops are grown in the same manure. The plants also become successively more useless as a source of nutrition to people who eat them. Produce production and processing for the whole continent is now centralized in California, Arizona, and Mexico. Because the fresh produce market is multi billion and growing, there are enormous market pressures on these areas to increase production. However, the ability of these areas to grow vegetables is declining because of the lack of clean irrigation water, urbanization of farmland, rising fuel costs, global warming and climate change, drought, rising labor costs, polluted irrigation water, salinization of farmland, fiber and mineral depletion of farmland, and rising transport costs. But, the demand keeps growing. Centralized production runs the risk of sudden failure from one or a combination of events. For example, the Salinas Valley in California is a big producer of lettuces, but it is now experiencing problems with a falling water table, nitrification of ground irrigation water, salinization of topsoil from the salts in irrigation water, urbanization, and rising fuel and labor costs. 50% of all farmland in the Central Valley of California is already useless from salinization from repeated irrigation. Pressure is also on the other 4 producing river valleys in California. In other words current centralized production as it exists is not sustainable. In a report by the California Dept. of Conservation, the Sacramento Valley lost 29,000 acres to urbanization in 2 years ending in 2002. Department of Conservation officials said they're worried that if something isn't done soon to stem the tide of farmland loss that the area will have to start relying on foreign-grown crops for a significant portion of the future food supply – in California! An economic development officer in Bakersfield, in the San Joaquin Valley stated that unless growers changed their “practices” they would all be “toast” in 5 years. SaladacresUvaldeTexas3.2 Jan. 2009 Page 13 of 24
  14. 14. When our greenhouse operations are installed inside our market region, we will eliminate all the problems of centralized production. Our products will be produced in or near our markets. We are sustainable in our region as long as we have customers. BUILDING EQUIPMENT AND DESIGN Engineering and design of the facilities, and internet marketing is supported by a number of companies. Saladacres greenhouse designs are a combination of leading technologies, plus our own methods and designs that put SA in the top 1% of greenhouses in the world. The result is a profitable operation. We are the first to design an operation that will economically grow a wide variety of short crop produce on a large scale, year around, in all climates. The growing of crops takes place in Climate Buildings, clustered in “ranges”. Each range consists of twenty 25’x115’ Climate Buildings, occupying 1.5 acres. The service building is built at the north end of the range and contains areas for: water treatment, laboratory, seeding, offices, irrigation, heat exchangers and boilers, shipping, lunchroom, lockers, maintenance shop; and storage for tools, equipment, and inventory. One service building can service up to 30 climate buildings, however, the standard design number is 20 climate buildings. Plants are started from seed. Seedlings are raised up to 30 days in the nursery. They are then transplanted to the climate buildings where they grow to maturity over a period of 20 to 35 days, depending on the crop. Range Data and Specifications 22 Building Range Gross Area 8,434 sq. meters (Includes ventilation area 90,750 sq ft. 165' x 550') 2 acres Net Area 5,994 sq. meters (Gross area less ventilation 64,500 sq. ft. area of 26,250 sq. ft.) 1.5 acres Service Building 383 sq. meters (25’ x 165') 4,125 sq. ft. Roof and walls: Steel siding and roof Floor: Concrete composite Climate Building and Nursery 267 sq. meters (25' x 115’) 2875 sq. ft. Roof and walls: Polycarbonate Floor: Concrete composite walking surfaces Site and Building in Uvalde Round 1 Financing: First 2 Ranges: $5.8 Million 1) The first range will be built at a cost of $2.7 million and brought into production. Construction will be done by TG Fabricators. 2) Commissions and working capital are included in the $5.8 million funding in the first phase SaladacresUvaldeTexas3.2 Jan. 2009 Page 14 of 24
  15. 15. Phase 2 Financing: Subsequent Ranges 1) Cost per additional range, after the first range, is $2.2 million. 2) The construction of ranges will follow market development 3) 4 ranges can be built on the initial purchase of 10 acres Evolutionary, not revolutionary The operating principles of our greenhouses are the same as those of 150 years ago. Then, as now, the primary goal is to maintain good growing conditions and shelter crops from the weather. New materials and equipment such as computers have made the job of controlling conditions more reliable. Maintaining good growing conditions increases yields and profits. Design Advantages to Support Production The following advantages are designed into our system. Individual operators in the current greenhouse industry use some of the following features, or none at all. • Waist height crops: All crop seeding, transplanting, and harvesting is done at waist height eliminating the need for stooping and crawling. This is highly valued by older staff who can be productive without wrecking their backs or wrenching their legs. • Carbon dioxide enrichment: by elevating the concentration of carbon dioxide in the greenhouse air from the burning of natural gas in a small boiler, we achieve faster growth and larger crops without diminishing the nutrient content. This enables us to grow outstanding crops in cold climate in the winter. • Comprehensive Water Treatment: water can be treated from all sources (pond, ditch, lake, ocean, river, and stream) to a purified base. • Low Water Consumption: one range can be supplied by 12 mm pipe (1/2") and uses up to 1/10 of the water used in arid field agriculture • Winter crops are now comparable or superior to summer crops • Year round production of 12 to 18 crops per year • Zero Pollution: a sustainable operation with no harm to the environment • Computer controlled, constant, growing environments, year around. • Microorganism control: Slow Sand Filtration where needed and UV radiation • Soil less operation: work is clean and fast • Plant Movement: fast product movement • Maintenance free building • Crop Versatility: fast crop change on demand – you want it, you’ve got it • Humidity Control: winter and summer • Light Entry: maximum light entry with clear polycarbonate and effective light entry design; sunlight is the driver of crop production, so the more sunlight, the better the crop growth • Hail Resistance: hail proof from hailstones up to 1” • 8 potential patents, and more expected; although this information will be kept as a proprietary trade secret • Cooling: building temperatures are reduced when outside temperatures are hot • Hurricane Resistant Design for buildings • Electricity off grid: we generate electricity on site by burning biomass; this produces heat that powers a turbine; this saves hundreds of thousand of dollars Energy Hot Water Hot water is the primary source of energy. Hot water can come from two sources: biomass and solar. A Biomass Combustion System (BCS, or gasifier) burns a variety of cheap, renewable biomass fuels (sawdust, agricultural waste, straw, chicken and cow manures, carpets, asphalt shingles, tires, construction waste, wood chips, and sorted municipal garbage) at high temperatures with zero pollution. This is proprietary to Saladacres and we call our machine the “Buzzard”, because it will burn any biomass. The BCS can also provide heat for water purification for irrigation water from “grey” or ocean water. There are big opportunities to use garbage as a source of fuel for hot water. Hot water can be piped for ½ mile. These fuel options enable SA to control the cost of energy, and use the available fuels in project locations of opportunity. This translates into lower operating costs and therefore lower production costs. SaladacresUvaldeTexas3.2 Jan. 2009 Page 15 of 24
  16. 16. Biomass combustion is considered C02 neutral and not a producer of greenhouse gas. We are able to trade carbon credits. Each range eliminates 1,252 tons of C02 from entering the atmosphere each year. These income sources can be substantial at $15/ton but are not factored in our Income Statements. Solar hot water collectors are the second method for heating water in hot locations. A third method is geothermal but the uncertainties of the source make this a gamble in most areas. Heating To heat the greenhouses, water is heated in the biomass combustion system, and then pumped to pipes under the floors of the greenhouses. This is hydronic heating. Using heat from the BCS to heat greenhouses has released SA from the dependence on fossil fuels. Our products are not subject to price increases due to higher heating costs from price increases in oil and gas. Low heating costs in the winter control costs. Electricity SA has assisted in the design and development of a turbine that is powered by hot water. The turbine spins a generator that delivers electricity. Each turbine will deliver about 500 kW that will run 5 ranges. Users of electricity are pumps, fans, and processing equipment. Cheap electricity keeps costs low. This is proprietary technology which SA controls. We are able to sell energy, or power packages consisting of the BCS and turbine to customers wanting to generate their own electricity. This setup is ideal for towns and settlements who want cheap electrical power from renewable fuels – not from coal and big power companies. Electricity on site could also provide power to electrolize water using a new discovery at MIT. This system uses low power to electrolize water into oxygen and hydrogen gases at room temperature. The hydrogen would be stored for use in fuel cells to power vehicles and other equipment. At SA, we would use it in all vehicles. The oxygen could be used to enhance combustion in the Buzzard. Cooling Cooling a greenhouse in hot weather is as important as heating in cold weather. Electricity from the generator powers pumps and fans for cooling. Therefore cooling costs are kept low. Incomes and benefits from the use of renewable fuels to provide heat, electricity, and fresh food: Direct Incomes to SA • Produce sales • Carbon credits where applicable • Pickup fees for some fuels • Electricity sales off grid • Heat sales to buildings off site • Location of greenhouses in areas where there are no gas or electric lines Direct benefits to community • Pure, healthy, produce sold locally year round at affordable prices • Jobs: construction, production, and sales year round • Eliminant reliance on diesel electric generators in some community situations • Better health and lower medical costs • Low cost heating and electricity for businesses and homes • Less carbon dioxide released into the atmosphere through reduced consumption of fossil fuels • Reduction in landfill volumes • Reduction in potential ground water pollutants • An option for the survival of individuals and communities Site Independence Since we can generate our own electricity, we can select project sites almost at will. For example, in rural, or island areas where grid electricity is absent. This opens up markets and income opportunities. It is a fantastic advantage. Lower costs of production Costs of production are low compared to similar levels of production in greenhouses based on soil methods. We do not use: pesticides, fumigators, herbicides, fungicides, algaecides, soil sterilization agents, and attendant equipment such as soil steamers, sprayers, rubber aprons, breathing filters, scuba filters, “space suits” for pesticide spraying, planters, weeders, SaladacresUvaldeTexas3.2 Jan. 2009 Page 16 of 24
  17. 17. tillers, discs; tractors, tractor parts and fuels; field trucks, ploughs, shovels, hoes, rakes, protective clothing, and soil or media moving equipment, which are in common use in one way or another in the greenhouse and farming industry and represent costs. All raw materials are delivered to a range via wires or pipes. All cost savings are the result of environmental controls, the design of our system, and our location. Future Competitive Advantages – Goals At the same time we are building and operating ranges for our salad crops, we will be preparing for future projects. Some of these are: • Develop SA varieties with in house reproductive methods; i.e. tissue culture or cloning • Start an aggressive R&D program to grow pharmaceutical bases and medicinal herbs • Increase the number of ranges so we can improve productivity and offer more products at lower prices • Create more unique salad products and blends • Develop new energy sources such as co-generation (e.g. electricity and heat from turbines), solar, wind, and hydrogen • Develop additional product lines through partnerships to include: pure baby foods, jams, variations on EMA (Electrolyte, Mineral, Antioxidant) type juices, flowers, throat lozenges, potted plants, pet care products, cosmetics, lotions, sugar free cookies, teas, medicinal herbs, soaps, salad dressings under the SA label • Supercharge specific plants with single minerals such as iron and calcium that are combined organically within the plants for dietary deficiencies in people • Investigate the nanofication (molecular cluster size reduction in water) through nanofiltration of medicinal herb factors for use in alternative medicine • Seed production • Develop a cheaper climate building for longer term crops • Develop and operate more efficient water treatment equipment (present equipment is adequate) • Hydrogen powered delivery trucks using fuel cells, filled with hydrogen generated from the BCS Patents The production system has many designs and methods that are patentable. However, the reality of this world is that patents can be copied, or modified once the original design is known. Patents are published and the designs and methods are “out there”. Therefore, to avoid advertising our systems we will avoid equipment patents and rely on trade secrets for security. However, we will work with the USDA to patent plants, which are much more difficult to copy. Once we have the plant we want, we can clone as many as we need with tissue culture. This involves the duplication of tiny plants in test tubes from a original plant type to rapidly create millions of identical plants in a short time. Here are some opportunities: • Modify the flavors of our salad vegetables (examples: a sweeter spinach, an orange tasting romaine, a licorice tasting radish, a sweet turnip) • Develop medicinal herbs with stronger active ingredients • Develop new types of medicinal herbs • Supply contaminant and virus free medicinal herbs: establish new standards for purity • Make slow growing plants grow faster • Combine unique colors and shapes for new salad vegetables Each plant is a potential patent. The US Horticultural Research Laboratory of the USDA labs are ready to work with us. In the tentative arrangement with the USDA we will collaborate on the R&D. They will get the rights to publish, and we get the patents and production rights on the new plant varieties. Plant patents are far more secure than equipment patents. PERSONNEL The most important assets are the staff and they will be given the following conditions under which to work and form their careers. In the current greenhouse industry, operators offer none, or only some of these advantages. SaladacresUvaldeTexas3.2 Jan. 2009 Page 17 of 24
  18. 18. • All crops are grown at waist height eliminating stoop fatigue and back problems • No toxic chemical application • Weed free crop production • Excellent working conditions; workers stay clean in a healthy environment • Year round employment • Better than average wages due to the high productivity • Profit sharing and or stock options • Ongoing training, intern, and apprenticeship programs • Management opportunities – internal advancement • Group benefit program (ex. medical, dental) • Employee services: (ex. daycare, laundry, cafeteria) Job Description Outlines Company Management Function • Coordinating and developing Business Plan • Product sales • Sales and construction of joint ventures • Co-ordination of sales and production, cost accounting • Developing and doing research Personnel • The number of staff in an operating range is about 12. Range Manager: Description • Sales and production co-ordination from specific ranges • Supervision of seeding, transplanting, harvesting, and shipping • Climate management • Worker scheduling, hiring and training, reviews and supervision • Will operate the range on a profit sharing basis Production Manager • Co-ordinate production personnel in production • Answers to the Range Manager Nursery Manager • Maintain seed inventory • Seed trial supervision • Seeding, seedling care, and transplanting management Planters • Full and part time workers • Transplanting, harvesting, Packers • Packaging products, shipping Training • Southwest Texas Junior College plans provide courses for a 2 and 4 year degrees in greenhouse management based on the SA model. SA will provide input into the curriculum. The subject matter of the curriculum is now available from SA. • SaladacresUvaldeTexas3.2 Jan. 2009 Page 18 of 24
  19. 19. SALES AND MARKETING Marketing Methods We will sell as directly as possible to our customers by 3 methods: 1) direct sales with agents to food services, 2) contract sales to supermarkets, and 3) direct delivery to individual customers. Great importance is placed on active person to person sales and service, backed with advertising. We will supply our customers with specific products, a year round supply at stable prices, food safety, and traceable products. 1. Food Services: Agents will sell directly to food service customers such as: restaurants, school cafeterias, restaurant chains, hospitals, and institutions. More detail is given in the Marketing Appendix D. 2. Contract: A supply contract would be the shipment of a set amount of production to a chain supermarket such as Albertson’s, under their own label, or SA’s label, at a specific price, over a set time period. SA has letters of intent and verbal confirmation from a number of large retail grocery chains to purchase production. This is a testament to the demand. They are desperate for a reliable supplier of fresh produce year round. 3. Direct Delivery (DD) We will sell directly to customers on a home-direct delivery of ‘produce boxes' via contract delivery and courier services from Texas. Direct sales will be made through the internet, or phone with a commission based sales person. Products will be shipped directly to the customer by courier such as DHL, UPS, Fed Ex, or private contractor if deliveries are being made within an economical delivery radius from the greenhouse. Products would be shipped in “boxes” which will be cardboard boxes, recyclable styrofoam boxes, or pillow packs containing a variety of produce and EMA juice, possibly with ice in pouches, and dry ice. The boxes would normally contain standard bagged salads, vegetables, and EMA The combinations of types of bagged salads and vegetables would vary from week to week but the quantities would remain the same. The EMA quantity would stay the same. We would avoid sending those items the customer specifically does not want. Boxes would be delivered weekly or biweekly, directly to houses, apartments, and individuals. Advantages of Direct Marketing: • SA is paid before the boxes are shipped which makes our cash flow fast and secure • SA will make 20% more profit than selling to retailers; no receivables or collections • SA can create a year round demand with our own varieties and products rather than responding only to retailers demands • SA sets the prices • No comparing of SA prices by retailer to California or Mexican prices on the shelf • No purchasing of shelf space at retail level by SA • No “money games” by retailers; ex. late payments, profit disclosure to retailer, price dickering and reductions, bankruptcy • No disruptions from retail strikes, or slowdowns • Less transit time than through retailers • No waiting on retailer shelves • Less handling • All inventory can be sold; no surplus • Shipping flexibility of inventory • Direct customer lists can be used as collateral for expansions • An overall better deal for customers in terms of price, quality, and certainty • EMA Juice value is equal to the value of whole shipment – vegetables are essentially free Not everyone can become a direct delivery customer. Those wanting direct delivery of produce will be required to first apply through an agent or salesperson. In the beginning phases of SA there will be more customers than the capacity to supply. SaladacresUvaldeTexas3.2 Jan. 2009 Page 19 of 24
  20. 20. SA will treat each customer as an individual. We can customize the contents of the box, and arrange for alternate delivery addresses, and drop off times. This information would be given by the customer. Its part of the job of the delivery contractor to make sure all the boxes are delivered to their addresses on time. The delivery contractor will have all the current delivery information printed on each box. The box would be tagged with a bar code label, similar to airline bags. It is notable that delivery by a contractor would allow us to use recyclable plastic boxes that would be returned for reuse. Market Development Our marketing philosophy is based on growing and delivering produce of consistent quality, at competitive prices, year round. Starting markets will be in central and south Texas. We will start production of bagged salads. The market for this product is expected to double in the next 2 years. Magazine and newspaper advertising will start at this level. Product sampling in stores will be done by our agents. 1) Supermarkets and Food Services We will introduce our products to supermarkets and food services such as restaurants, hotels, resorts, hospitals, and caterers where we can establish personal relationships. By inviting chefs and catering managers to visit our facilities we can explain the process that we use, and show that the products are free of herbicides and insecticides. Product distribution to customers will be done with a 24' truck van, making 2 or 3 trips per week to customers. Shipments will be prearranged by the sales agent. 2) Direct delivery marketing (DD) DD is the most important marketing method – it earns the most money and the cash flow is secure, and instant. Individuals will be approached by a commission agent, can contact SA directly about arranging for direct delivery. After completing the application process, and accepted by SA, people can place their order from our list of products on our website and have them delivered anywhere, overnight. The convenience factor of being able to order pure produce on a weekly basis or at a moments notice is an attractive and exciting to us as suppliers, and customers who care about their personal health. We would appeal to a wide range of individuals and families because our quality is pure and consistent, delivery year round, and prices are competitive. Our customers can be certain of stable, low prices. Short delivery distances to customers will keep the end costs down. Therefore, the immediate markets for direct delivery will be in the central Texas area. Direct delivery customers will be signed up by agents of SA who are associated with SA in Uvalde. Sales are by direct contact, mailers and postcards, radio and TV, and newspaper articles and ads. The agents would be paid a commission for every box sold to that customer for as long as the customer buys. The airport is next to the SA site in Uvalde. UPS and Fed Ex have drop points at the airport. There is a limit to the number of people 1 range can provide. Customers will only be accepted when there is the capacity to supply them. Waiting lists are expected, but shareholders are automatically accepted. When customers move, their direct delivery box will follow them. Customers can transfer their delivery to other people. 3) Range Expansions At the same time the South Texas market is being established we will begin selling to central and more northern Texas markets in anticipation of expanding the number of ranges in production. Projects will be built in other locations and expansions in these projects will follow demand. Projects and ranges will be added as markets and customers are confirmed through advance sales, capital becomes available, and prudent business practices are followed (don’t build before sales are known). Projects and ranges will be financed on the strength of future sales contracts and orders. This will reduce the requirement for issuing more shares and thereby avoid diluting the shares of the original shareholders. The marketing plan is set up in stages so that the number of ranges built equals the demand. New products will be introduced into the market on a regular basis, on our own initiative and in response to demand. From our experience, we will get free advertising from newspapers and magazines. As well, we will advertise with multi media – radio, newspapers, and TV. There will not be enough ranges in the beginning so customers will be served on a first come, first served basis. SaladacresUvaldeTexas3.2 Jan. 2009 Page 20 of 24
  21. 21. Joint Ventures and SA Owned Projects SA will form other Joint Venture Partnerships for expansion in the U.S., which will operate under an Operating Agreement with SA. As well SA will expand from SA financing to own the projects outright. For example, the Joint Venture could be SA Florida. In this agreement, SA will provide to SA Florida: a business plan, site selection, engineered drawings for permits and construction, construction supervision and equipment, production startup and technology support, ongoing inventory supply, staff training and in some cases trained staff to man the JV, marketing, advertising advice, and the ongoing benefits from R&D. In other words, SA will provide a turnkey operation and ongoing support to SA Florida. The training of the initial personnel for SA Florida will be done in Uvalde. When a project is operational, the investors in a Joint Venture will receive a preferred rate of the net profits before taxes, until the principal amount of the initial investment is paid back to the investor or investment group. After the principal has been paid back to the investor, the parent company and investment partners could split the dividends 50/50, or another agreeable ratio, on future profits from the starting and added ranges. Export Projects SA will also look to develop projects in other countries. The Export Import Bank, a branch of the U.S. government will guarantee bank financing. Other banks may also participate. These projects will be owned outright by SA, or SA will invite partners to participate along with bank financing. Markets we want to enter are the South Seas, South America, British Isles, Italy, Caribbean, and Russia, and Greece. We invite participants to work with us in these areas. OPERATIONS AND COSTS Contract Sales: For contract sales, orders will be delivered directly to each of the contracted supermarkets on a weekly and/or biweekly basis. Products will be distributed in an owned or leased 24’ truck van, most probably in the morning. It’s estimated that the truck will cover anywhere from 250-400 miles a day. The delivery schedule will be based on the most efficient logistical means of distribution. Direct Delivery: Products will be prepaid and shipped directly to the consumer via UPS-type carriers with a one-four day delivery option. For example, one 22-building range can produce 400,000 lbs of produce per year. Assuming the average consumer consumes a low 30lbs of lettuce each year (, Saladacres estimates one range can serve thirteen thousand customers per year depending on the crop. Product control: On-site Hazard Analysis Critical Control Point (HACCP). This system will meet the standard requirements set forth by the FDA to ensure 100% bacteria free products. This is a method of making sure all potential areas of bacterial growth and sources of contamination are kept clean; for ex. hands, washrooms, equipment, etc. Inventory: Saladacres will manage its inventory on a first in-first out (FIFO) basis. Meaning, the company will carry little (if any) excess product inventory. All production and harvesting is based on a customer need basis. Packaging supplies: Purchased as needed and lead times will be product and vendor dependent. SaladacresUvaldeTexas3.2 Jan. 2009 Page 21 of 24
  22. 22. Seed Suppliers: About 40 different seed companies supply seeds. The companies are located in the U.S., Canada, Europe and Japan. SA will also plan to keep enough seeds on hand for at least a year. Cost of goods sold: The cost of goods sold includes material costs such as: packaging material (bags, labels and wraps) as well as shipping materials such as pallets and boxes. Labor costs: Labor costs for production are broken down per range with the assumption that the facilities are working at their maximum capacity. Payment: Estimates of payment on sales with be: 40% cash, 60% 30 day for supermarkets. Food services will be weekly. Options for payment such as cash, credit or check is dealt with on a customer basis. The customer’s payment option is decided by the Saladacres salesperson responsible for the sale. Utilities and Related Costs: When in operation, Saladacres will use the utilities of: electricity, gas, water, and telephone. Hot water range heating will be done with the use of a biomass combustion system (BCS) using renewable fuels. Additional related operational costs include: sewer and garbage pick-up, reverse osmosis (RO) service, and repair of service and equipment. (See Financials). Miscellaneous Costs include: nutrients, cleaning agents, staff clothing and contingencies (See Financials). • • • • License and Operating Agreement The greenhouse technology and design package is a body of information that is protected in trust. It is provided to our partners under license for one dollar a year for the mutual benefit of SA, its partners, and shareholders. Saladacres LLC does not own the technology for the legal protection of investors and partners, but is able to grant the use of the technology on an exclusive basis in the United States. It is available to all who want to become partners in a working greenhouse installation, working under the Operating Agreement which is the document signed and followed by our partners. Issuing the licenses to partners is governed by trustees of the technology who are also directors of SA. The working information is described in the texts referred to as the Design and Data Base, Variety Register, and Term texts. They are used for the construction, production, and operation of a hydroponic greenhouse of the SA design for the year round growing of salad vegetables. The texts describe building design, layout and construction; function, component costs, theory, and labor in relation to Saladacre greenhouses. They also describe production formulations, techniques of seeding, transplanting, production, and designs of production equipment in the form of text and drawings. The Term texts are the basis of the instruction curriculum and are split into Biology and Conditions, Chemistry, and Electronics. These texts are based on science and are updated and edited on a regular basis by staff, interns, and partners. It is a dynamic, flexible, and adaptable body of knowledge that takes effort and commitment to understand. FUTURE DIRECTIONS OF AGRICULTURE SaladacresUvaldeTexas3.2 Jan. 2009 Page 22 of 24
  23. 23. The future of agriculture will be driven by customers who demand pure fresh fruits and vegetables, and insist on knowing their source. The future of agriculture will be lured, pulled, coaxed, and rewarded by health conscious people to grow clean, healthy, pure, competitive priced living foods. These people will drive the direction of agriculture toward sustainable production because sustainability is just that; it won’t run out of resources and stop. These people will also insist on ‘know your source’ informed nutrition, and accept direct delivery. Charles Darwin noted that survival and reproduction are the basic drivers of our behavior. It’s a personal and group obsession, and the media is saturated with concerns of health, beauty, behavior, dress, and appearance. People want to live and reproduce and these are the instincts that will change directions in agriculture. Greenhouse Industry Expansion The big changes in agriculture will see rising production of pure vegetables in greenhouses. The winners will be greenhouse producers of vegetables that can manage mineral nutrients and provide a full range of minerals in their crops. Since minerals are expensive, various ways will be developed to conserve minerals while the crops are growing. Recirculating and drip irrigation systems and the use of liners are three such methods. Greenhouses can manage growing environments and should permit maximum growth potential of crops. There are greenhouses now that can deliver vegetables that are pure, good tasting, and with a high mineral content. Saladacres is an outstanding example. Supplying the demand for fresh, pure, vegetables will be greenhouses located within 2 to 3 hours delivery of their customers. Greenhouses will grow clean, pure, produce, competitive in price with field grown prices. Production will be sustainable, where the use of fossil fuels is low, arable land is not used, and the operation is pollution free. Sustainable by our definition is the ability to operate indefinitely without depleting natural raw materials such as topsoil and fossil fuels. For the customer, this results in fresh vegetables, and low transport costs. Ideally, greenhouses will be located right next to the cities they serve. Direct marketing is the direct connection of the greenhouse grower to their customers. In direct marketing there will be personal contact between the greenhouse agent and the customer. Marketing will become more direct because the methods to do this are now available. Computers assist in similar areas such as airline baggage handling, and newspaper delivery, and courier services like Fed Ex where changes in new and old delivery times and places are handled easily. Direct delivery will work for SA because the delivery contractor earns a high return for his or her effort and has the information technology. Supply contracts between SA and customers will enable the financing of the production systems, which are expensive. A supply contract can be set up on the web, and can be accepted if there is production available. In the case of SA, we expect waiting lists. In light of this, SA is is presented with a great opportunity for expansion to meet the present and future demand for our products. We have proven our ability to grow these crops. The minerals in SA vegetables are abundant, potent, pure, and ‘first hand’. The plants are healthy, good looking, and full of flavor. They provide essential minerals, enzymes, flavonoids, and vitamins to those who eat them. Our contracted customers will be the benefactors. FINANCIAL PLAN Projections for capital costs and incomes are in Appendix A and Appendix B. Income Summary Incomes Staff incomes and returns on investment are good. Full ownership of some ranges is possible in less than 5 years. Year Ranges Total Gross # Greenhouses Capital Cost Sales Net Operating Project Built Ranges Acres In Ranges (1) of Ranges (3) / Year (4) Income (2) Value (5) 1 2 2 5 40 4,900,000 3,800,000 1,520,000 4,900,000 SaladacresUvaldeTexas3.2 Jan. 2009 Page 23 of 24
  24. 24. 2 3 5 12 100 6,600,000 9,500,000 3,800,000 11,500,000 3 5 10 24 200 11,000,000 19,000,000 7,600,000 22,500,000 3.5 10 20 50 400 22,000,000 38,000,000 15,200,000 44,500,000 5 50 75 200 1500 150,000,000 165,000,000 66,000,000 165,500,000 (1) Generally 1 range can provide for 3,000 people as a rule of thumb, with bagged salads, and produce through direct delivery (2) ebidta:earned before interest, depreciation, taxes, amortization; a conservative average (3) Capital costs based on the cost of the first range and economies for future ranges First range is $2.7 M, the succeeding ranges $2.2 M (4) Conservative average projection based on a mix of standard crops and Direct Delivery (5) Calculated as value of buildings only; not based on the income generating ability (6) Each range is capable of producing annually: 838,000 heads of lettuce, 220 tons of spinach, 588,000 lbs. of tomatoes, 698,000 Liters of EMA nutrient juice, 19.2 million green onions. Purchase Orders: A Company By-Law All purchases leading up to and including the construction of the first and subsequent ranges, will be preceded by a Purchase Order, from SA, for all purchases of goods and services over $10.00. This includes consulting work, legal work, making of contracts, business plan development or amendments, engineering, survey, permits, leasing and rental, and other purchases listed in the Design and Data Base. This is a condition of accepting this Business Plan. Payment will not be made without a Purchase Order number on the supplier’s invoice. Verbal commitments or promises are not valid or binding. NOTE TO READER: The financial projections have been developed from actual operating statistics (pilot projects) and the profit potential is estimated to be conservative. The projections are conservative and do not take into account: • Surges in demand (which we are now experiencing) • Inflation • New profitable product lines such as medicinal herbs and extracts • Culinary herbs, which the payback per range can be 3 years • Rising costs of gas, natural gas, diesel, and electricity that will drive up the cost of imported and domestic produce • Profit margins can be increased by using 'super ranges' which are ranges consisting of 30 climate buildings rather than the standard 20 climate buildings. • Weather changes caused by Global Warming and the adverse effects of drought, hurricanes, storms, and cool weather • Income from carbon credits • Additional production from 'hoop houses' - a utility seasonal greenhouse for growing long term crops When in production, SA will operate on an income plus profit sharing plan where a percentage of the sales will be distributed to production staff. A number of income spreadsheets are prepared. The best 'mix' of crops to be grown in each range is determined by the market. CONTACT Ron Tuttle; cell 954-270-3485 780-922-3340 SaladacresUvaldeTexas3.2 Jan. 2009 Page 24 of 24