Olmito Agriquatics A Business Plan Executive Summary ________________________________           Paul Skillicorn           ...
Olmito Agriquatics                      A Business Plan Executive Summary                         ________________________...
local processing of a wide range of valuable extractive crops, energy crops, buildingmaterials and domes for internal cons...
treatment of wastewater and production of food protein; leveraging the limited and fragilesupplies of fresh water for huma...
that can contribute to improving the lives of every Valley citizen. If produced by aconventional coal-powered thermal powe...
federal authorities in the region to make The Valley ideally suited to host the first majorimplementation of the Agriquati...
Farm Infrastructure & Farm RollingStock                                              $0            $0    0%              $...
Income Statement (Profit &Loss)                                         2013          2014            2015            2016...
ASSETS  CASH & SHORT TERM INVESTMENTS                   $ 678,212     $ 416,446   $ 1,308,133   $ 1,237,493   $ 2,511,158 ...
Administrative Staff        1            1              1             1              1                              Suppor...
COST STRUCTURE                                                                                                          $ ...
Original Group (Management & Technology)                          500,000         50%          $ 100,000    $ 500,000     ...
Expenses, Fees and Commissions                                              $ 522,668     Net Cash Raised                 ...
Commission on Environmental Quality). Subsequent engineering and environmentalassessments are presumed to take a further 6...
Paul SkillicornSkillicorn@yahoo.com, PaulSkillicorn@gmail.comHome/office: +1 512-934-7441      cell: +1 512-934-7441Skype:...
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Olmito agriquatics executive summary - third party investors

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Executive Summary of the Olmito Agriquatics project -- assumes no income from sale of water or from attendant agribusiness conducted with that water.

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Olmito agriquatics executive summary - third party investors

  1. 1. Olmito Agriquatics A Business Plan Executive Summary ________________________________ Paul Skillicorn 3/19/12
  2. 2. Olmito Agriquatics A Business Plan Executive Summary ________________________________ Paul Skillicorn 3/19/12Introduction: Olmito Agriquatics, a collaboration among principals now based in Texas, islaunching a new wastewater treatment business based on the proprietary AgriquaticsSystem. Following successful commissioning of a comprehensive Agriquatics pilotproject now being conducted with the help of smallholders of Santa Catalina and the Cityof Barranca in the Lima Region of Peru, the Company is moving forward to implement afull scale operation which, through successive phases, will provide comprehensivewastewater treatment services to Olmito and surrounding areas in South Texas. Olmito Agriquatics intends to change, fundamentally, the existing paradigm forwastewater treatment in South Texas. The Agriquatics System treats municipal, industrialand CAFO (concentrated animal feeding operations) wastewater effluents to a fullyrecyclable condition. Byproducts of the Agriquatics wastewater treatment process –branded high protein animal feeds, fish, crustaceans and protein concentrates – generate apositive cash flow sufficient to cover both operating and capital costs of the underlyingwastewater treatment plant. Nothing is discharged. No water is lost. The AgriquaticsSystem, as first implemented in Olmito, Texas will, in fact, rank among the first trulyprofitable commercial-scale “no-fees” wastewater treatment systems in the world. In subsequent phases, Olmito Agriquatics intends using the “entre” and localpresence afforded by its rural, or small town wastewater treatment concession, tointroduce to The Valley region of South Texas the massive advantages of its uniqueaquaculture and fertigation methods in the context of a mutually beneficial, trulyinterdependent joint venture agribusiness relationship with local smallholders. In asecond phase agribusiness iteration, an AJVA (Agriquatics Joint Venture Agribusiness)enterprise will leverage possession of the continuous stream of highly treated effluentrealized by the Agriquatics wastewater treatment system and adoption of advancedfertigation irrigation technologies, to achieve highly efficient distributed production and2
  3. 3. local processing of a wide range of valuable extractive crops, energy crops, buildingmaterials and domes for internal consumption and sale in the greater US, European andthe Far East markets. In so doing, the AJVA enterprise will also enrich rural smallholderpartners in a manner and to a level hitherto believed to be unattainable.1 Olmito Agriquatics’ longterm objectives with respect to wastewater treatment areto employ an accelerated amortization, distributed treatment approach to treatingwastewater in the South Texas periurban and rural contexts. In so doing, the System willsave future municipal and/or water service company clients not only the cost of atreatment plant, but also the cost of installing and maintaining some expensive mains andlift stations that would otherwise be required to aggregate wastewater and transport it tocommon points of treatment and discharge. The System will “clean up” anddecommission existing wastewater treatment lagoons. It will also allow quick, localdistribution of treated wastewater to industrial clients and to a wide variety of public andprivate irrigation applications – thus freeing up the municipalities’ or water supplycorporations’ constrained fresh water supplies for use in supporting new growth in thegreater metropolitan area. Agriquatics and its partners intend financing each such systemlocated within the South Texas region entirely off budget to the client municipalities andor water supply corporations. In “mature Agriquatics applications, later phases of theextension of such projects will, in part, be enabled by the capital gains realized throughsale of properties that have been “cycled” through the Agriquatics process and therebygained “absolute preference” with respect to zoning allowances, installation ofinfrastructure (roads, electricity, water, wastewater, telephone, emergency service, policeetc.), and preferential access to Agriquatics-treated recycled water. Construction of the first commercial Agriquatics wastewater treatment plant – theimmediate object of this business plan – will begin in early 2013, with commissioning ofthe first subsystems commencing in late 2013 and fullscale operations expected to beginin mid-2014. During the subsequent 5 years, the Company will predictably become animportant factor in the South Texas domestic market for premium, high protein brandedfeeds and an important new supplier of tilapia, barramundi, a western Pacific region fish,and macrobrachium fresh water prawns. The Company will be managed, at the discretion of its board of directors, by acompact team of experienced managers and production experts based in the Company’soffices located in Austin and South Texas. Olmito Agriquatics principals believe the Company’s “green” contributions toimproving the local environmental circumstance; changing the global paradigms for1 Readers should consult The Olmito Agriquatics Agribusiness Phase II Business Plan fordetails on subsequent phases of the Olmito Agriquatics Project. The company will alsointroduce, during Phase II, its approach to using duckweed to produce biodegradablebioplastics.3
  4. 4. treatment of wastewater and production of food protein; leveraging the limited and fragilesupplies of fresh water for human use and consumption; and developing dramaticimprovements in the production efficiencies of building materials and renewable energyfeed stocks will continue to gain recognition in a world that is becoming increasinglysensitivity to the health of the environment in which we live.Public Benefits A recitation of Olmito Agriquatics’ public benefits – in effect a contribution to allresidents of South Texas – is noteworthy. During the first five years of the proposed project, Olmito will move from being“at the back of the pack” in its treatment of wastewater to ranking among the globalleaders. All wastewater treated by the Olmito Agriquatics wastewater treatment plant(s)will meet the highest treated effluent standards in the world, and all of it will be fullyrecycled. Nothing will be lost. This will have the effect of significantly expanding theavailability of water to all those in the immediate Olmito area – a region comprising thetowns of Olmito, Rancho Viejo, Los Fresnos, San Benito, Indian Lake, Laureles andneighboring Brownsville suburbs. By joint-venturing, in subsequent project phases, with neighboring south Texassmallholders, the Company intends to share up to 15% of the expanded project’s profitswith local farmers. By the end of 2016, rural smallholder partners will be expected toshare an annual distribution averaging just over $600,000 for a contribution of only 200acres of adjacent land. For the first time in contemporary history, a “major ruraldevelopment project” will have gone beyond merely providing basic needs, to genuinelyenriching select smallholder farmers – helping them truly get ahead. These samesmallholders will also have generated reciprocal benefits by helping to reduce the“wastewater treatment burden” of many of their urban brethren effectively to zero.Agriquatics expects, eventually, to expand services to encompass a significant portion ofthe sewered population within The Valley Region of south Texas. Duckweed, the principal crop produced by the project, is now universallyrecognized as the most productive of all leafed, flowering, vascular plants. Grown withsupreme efficiency, as it will be in this project, duckweed will convert more CO2 per acrethan can any other combination of plants on any “footprint” on the face of the earth.Agriquatics Systems treating 15 MGD of wastewater to a drinking water standard, forinstance, will effectively remove more than 20 tons of CO2 from the environment eachyear – equivalent to taking over a dozen mid-sized cars completely “off the road.” By substituting for next generation activated sludge wastewater treatment plants,the only comparable system when it comes to effluent quality, an aggregate 15 MGDs ofAgriquatics Systems will also save over 25,000 megawatt hours of electricity each year –enough capacity to provide all the electricity needs of over 1,000 households: capacity4
  5. 5. that can contribute to improving the lives of every Valley citizen. If produced by aconventional coal-powered thermal power plant, that same energy would generate releaseof over 25,000 tons of carbon dioxide over a 12-month period, approximately the sameamount as a fleet of 2,500 mid-sized cars. Additionally, by increasing the generalavailability of water that can be used in cooling operations of powerplants, theAgriquatics System will contribute to developing a solution to what has today become acrisis throughout Texas. The centerpiece of the Agriquatics wastewater treatment system, the duckweed-based biological nutrient removal system, will effectively change the global paradigm forproduction of plant-based protein. One acre of duckweed surface area will produce 30times as much plant protein as will soybeans grown on that same acre – and a betterprotein (better amino acid profile) at that.2 An aggregate 15 MGDs of AgriquaticSystems will produce more than 106,000 tons of duckweed meal each year – substitutingfor approximately 120,000 tons of soybeans – most of which must now be imported intothe region. The project’s novel vermiculture primary treatment system will also producemore “meat protein” per unit of surface area than does any other animal proteinproduction system. As harvests of fishmeal inevitably decrease with overfishing and theadvent of global warming, “Agriquatics worms” can easily replace those losses. The Agriquatics phased-sequenced anaerobic digesters provide an alternativemethod by which to extract high value from volatile solids. Today, they can deliver morebiogas, and a better biogas (higher methane) from primary waste solids than can anyother comparable anaerobic process. These systems will also contribute, in a significantmanner, to both CO2 mitigation and energy savings throughout the south Texas region.Location The Agriquatics System may be profitably deployed in any location within thegreater Valley region of south Texas where wastewater is collected. Weather, topographyand soil conditions favoring reuse of treated wastewater in agriculture and aquacultureare prevalent throughout the region. By substituting for water that must now be extractedfrom the Rio Grande River, the Agriquatics System will allow more of that valuablewater to be extracted in regions up-stream, such as the greater El Paso region, that nowsuffer serious shortages of both potable and irrigation water. These attractive geographiccircumstances combine with the favorable disposition of cognizant municipal, state and2 Demand for soymeal to feed the exploding demand for meat in India and China is nowgenerally recognized as the primary driving force behind clearing of Amazon jungle inBrazil, Peru, Bolivia, Colombia, Venezuela and Guiana. One acre of Agriquatics“duckweed bioreactor surface area” conceptually compensates for 30 acres of soybeans –thirty acres of rainforest.5
  6. 6. federal authorities in the region to make The Valley ideally suited to host the first majorimplementation of the Agriquatics System in the United States.The Team Olmito Agriquatics will be managed by a senior team of experiencedprofessionals, headed by Paul Skillicorn. As a group, the “project team” has moreexperience with duckweed production, duckweed-based wastewater treatment,duckweed-based pisciculture and reuse of treated municipal effluent than any comparablegroup worldwide. Management will work at the direction of a 5-member board ofsimilarly experienced directors. Management and the Olmito Agriquatics Board ofDirectors will be advised by members of the Advisory Team, each of whom haslegitimate claim to be at the top of his/her respective disciplines, globally.The Numbers A brief summary of project first phase “numbers” is presented below. The readershould note that beyond the Olmito region, no other sewered towns or communitiesfeature in “The Numbers,” as presented here. The Numbers also ignore potential incomederived from reuse of water and any future value derived from urban real estate capitalgains. The Company believes, nevertheless, that these “ancillary” source of income mayeventually come to exceed the System’s core aquaculture returns. Expressions of interestalready received from the mayors and councils of towns such as Los Fresnos, RanchoViejo and Indian Lake suggest, nevertheless, that Agriquatics will experience littledifficulty gradually expanding its services to cover a significant portion of the greaterValley region.Start-up Costs & Sources of Funding GUARANTEED INVESTMENT BY LOAN WORKING LOAN TOTAL 3RD Parties % Bank YYY % Bank ZZZ %PLANT AND EQUIPMENT (guaranteed loans)Tissue Culture Lab - AD and Stevia $0 $0 0% $0 0% $0 0%WWT (series of 22 l/s units - including $fish,worms & digesters) 4,544,386 $0 0% $ 4,544,386 100% $0 0%Local Hydraulics & Sludge Mining $ 337,324 $ 219,436 65% $ 117,888 35% $0 0%Roads $ 85,845 $ 85,845 100% $0 0% $0 0%Security $ 72,676 $ 30,000 41% $0 0% $0 0%Electricity and Backup Power Units $ 480,000 $0 0% $ 480,000 100% $0 0%Phase II Park Project Landscaping $ 325,000 $ 325,000 60% $0 0% $0 0%Phase II Park Construction $ 300,000 $ 300,000 100% $0 0% $0 0%Fertigation Infrastruction (per hectare) $0 $0 0% $0 0% $0 0%Fertigation Infrastructure(station/overhead facilities) $0 $0 0% $0 0% $0 0%6
  7. 7. Farm Infrastructure & Farm RollingStock $0 $0 0% $0 0% $0 0%Non-Farm Rolling Stock $ 80,000 $ 80,000 100% $0 0% $0 0%Extraction Units $0 $0 0% $0 0% $0 0%Kenaf Equipment, Press andInfrastructure $0 $0 0% $0 0% $0 0%Miscellaneous Equipment + Spare Parts $ 129,718 $ 129,718 100% $0 0% $0 0%OVERHEAD COSTS THROUGHSTARTUP Closing Costs $ 30,000 $ 30,000 100% $0 0% $0 0% Bridge Financing $0 $0 0% $0 0% $0 0% Preliminary Expenses $ 100,000 $ 100,000 100% $0 0% $0 0%WORKING CAPITALREQUIREMENT Initial inventory $ 150,000 $0 0% $0 0% $ 150,000 100% Initial accounts receivable $ 300,000 $0 0% $0 0% $ 300,000 100% $ Initial operations, admin & sales costs 1,050,000 $0 0% $0 0% $ 1,050,000 100% Second Round Working Capital $ 400,000 $0 0% $0 0% $ 400,000 100% $TOTAL START-UP EXPENSES 8,384,950 $ 1,300,000 16% $ 5,142,274 61% $ 1,900,000 23% Investment Scheduling Up Front Year 2 $0 Cash Investments Closing Costs $ 30,000 $0 Bridge Financing & Preliminary Expenses $ 100,000 $0 Equipment and Supplies $ 1,170,000 $0 Working Capital Disbursements $0 $0 $0 $0 Guaranteed (Olmito) $0 $0 Year-1 Working Capital *** $ 1,500,000 $ 400,000 Equipment Purchase $ 5,142,274 $ 104,859 $0 $0 Line of Credit $0 $0 Year-1 Working Capital *** $ 1,500,000 $ 400,000 $0 $0 Term Loans and/or Bonds $0 $0 Year1 1 & 2 Equipment Purchases $ 5,142,274 $ 104,859 TOTAL INVESTMENT/DEBT RAISED $ 7,942,274 $ 504,859 *** Note: Year 1 loans long term loans may require 100% guarantees ****Note: Total Cash Investment being sought is only : $1,300,0007
  8. 8. Income Statement (Profit &Loss) 2013 2014 2015 2016 2017SALES $0 $ 4,518,041 $ 7,373,409 $ 8,020,114 $ 8,491,605 Product Group 1 Sales $0 $0 $0 $0 $0 Poduct Group 2 Sales $0 $ 4,518,041 $ 7,373,409 $ 8,020,114 $ 8,491,605 Product Group 3 Sales $0 $0 $0 $0 $0 Product Group 4 Sales $0 $0 $0 $0 $0COST OF GOODS SOLD $ 41,131 $ 2,310,148 $ 3,373,107 $ 3,604,401 $ 3,746,067INCOME FROM PRODUCTION (GrossMargin) -$ 41,131 $ 2,207,893 $ 4,000,303 $ 4,415,713 $ 4,745,538OPERATING EXPENSES $ 631,900 $ 1,219,545 $ 1,374,472 $ 1,384,317 $ 1,315,945EBITDA -$ 340,734 $ 1,305,142 $ 2,946,133 $ 3,355,589 $ 3,757,655INCOME FROM OPERATIONS -$ 673,031 $ 988,348 $ 2,625,830 $ 3,031,396 $ 3,429,592NET INTEREST INCOME -$ 210,106 -$ 400,056 -$ 348,647 -$ 293,485 -$ 211,585INCOME BEFORE TAXES -$ 883,137 $ 588,293 $ 2,277,183 $ 2,737,911 $ 3,218,007TAXES ON INCOME $0 $ 195,171 $ 719,713 $ 879,941 $ 1,040,224NET INCOME AFTER TAXES -$ 883,137 $ 393,122 $ 1,557,471 $ 1,857,970 $ 2,177,783Cashflow Statement 2013 2014 2015 2016 2017INVESTMENT AND OTHER CAPITAL $ 1,300,000 $0 $0 $0 $0LONG-TERM DEBT $ 5,057,425 $ 104,859 $0 $0 $ 64,859SHORT TERM LOANS $ 1,500,000 $ 400,000 $0 $0 $0INCOME FROM OPERATIONS $0 $ 3,976,320 $ 7,270,117 $ 7,985,873 $ 8,455,940INCREASE IN ACCOUNTS PAYABLE $ 14,197 $ 134,246 $ 185,012 $ 194,888 $ 197,761INCOME FROM INTEREST $ 34,472 $ 12,177 $ 23,892 $ 38,420 $ 58,395TOTAL SOURCES OF FUNDS $ 7,906,094 $ 4,627,602 $ 7,479,022 $ 8,219,181 $ 8,776,955CAPITAL EXPENDITURES $ 6,250,091 $ 122,190 $ 83,728 $ 81,203 $ 77,603SALARIES, LABOR & COMM. $ 128,793 $ 1,264,353 $ 1,645,819 $ 1,726,463 $ 1,747,968COST OF GOOD SOLD $ 22,011 $ 1,486,230 $ 2,205,795 $ 2,361,741 $ 2,457,126OTHER OPERATING COSTS $ 189,931 $ 584,262 $ 677,158 $ 685,351 $ 634,566PAYMENT OF PRINCIPAL $ 392,478 $ 824,931 $ 882,583 $ 923,217 $ 989,822INTEREST EXPENSE $ 244,578 $ 412,233 $ 372,539 $ 331,905 $ 269,980INCOME TAX PROVISION $0 $ 195,171 $ 719,713 $ 879,941 $ 1,040,224DIVIDEND PAID $0 $0 $0 $ 1,300,000 $ 286,000TOTAL UTILIZATION OF FUNDS $ 7,227,882 $ 4,889,369 $ 6,587,335 $ 8,289,821 $ 7,503,290FUND INCREASE (DEFICIT) $ 678,212 -$ 261,767 $ 891,687 -$ 70,640 $ 1,273,665OPENING CASH BALANCE $0 $ 678,212 $ 416,446 $ 1,308,133 $ 1,237,493CLOSING CASH BALANCE $ 678,212 $ 416,446 $ 1,308,133 $ 1,237,493 $ 2,511,158Balance Sheet 2013 2014 2015 2016 20178
  9. 9. ASSETS CASH & SHORT TERM INVESTMENTS $ 678,212 $ 416,446 $ 1,308,133 $ 1,237,493 $ 2,511,158 ACCOUNTS RECEIVABLE $0 $ 541,732 $ 645,035 $ 679,284 $ 714,960 INVENTORIES $ 50 $ 62,314 $ 184,162 $ 379,379 $ 628,775 TOTAL CURRENT ASSETS $ 678,262 $ 1,020,492 $ 2,137,329 $ 2,296,156 $ 3,854,893 LAND AND IMPROVEMENTS $0 $0 $0 $0 $0 MACHINERY, EQUIPMENT, VEHICLES $ 6,250,091 $ 6,363,944 $ 6,441,818 $ 6,519,466 $ 6,596,628 BUILDINGS & IMPROVEMENTS $0 $0 $0 $0 $0 ACCUMULATED DEPRECIATION $ 332,296 $ 649,090 $ 969,394 $ 1,293,587 $ 1,621,649 TOTAL PLANT & EQUIPMENT $ 5,917,794 $ 5,714,854 $ 5,472,425 $ 5,225,879 $ 4,974,979 OTHER ASSETS $0 $0 $0 $0 $0TOTAL ASSETS $ 6,596,056 $ 6,735,346 $ 7,609,754 $ 7,522,035 $ 8,829,871LIABILITIES SHORT-TERM DEBT & NOTES PAYABLE $ 1,304,025 $ 1,279,741 $ 803,575 $ 282,741 $0 ACCOUNTS PAYABLE $ 14,197 $ 148,443 $ 333,455 $ 528,343 $ 726,103 TOTAL CURRENT LIABILITIES $ 1,318,222 $ 1,428,184 $ 1,137,030 $ 811,084 $ 449,156 LONG TERM DEBT $ 4,860,921 $ 4,565,133 $ 4,158,717 $ 3,756,334 $ 3,391,059 INVESTMENTS & OTHER CAPITAL $ 1,300,000 $ 1,300,000 $ 1,300,000 $ 1,300,000 $ 1,300,000 RETAINED EARNINGS -$ 883,087 -$ 557,971 $ 1,014,008 $ 1,654,618 $ 3,689,656 TOTAL EQUITY $ 416,913 $ 742,029 $ 2,314,008 $ 2,954,618 $ 4,989,656TOTAL LIABILITIES $ 6,596,056 $ 6,735,346 $ 7,609,754 $ 7,522,035 $ 8,829,872Labor and Wage Summary 2013 2014 2015 2016 2017VARIABLE COST LABOR Manufacturing Labor Line Supervisor 2 2 2 2 2 Skilled Workers 4 4 4 4 4 Semi-Skilled Workers 6 6 6 6 6 Unskilled Workers 2 2 2 2 2FIXED COST LABOR Manufacturing Labor Manufacturing Manager 1 1 1 1 1 Production Managers 0 0 0 0 0 Operation Managers (Shop) 1 1 1 1 1 Operation Managers (Electrical) 1 1 1 1 1 Engineers 1 1 1 1 1 Shipping & Stores Personnel 1 2 2 2 2 Field Workers 2 2 2 2 2 G&A Labor Executives (CEO, COO, CFO, CTO) 0.2 0.2 0.2 0.2 0.2 Marketing/Sales Manager 0.2 0.2 0.2 0.2 0.2 Sales Staff 0.2 0.2 0.2 0.2 0.2 Accounting/Financial Staff 1 1 1 1 19
  10. 10. Administrative Staff 1 1 1 1 1 Support Staff 2 2 2 2 2LABOR SUMMARY (Broken Down TwoWays) Total Manufacturing Labor 21 22 22 22 22 Total G&A Labor 4.6 4.6 4.6 4.6 4.6 Total Variable Cost Labor 14 14 14 14 14 Total Fixed Cost Labor 11.6 12.6 12.6 12.6 12.6TOTAL HUMAN RESOURCES 25.6 26.6 26.6 26.6 26.6WAGE SUMMARY (Broken Down Two Ways) Total Manufacturing Wages $ 1,046,400 $ 1,046,400 $ 1,046,400 $ 1,046,400 $ 1,046,400 Total G&A Wages $ 336,233 $ 336,233 $ 336,233 $ 336,233 $ 336,233TOTAL WAGES $ 1,382,632 $ 1,382,632 $ 1,382,632 $ 1,382,632 $ 1,382,632 Total Variable Cost Wages $ 825,273 $ 825,273 $ 825,273 $ 825,273 $ 825,273 Total Fixed Cost Wages $ 557,360 $ 557,360 $ 557,360 $ 557,360 $ 557,360TOTAL WAGES $ 1,382,632 $ 1,382,632 $ 1,382,632 $ 1,382,632 $ 1,382,632Ratio Analysis A 2013 2014 2015 2016 2017ANNUAL GROWTH RATES 63% 9% 6%LIQUIDITY Current ratio 5.00 4.72 6.69 9.27 19.66 Quick ratio 0.51 0.67 1.72 2.36 7.18DEBT Debt to total assets 0.74 0.68 0.55 0.50 0.38 Debt to total capitalization 0.92 0.86 0.64 0.56 0.40 Debt to equity 11.66 6.15 1.80 1.27 0.68 Leverage 15.82 9.08 3.29 2.55 1.77 Times interest earned -2.61 2.43 7.11 9.25 12.92 Fixed charges coverage -2.61 2.43 7.11 9.25 12.92ACTIVITY Inventory turnover 0.00 72.50 40.04 21.14 13.50 Average collection period 43.77 31.93 30.91 30.73 Sales to fixed assets 0.00 0.79 1.35 1.53 1.71 Asset turnover 0.00 0.67 0.97 1.07 0.96PROFITS Gross margin 49% 54% 55% 56% Operating margin 0% 22% 36% 38% 40% Profit margin on total sales 0% 9% 21% 23% 26% Return on assets -13% 6% 20% 25% 25% Return on equity 0% 0% 67% 63% 44%EFFICIENCY Production 0.51 0.46 0.45 0.44 Sales, Marketing & Distribution 0.05 0.02 0.02 0.02 R&D/Quality Assurance 0.02 0.02 0.01 0.01 General & Administration 0.13 0.10 0.09 0.08 Post-TaxRATES OF RETURN Post-Tax IRR 51% NPV $ 11,680,58910
  11. 11. COST STRUCTURE $ Total Fixed Costs $ 1,108,356 $ 2,621,121 $ 2,804,095 2,825,231 $ 2,775,465 $ Total Variable Costs $ 101,731 $ 2,154,730 $ 3,211,621 3,431,397 $ 3,558,652Shareholder Value Calculations Risk Adjusted Present Value Calculation Discount Rate 6.75% P:E Ratio 3 Present Value Worst After-Tax Plan Best Case: Case: Net Income Net Income Valuation 1.2 FAILURE 2012 $0 $0 $0 $0 $0 2013 $ 393,122 $ 368,264 $ 1,104,792 $ 1,325,751 $0 $ 2014 1,557,471 $ 1,366,734 $ 4,100,203 $ 4,920,244 $0 $ 2015 1,857,970 $ 1,527,338 $ 4,582,013 $ 5,498,416 $0 $ 2016 2,177,783 $ 1,677,039 $ 5,031,116 $ 6,037,339 $0 Projected Present Valuation $ 14,818,124 $ 17,781,749 $0 Assigned Probability 40% 10% 50% Risk-adjusted Valuation by "Case" $ 5,927,250 $ 1,778,175 $0 Total Risk-Adjusted Present Valuation (casessummed) $ 7,705,425Original Shareholders Risk AdjustedShareholder # Shares: % Equity Speculative ValueOriginal Group (Management & Technology) 500,000 50% $ 3,852,712OWSC (Land & WWT Investors) 500,000 50% $ 3,852,712 0 0% $0 0 0% $0 0 0% $0 Total Outstanding 1,000,000 100% $ 7,705,425Shareholder Value Calculations Page 2 Preliminary Investment in Cash sharesRisk Adjusted Calculated Share Value $7.705 (Assuming 1,000,000 outstanding)Stated Share Price $1.000 Risk Adjusted $ Nominal SpeculativeShareholder # Shares: % Equity: Investment Value Value11
  12. 12. Original Group (Management & Technology) 500,000 50% $ 100,000 $ 500,000 $ 3,852,712OWSC (Land & WWT Investors) 300,001 30% $ 100,000 $ 300,001 $ 2,311,635Cash Investors (convertible B preferred) 199,999 20% $ 1,300,000 $ 199,999 $ 1,541,077Guarantees (50% of cash) 0 0% $0 $0 $0Other Partner C 0 0% $0 $0 $0 Total Outstanding 1,000,000 100% $ 1,500,000 $ 1,000,000 $ 7,705,425First Round Investment - Cash & Guarantees sharesRisk Adjusted Calculated Share Value $7.705 (Assuming 1,000,000 outstanding)Stated Share Price $4.000 Risk Adjusted $ Nominal SpeculativeShareholder # Shares: % Equity: Investment Value ValueOriginal Group (Management & Technology) 500,000 50% $ 100,000 $ 2,000,000 $ 3,852,712OWSC (Land & WWT Investors) 300,001 30% $ 100,000 $ 1,200,004 $ 2,311,635Cash Investors (convertible B preferred) 199,999 20% $ 1,300,000 $ 799,996 $ 1,541,077Guarantees (50% of cash) 0 0% $0 $0 $0Other Partner C 0 0% $0 $0 $0Employee Stock Plan 0 0% $0 $0 $0 Total Outstanding 1,000,000 100% $ 1,500,000 $ 4,000,000 $ 7,705,425Shareholder Value Calculations Page 3 IPO - After Year-5Presumed stock market valuation of company and shareholder value at 12x Year-5after-tax earnings $Assumed Year-6 Pre-IPO Valuation 26,133,395IPO Target Price (12x post-tax earnings) $21.778 per share 5-Yr % Gain $ Investmen onShareholder # Shares: % Equity: t Valuation Investment $Original Group (Management & Technology) 500,000 42% $ 100,000 10,888,915 10889%OWSC (Land & WWT Investors) 300,001 25% $ 100,000 $ 6,533,371 6533%Cash Investors (convertible B preferred) 199,999 17% $ 1,300,000 $ 4,355,544 435%Guarantees (50% of cash) 0 0% $0 $0 0%Other Partner C 0 0% $0 $0Employee Stock Plan 0 0% $0 $0IPO Subscription 200,000 17% $ 4,355,566 $ 4,355,566 $ Total Outstanding 1,200,000 100% $ 5,855,566 26,133,395IPO Funds RaisedStock Sales $ 4,355,56612
  13. 13. Expenses, Fees and Commissions $ 522,668 Net Cash Raised $ 3,832,898 While the IPO scenario is merely illustrative, it is noteworthy that, in 2017,project partners would share a pre-tax profit of approximately $3 million. Theamount contributing to OWSC – approximately $0.9 million per year – would serveto paydown that company’s existing longterm capital debt, before eventuallycontributing to reduction of service fees for water and wastewater treatment nowbeing charged to its member/clients.Financing and Capital Contributions: Olmito Agriquatics is seeking a third party cash investment of $1.3 million3 and a$5.9 million capital loan to allow construction of Phase-I infrastructure. This should besupported by a $1.9 million working line of credit. The Olmito Water SupplyCorporation, a 50% project partner, will commit its existing land, wastewater treatmentinfrastructure and attendant hydraulic resources to the project. It will also formallyguarantee the debt with its existing service fee revenue stream.4 Agriquatics LLC willprovide local rights to its proprietary technology and attendant engineering knowhow,while also managing the project. Upfront “internal costs,” estimated at approximately$200,000, will be shared equally by the Agriquatics and OWSC. Project engineering andenvironmental assessment costs, estimated at $400,000 and $50,000 respectively, areembedded in the capital cost budget.Timing: With land and much of the necessary hydraulic infrastructure already in place, theOlmito Agriquatics project can quickly be brought to a shovel-ready circumstance. Pre-engineering project development, estimated to require 2 months, can proceedimmediately upon receipt of funding and preapprovals from TCEQ (The Texas3 Investors are being offered “first-in-first-out” terms, with complete reimbursements ofinvested capital expected to take place in years 3 and 4. Investors are also being offeredpreferred shares earning 22% of respective invested amounts, with an option to convert to20% of all outstanding A shares/units before the end of year 5 (2017). An investorcommitting $1,000,000 to the project would expect, by the end of 2017, to have allhis/her money back plus dividends of $440,000. If he/she should elect to convert to “A”shares, he/she might then expect to receive a further contribution to his/her capitalaccount in the amount of approximately $600,000 in 2018.4 OWSC managers and members of board of directors understand that, should outsideguarantees be necessary, ownership will be modified accordingly.13
  14. 14. Commission on Environmental Quality). Subsequent engineering and environmentalassessments are presumed to take a further 6 months to completion. Final permitting, apainstaking iterative process conducted with Mr. Louis Herrin and his staff at TCEQ, isestimated to require at least 3 months. Phase-I of project construction will take 6 months,with commissioning and startup requiring an additional 90 days to completion.Landscaping and site “optimization” will thereafter continue on an open-ended basis. Revenues from sale of fish and prawns are expected to begin accruingapproximately 13 months following groundbreaking. The project is expected to beginmaking net profits on month 17, with targeted optimal margins attained 2 monthsthereafter (gross margins: 56% ). The project’s financial model suggests payback oncapital will be approximately 2.8 years.Additional and Optional Future Project Elements: Having attained profitability, Olmito Agriquatics will be well positioned to launch“additional local elements,” including: (a) a Visitor Center and Park open to formalschool science visits and intrepid tourists; (b) expansion to treat effluent fromneighboring communities; and (c) AJVA enterprises employing recycled treated effluentto supply high tech fertigation-irrigated, vertically integrated, value-added agricultureconducted in joint venture with local smallholder farmers. Demonstable local success of the Agriquatics System will trigger acquisition (atno charge) of raw wastewater now being treated at Rancho Viejo, Los Fresnos, SanBenito, Indian Lake, Laureles and neighboring Brownsville suburbs. Nutrients derivedfrom these sources will substitute for nutrients hitherto “mined” from existing Olmitolagoons. The Company will also begin aggressively to develop plans for treatingwastewater in a number of other favorable locations throughout The Valley. Initially,these “new” Agriquatics System wastewater treatment plants will add new capacity inhigh growth regions and replace systems requiring upgrading and/or repairs. Increasingly,however, Agriquatics Systems will also replace serviceable and well-performingactivated sludge facilities – serving thus to lower cost of service to client municipalities,enhance the local supply of recycleable water and improve treatment plants’ carbonfootprints.Contact Information: Readers requiring additional information should contact:14
  15. 15. Paul SkillicornSkillicorn@yahoo.com, PaulSkillicorn@gmail.comHome/office: +1 512-934-7441 cell: +1 512-934-7441Skype: PaulSkilliorn15

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