BEA Business Plan


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BEA Business Plan

  2. 2. BEA Business Plan Contents EXECUTIVE SUMMARY ............................................................................................................................. 3 Business Opportunity .......................................................................................................................... 3 Financial Considerations ...................................................................................................................... 4 The Request ........................................................................................................................................ 5 Why BEA Will be Successful ................................................................................................................. 6 Product ............................................................................................................................................... 6 Distribution ......................................................................................................................................... 6 Personnel ............................................................................................................................................ 7 THE COMPANY ........................................................................................................................................ 8 Company History ................................................................................................................................. 8 Company Location ............................................................................................................................... 8 Company Ownership ........................................................................................................................... 8 Mission Statement............................................................................................................................... 8 PRODUCTS............................................................................................................................................... 9 Product Description ............................................................................................................................. 9 Ergofit Fertilizer: ................................................................................................................................ 12 THE MARKET ......................................................................................................................................... 22 Market Analysis ................................................................................................................................. 22 Target Market Segment ..................................................................................................................... 23 Market Needs- Ergofit Organic Fertilizer ............................................................................................ 26 Competitive Edge .............................................................................................................................. 34 FINANCIAL CONSIDERATIONS ................................................................................................................ 38 Product Costs ................................................................................................................................ 39 Investor ROI ................................................................................................................................... 41 MANAGEMENT...................................................................................................................................... 42 Management Team ........................................................................................................................... 42 Organizational Structure .................................................................................................................... 43 2
  3. 3. EXECUTIVE SUMMARY BEA Business Plan Business Opportunity The extensive and ever growing fertilizer industry merits the attention of any sophisticated investor. With 176 billion dollars a year in sales, the fertilizer market is one of the largest and most consistent markets in the world. The primary consumer in this market is agriculture; however, many participants in the agricultural industry suffer due to unstable fertilizer costs. The agriculture industry faces many challenges, such as: • Highly inflated chemical fertilizer prices (400% increase in the past 4 years), • Consistent decreases in crop yields (due to destructive nature of chemical fertilizers) • Excess amounts of contaminated runoff • Severely malnourished top soils The continually growing global population has led to a worldwide demand for higher crop yields. This, along with ever increasing chemical fertilizer costs, has presented a profoundly lucrative opportunity for BEA Global. BEA Global provides a solution to the demand of superior fertilization with its unique bacterial products. BEA's products are superior to chemical fertilizers in production cost, user pricing and availability. They result in greater soil regeneration and crop yields, allowing BEA global to be uniquely positioned to build a multimillion dollar company within months of opening its doors. BEA Global’s landmark product is Ergofit. Ergofit is a revolutionary liquid azotic, bacteria based, organic fertilizer that has proven to outperform chemical fertilizers in many verifiable case studies. Ergofit boasts many impressive benefits: • Remarkable crop yields (up to 40% more than the best chemical fertilizers) • Sustained cost (more stable than expensive chemical fertilizers) • Increased soil water retention capabilities, resulting in up to 50% decline in water requirements. • Ease of application – consumers can use the same equipment they currently use • Beneficial environmental byproducts • Increased shelf life of produce • Soil restorer – the soil requires less application over time as the natural ecology of the soil is restored. • Reduces contamination in soil and water caused by standard chemical fertilizers 3
  4. 4. BEA Business Plan The astounding effects of using Ergofit to fertilize crops make it at least 18% cheaper than traditional fertilization for most users. This translates directly to the farmer’s bottom line thus creating significant value to the consumer and long term customers for BEA Global. Because of these features Ergofit is quickly becoming a well recognized and sought after product in the Brazilian agricultural community. In a recent press conference, held by BEA Global in Brazil, considerable interest was shown by Brazilian Government officials (both national and state), national environmental protection agencies, agricultural conglomerates, media groups and corporate entities. In the conference BEA Global created an immediate demand for Ergofit, specifically and most notably with Suzano and Aracruz, two of the largest paper pulp manufacturers in the world. Both companies are anxiously awaiting the arrival Ergofit. Suzano and Aracruz have used Ergofit in the past and have both subsequently, verbally, agreed to purchase a minimum of 2 containers of Ergofit per month, once the business entity is established and inventory is warehoused in Brazil. Brazil is currently the world's largest producer of sugar cane, coffee, soy beans and ethanol. Additionally Brazil is the leading net exporter of orange juice, tobacco, forest products, and several tropical fruits and nuts. It is also the fourth largest consumer of fertilizer in the world, utilizing over 25 million tons per year, totaling upwards of 25 billion dollars annually. Brazil is also one of the fastest growing agricultural producers in the world, with a growth rate of 6% per year over the last 10 years. These and other reasons have led BEA Global to the decision to launch the product in Brazil as soon as possible. BEA Global has already launched the Ergofit product in the United States. The US Market is the third largest Market in the world and it is where the headquarters of BEA Global lie. Concurrently with the BEA Brazil campaign, BEA Global will launch a large expansion campaign within the US targeting specialty sectors such as Golf Courses, Vineyards, Sugar production, and several others. We expect that ultimately the US market will bring the most profitability to BEA Global. Financial Considerations BEA Global has established relationships with raw material suppliers and mixers that will produce the product at low cost, yielding impressive 54% gross margin on the sale of the products while still remaining competitive in the fertilizer markets. These margins should improve considerably as BEA builds its own facilities and takes advantage of economies of increased sales. To date, through BEA Global’s local partner, Sergio Norris, there are commitments from four major agricultural and paper manufacturing companies who wish to commit to 12 month contracts to purchase Ergofit. The sum total of their interest is for 100,000 kg per month. With BEA’s current margin, which will only improve with development, these four orders alone will generate a gross profit of USD 1,250,000.00 per month. These 4
  5. 5. BEA Business Plan commitments have been made prior to having a full time sales team in operation. With BEA Global running the business and preparing to devote experienced teams to drive the sales - the considerable financial potential is clear. The Request In order to maximize efficiency and to get BEA Global operational at the highest levels, an investment of approximately $1,000,000.00 will be required. To get BEA Global fully operational requires considerable effort and up front capital. It will require that we have office space, warehouse space, sales and support staff, and a significant amount of product on the ground. Generally Brazilian companies, including large ones, will not engage in the purchase of products if such a presence in not established. When the interested parties purchase product it is done face to face after seeing the product in person. The following are necessary expenses and are reflected in detail in the 2009 and 2010 budgets in the appendices. Administrative Expenses- $344,867.46- These expenses include all necessary expenses not directly associated with the product itself through November 2009. This includes payroll, legal fees, office supplies, rent, utilities, advertising etc. Cost of Goods Sold- $562,111.00 - In order to sell in Brazil we must supply our warehouse with at least two containers (48,000 KG’s) of ready to sell product. Contingency Costs- $100,000.00 - In every business venture there are unforeseen difficulties and expenses that need attention. To hedge ourselves against potential losses, delays, government intervention, and other liabilities it is important to have significant contingency capital. Product Security BEA has taken the decision after many years of development, not to have the product patented. This is a decision that has served them well. The field of bio-technology and organic based fertilizers is not a new one, but as yet, no other company has managed to create a formula as effective as Ergofit. If BEA entered the product formula and mixing instructions to be patented, they would immediately give all competitors detailed directions to recreate the product, while making changes small enough to get the same results yet not infringe on the IP. Over the past five years several competitors have attempted to reverse engineer the specific bacteria formula necessary for Ergofits remarkable results, but without success. This, along with BEA Italy’s highly secretive mixing procedure (the mixing of the bacteria is broken down in to four parts in four separate locations in San Marino, so as not to reveal the entire mixing process in one location), gives BEA Global the confidence that Ergofit cannot be recreated. 5
  6. 6. BEA SUSTAINABLE COMPETITIVE BEA Business Plan ADVANTAGE Why BEA Will be Successful BEA Global is positioned for fast, sustained growth and huge financial gains. The company exhibits three major sustainable advantages that can maintain investor confidence. These are described below and detailed throughout the document. Product • Effectiveness o Remarkable crop yields (up to 40% more than the best chemical fertilizers) o Improved crop quality, larger fruit, higher brix content, better defense against pests and disease etc. o Increased soil water retention capabilities, resulting in up to 50% decline in water requirements. o Increased shelf life of produce o Ease of application – consumers can use the same shelf life they currently use. • Cost o Production Cost: $12.50/kg and Sales Price: $22.00/kg o Margin – 70% minimum o On average 18%+ cheaper than traditional chemical fertilizers in the first three years and 35% cheaper from there on. • Environmental Benefits o Product itself is Environmentally Safe o Creates healthy byproduct (humus) o Eliminates toxins in soil & water Distribution • Established Networks of Distribution o The source in Italy, has been providing product for distribution in Brazil, South Africa, Europe and the Middle East since 1995. And has the necessary product expertise. o Sergio Noris over the past five years has developed an extensive interest for Ergofit many of the interested parties already have a purchase history in Brazil as well as existing interest from other large buyers 6
  7. 7. BEA Business Plan o With new plants planned in Brazil (6-9 months) and later in Mexico and Chile. Distribution, costs & control will improve dramatically as these facilities come online. Personnel • BEA’s Global Team o Sergio Norris- Has built a business selling Ergofit in Brazil for 5 years. Through his extensive contacts he has established a network of buyers, but with his limited time the business grew beyond his control and closed operation Two Years ago. The source in Italy was unwilling to re-open the Brazilian operation until a reliable management team was in place. SEG is that management team. o SEG – A business development company with years of experience across a variety of products and markets. SEG will administrate all infrastructural development for the company and manage cash flow and marketing. The SEG management team will consist of James Scott president of BEA, Jason Sisneros, and Rusty Jensen. o Supporting Cast -  Legal Team: Kirton & McConkie: ; Mesquita Ribeiro Advogados:  Accountants – Haney & Company: An accounting firm with contacts in Brazil and vast experience in international affairs and financial flow Ergofit in Brazil BEA’s primary target in the first year is the establishment of a viable operation in Brazil. BEA previously operated in Brazil for approximately five years. The previous distributor and our current local partner is Sergio Norris. Through his friendship with the head office in Italy, he was granted the license, without fees, to import and distribute the product in Brazil in 2004. He did this on a small scale for the next three years, gaining a small but loyal customer base. Sergio, is an extremely successful client relationship manager and through his contacts in high level motor racing, the yachting world and the Brazilian parliament, he has made many valuable connections. Due to local distributor problems, the business suffered a major loss in 2007, which led to the head office in Italy losing a significant amount of capital. Until a well structured and effective management team, with the necessary capital to reactivate the operation was put in place, the operation had to come to an end. BEA Global has now been granted the license and will, with the co-operation of Sergio and his extensive connections, be putting in place the finances, management, legal, accounting and administrative team necessary to make BEA Global the success it has the potential to be. 7
  8. 8. THE COMPANY BEA Business Plan Company History BEA Global was founded in Salt Lake City, UT in June 2009. Its partner company, BEA Italy has been in operation for almost 20 years. The formation of the company took place immediately upon purchase of distribution rights for North, Central & South America of BEA Global’s flagship product, ERGOFIT. Company Location BEA Global is headquartered in Salt Lake City, Utah USA with an additional office in Sao Paulo Brazil. All administrative duties as well as sales and marketing aspects of the business are performed from Salt Lake City. The science labs and proprietary product matters are by BEA Italy. BEA Global maintains manufacturing & shipping facilities in Utah, Wyoming, Italy, South Africa and soon in Brazil. Company Ownership Principal ownership of BEA Global is held by the Sovereign Exchange Group (SEG), a business development company also based in Salt Lake City, UT. Mr. David Teichert of Wyoming owns the minority share of the company. SEG is in charge of business administration, sales, accounting, marketing and financial considerations. Mr. Teichert heads up research & development and manufacturing and product distribution. Mission Statement BEA’s purpose is to supply natural, environmentally friendly, self sustaining organic fertilizers. In a world with an ever growing population, where the answer to increasing food requirements and dwindling crop productions is to throw more chemicals on the land, BEA is looking to return to nature what should be there. From gardens to wheat farms and golf courses to cocoa plantations, BEA aims to provide the natural, yet most effective product available on the market today. BEA views itself as a partner with its customers, employees, community and environment. BEA aims to become a globally recognized brand name, capitalizing on the sustained interest in the Brazilian markets and the desire of consumers worldwide to use the most economic, effective and environmentally friendly products available. BEA’s goal is rapid growth, sustained profitability, a satisfied consumer base and a healthier environment. 8
  9. 9. PRODUCTS BEA Business Plan Product Description The Basics: Plants are living organisms and to grow healthily they need sunlight, water, air and nutrients. If any of these four components are depleted the plants growth will be inhibited. Nature itself has an excellent system of maintaining the correct balance for plants to grow. A rainforest, for example, is self sustaining ecosystem full of healthy, lush plant life in its natural state. As various nutrients are absorbed by the flora and assimilated to help the plants grow, the soil is depleted. These same nutrients then help to nourish animal life as the plants are consumed and thus we have an ecosystem that provides sufficiently for all associated life. The soil is replenished when the natural bacteria in the soil begin decomposing dead plants, animals and waste material, and, in doing so, return the nutrients to the soil in the form of humus. Bacteria in soil are decomposers that consume simple carbon compounds, such as root exudates and fresh plant litter. By this process they convert energy in soil matter, into forms useful to the plants. Different types of bacteria perform different roles, enabling everything from – turning waste in the soil into sources of nourishments for plants, breaking down pollutants and pesticides in soil, retaining/immobilizing nutrients and thus preventing its loss, improve the efficiency of the roots nitrogen cycling, improve soil water retention through soil binding and competing with disease causing organisms at both root and above ground level. Agricultural fields on the other hand are not self sustaining because as the crops absorb the nutrients from the soil they are stored inside the plant, the crops are then harvested and removed from the field and the nutrients that would normally return to the soil end up nourishing the people and animals they were grown to feed. Those nutrients never return to fields. This also starves the bacteria in the soil thereby reducing the soils natural ability to break down organic matter and return the nutrients to the soil. For the soil to remain healthy the bacteria and nutrients need to be replaced, allowing nature’s cycle to continue. If this natural process is terminated the soil becomes barren. 9
  10. 10. BEA Business Plan Soil exhaustion: Plants send out explorer roots to identify nourishing soil. They use a capillary element (a root hair) which explores micro-habitats and samples the nutrients available. If there is only enough ‘food’ for one root hair the plant deposits toxins along the exterior surface of this space to stop the occupied area from being explored by other capillary elements. When all the nutrients are absorbed the plant makes the micro-habitat toxic and sheds off its root hair. This prevents other root hairs from exploring soil which has been exhausted. Through chemical fertilization you can replenish the nutrients in the soil and provide plenty of nutrition for plants to grow. This chemical fertilization works well, for a while, but the chemical fertilizer cannot break down the toxins so they build up. The natural bacteria in the soil work to break down the toxins and waste material the plant creates and if there is not sufficient bacterial activity to detoxify the soil the area will be avoided by new roots. Abusing soils and saturating them with chemical fertilizer helps to nourish our crops for a short periods but the unnatural herbicides and pesticides that accompany the fertilizer, destroy the friendly bacteria that are fundamental to all plant development. In effect when traditional methods are used we starve and poison the very things that replenish our soil and create balance in the ecosystem. Absorption problems: When analysis of the soil and leaves show that the correct micro-elements are present in sufficient amounts yet healthy growth is not achieved, it means that the plants root structure is not absorbing them. The foliage tends to become yellow, growth is stunted, it becomes disease prone and its fruits don’t develop and ripen. The micro-elements could even be present within the plant’s tissue and not be utilized. This is due to having incorrect pH levels or inadequate micro-biological activity in the micro-habitats located around the capillaries (root hairs). These conditions are caused by a lack of humic acids, hormone producing substances, amino acids, bio-catalysts and enzymes. As an analogy let us look at human beings. If a human is fed a completely balanced diet (proteins, carbohydrates, minerals, fats, vitamins, etc.) but the food is indigestible due to a lack of acids and enzymes, that person will very quickly become malnourished and suffer starvation. Even if he ate very well in both quantity and quality his cells would be incapable of absorbing the nutrients until they were broken down into an absorbable form. When the correct enzymes are present in the digestive tract the food can then be broken down and utilized by the body. The bacteria and other micro elements in the soil essentially “digest” organic material in the soil into a form that can be absorbed and utilized in the plants body. Phytophagous, Cryptogamous and Virosis Attack: Plants don’t possess a “means of transport;’’ they can’t escape from areas where they experience disease, fungal infections and insect attacks. Thus plants are prone to attacks of all kinds. These diseases and attacks primarily occur in situations where imbalances, nutrient deficiencies and soil exhaustion have set in. In other words, it is the unavailability of the organic and mineral compounds needed for the plant to defend itself. Plants have evolved their own incredibly robust, bio-engineered defense systems. A healthy plant can synthesize anti- 10
  11. 11. BEA Business Plan cryptogrammic and antibiotic substances (i.e. phytoalexins), and large amounts of repellents and toxins to combat phytophagous organisms. Plants with a high sugar, protein and mineral content are less susceptible to these attacks because insects find themselves in an adverse environment that is unsuitable for their feeding and reproductive needs. Thus, in order to survive, they have to move on to plants which are more accommodating, ones which are weaker and vulnerable to attacks. Strong Healthy Plants Naturally Accomplish The Following: • Strengthen their membranes, which make them resistant to damage from cryptogamous (plant like organism) attacks. • Produce antibodies, bactericides. • Manufacture combinations of repellent, noxious and toxic substances for fighting phytophagous organisms. In situations where plants are malnourished through a lack of nutrients or water, they are unable to engage all of their defense mechanisms and will be more prone to external attack. Plant Reproduction: Plants don’t produce food to satisfy animals’ nutritional needs, but to help propagate their own species. Propagation probabilities are directly related to the quantity, salubrity and vitality of the nourishing reserves that the propagation material (pods, seeds, fruits, spores) have. Building on the assumption that plant seeds have been nurtured to have the maximum probability of succeeding that their ‘parents’ can offer, we can conclude that plants will produce as many big fruits with as abundant amounts of pulp, sugars, vitamins, antioxidants and preservatives as they can manage. They will grow as large and as fleshy leaves as they can with what’s available. The same principle is valid for bulbs, roots and tubers. All the produce generated by plants depends on their chlorophyll's utilization of the sun’s energy. Photosynthesis transforms carbon dioxide in the atmosphere, water and sunlight into glyceraldehyde 3-phosphate (G3P). G3P is generally considered the prime end-product of photosynthesis. It can be used as an immediate food nutrient, or combined and rearranged to form monosaccharide sugars, such as glucose, which can be transported to other cells, or packaged for storage as insoluble polysaccharides such as starch. This process is influenced by the following factors: • Number of leaves. • Size of leaves. • Number of chloroplasts and their efficiency • Quantity of chlorophyll • Availability and assimilability of the nourishing elements • Water availability • Sunlight availability • Temperature 11
  12. 12. BEA Business Plan Ergofit Fertilizer: Ergofit Fertilizer is the most progressive product for the nutrition and stimulation of horticultural processes available today. The results obtained by Ergofit in the quantity and quality of production are unmatched in the industry. Ergofit is a liquid azotic organo- mineral bio fertilizer, which provides plants with everything they need, when they need it (enzymes, amino-acids, micro- elements, macro-elements, auxins, vitamins, humic acids, fulvic acids, crenic acids, hormone producing substances etc.) enabling them to resist disease and develop at an accelerated rate. Plants’ immune systems are stimulated by Ergofit to produce more phytoalexins (plant antibiotics) when under attack which enhances their defense dramatically. Ergofit accelerates development by providing the optimal nourishing conditions which eliminate the stresses usually encountered. Plants with larger, fleshier, more numerous leaves stimulate a higher quantity and quality of produce. The growth gap of stressed, overworked land can be regained and surpassed in an extremely short period by Ergofit. As Ergofit increases the abundance and size of the leaves it directly stimulates the production of chlorophyll which in turn builds up the number of chloroplasts while increasing their efficiency. With a greater surface area exposed to sunlight more energy is captured. This energy is utilized more effectively now because the principle nutrients are available, able to be absorbed, and 12
  13. 13. BEA Business Plan the chloroplasts have their chlorophyll working at maximum efficiency. In these conditions crops can grow stronger in all aspects, in particular: • Cells are larger. • Cuticles are thicker and stronger and so less vulnerable to disease and phytophagous (insect) attacks. Xylem and phloem expand allowing the sap to circulate more easily thus consuming less energy. • Plant fibers increase in size due to the heightened levels of sugars, cellulose fibers, lignin, vitamins, mineral salts, organic acids, etc. Ergofit fruits are rich in sugar and fiber due to increased photosynthesis. They have higher yields because well nourished plants don’t allow any fecundated fruits (fruits ready to grow seeds) to fall down. Malnourished plants only keep the amount of fruits they are able to feed and make the others fall down. This phenomenon is called Cascola. The most exciting benefit of Ergofit Fertilizer is that the quality of the fruit in terms of taste, shelf life and nutritional benefits dramatically increase, due to the elevated sugar, vitamins, minerals and mineral salts. Ergofit fruits have unmatched natural preservatives, vitamins A and C (ascorbic acid) and their bigger, thicker peels improve the harvest’s sensitivity to rotting and insect attacks. Phenomena like withering and a lack of turgor pressure (fluid pressure in plant cells) are delayed in fruits which have been treated and thus the integrity during transportation is astounding. Ergofit considerably increases the endogenous defense capabilities of plants, thanks in particular to the micro-biological contents of its organic component which initiates powerfully protective metabolic reactions. Assured protection from biological stresses, enable farmers to plan a crop’s development. New life is injected into the ground by the biodegrading action of the organic material and by the good bacteria that are at the top of the micro-biological food chain. The use of inorganic products is currently the method of choice for treating a plant affected with a disease. However a systematic, regular application of Ergofit will stimulate and cure the 13
  14. 14. BEA Business Plan plant just as effectively. If it is used continuously the prescribed amount of inorganic product can be reduced by up to 50% and after 2 or 3 seasons stopped altogether. Ergofit plants combat insects’ masticatory damage by quickly converting the sugars in their lymph to alcohol making it toxic to most insects. This is due to the plants having a high Brix (% sugar per unit of mass) content. Cell membranes and cuticles covering the leaves’ epidermis are thicker and stronger, making all the plant’s parts tougher and thus more resistant to attack by insects. Exposing the phytophagous insects to these elements prevents their population from exploding and allows their natural enemies to control their numbers. In short, a plant which receives Ergofit can intensify its defense system by combining an effective biochemical solution with a robust physical resistance. In the case of viruses it has been proven that a side effect of using Ergofit is the blocking of viral infection. Viruses can’t enter plants through the wounds made by insects as the damage is not invasive. The toxins don’t allow the viruses to live long enough to have opportunities to enter the plant. Ergofit is a concentrated substance with an amazing surface area to product ratio; in fact a gram of product can treat 800 m2 where, contrarily, 10,000 grams of manure can only cover a few square meters. If you use high quantities of manure, the enzymes and bacteria in Ergofit accelerate the transformation of the manure and the organic residues of the soil into humus. The application of 1Kg Ergofit is equivalent to 300 - 400 Kg manure. 14
  15. 15. BEA Business Plan Ergofit has a high probability of working where there are active root hairs so plants save the energy they would have spent creating roots to seek new nutrients. Moreover roots in the presence of Ergofit have increased lifetimes, further conserving energy which can now be redirected to the aerial parts of the plant (leaves, flowers, fruits). When root hairs die the bacteria quickly detoxifies the micro-habitats, preparing them for new capillary elements to grow in the same position. The fact that new roots don’t need to explore for nutrients is a new method of energy saving, it is the latest technology in horticulture. The combination of these systems result in a healthier plant, which can spend more energy defending itself from parasites and making bigger and more beautiful fruits, with more sugar as well. Ergofit utilizes bacteria that affect water movement in soil by producing substances that help bind soil particles into small aggregates (those with diameters of 1/10,000-1/100 of an inch or 2-200µm). Stable aggregates improve water infiltration and the soil’s water-holding ability. It is this improved water holding ability that means the requirement for irrigation can be reduced by up to 50%. Through the over use of chemical fertilizers, soil has become dry and grainy and has lost all ability to hold water, this has led to as much as 75% of the water delivered to the plant running away through the dry soil before the plant is able to absorb what it requires. The potential impact this has, both in the bottom line of the farmer and their water costs, and the benefits to the environment, where water requirements can be halved (water for irrigation made up 34% of all water usage in the USA in 2000) are considerable. ERGOFIT WATER RESTORER BEA Global offers the ERGOFIT WATER RESTORER range of products, designed specifically for various forms of bioremediation. The process of bioremediation uses the ability of bacteria to metabolize a multitude of substances for their own benefit. In so doing they are able to breakdown what are commonly seen as waste or toxic products and make available many compounds vital to agriculture/ horticulture. It is their ability to break down complex molecules that can be harnessed to deal with such problems as oil spills and sewage. ERGOFIT WATER RESTORER is a liquid bacterial product that provides all the enzymes necessary to break down any dead organic material. ERGOFIT WATER RESTORER uses the same enzymes nature uses to break down dead plants and animals and return their nutrients to the earth. The advantage of ERGOFIT WATER RESTORER is its special formula which encourages aggressive enzymatic growth and consumption, thereby accelerating the decomposition of the organic material to base molecules. ERGOFIT WATER RESTORER is not restricted to dead animal and plant matter. It can break down a myriad of things, including sewage, oil, gasoline, diesel fuel, jet fuel, tar, plant and animal waste. One of the largest potential uses for ERGOFIT WATER RESTORER, both economically and 15
  16. 16. BEA Business Plan environmentally, is the breakdown of oil products within natural water systems (rivers, lakes, harbours, oceans, etc).The bacteria found in Ergofit Water Restorer do not just absorb or displace oil like many existing solutions on the market but actually aggressively attack the hydrocarbon molecules causing them to break down. Upon application, the ERGOFIT WATER RESTORER will immediately start to attack the carbon structure of the oil spill and metabolize it into the natural organic substances found in humus. Aquatic plants and animal life thrive on this nutrient. Within as little as seven hours, a visible change takes place and a few days later the conversion is complete. Once an oil spill is sprayed with Ergofit Water Restorer, the oil can disperse, sink, or fragment, but it will not be able to evade the bacterial change until each drop sprayed is totally consumed. In addition to the commercial applications of oil bioremediation, the potential social and environmental benefits of using Ergofit to tackle the world’s sewage issues are considerable. In too many countries around the world the infrastructure to manage the booming population’s effluent are woefully inadequate. In many communities this poses, at best, odour problems and, at worst, serious and sadly, fatal health issues. Ergofit Sewage Bio-remediator can be used to quickly and effectively neutralize bad odors (in as little as two hours after application) and over a matter of days, breakdown the organic material within the sewage, not just to a harmless by-product, but to a valuable humus which can be used for the growth of healthy plant life. This is being seen with the current tests being run just outside of Jeddah in Saudi Arabia, where efforts are being made to tackle the infamous ‘Sewage Lake’. This 3 sq km lake of sewage is just 5 km outside of the city and poses a constant threat of flooding and the consequent health risks. It is anticipated that treatment of this sewage with Ergofit will turn this social and environmental hazard into a rich and ecologically diverse oasis. EPA Comments on Bioremediation Agents: The Environmental Protection Agency explains: "A note about bioremediation agents: Biodegradation is the process in which oil molecules are broken down by bacteria (you can think of it as the bacteria "eating" the long hydrocarbon chains that make up oil). Biodegradation happens naturally, without our doing anything at all. You don't need to add bacteria to make biodegradation happen, because any water from the ocean, a lake, or a pond naturally contains bacteria. However, to make oil biodegrade faster, bioremediation agents or techniques: • They may add nutrients in the form of fertilizer (such as you might use in your garden). • They may add bacteria designed to be especially effective at degrading oil. 16
  17. 17. BEA Business Plan • They may use techniques to make oxygen more available to native bacteria (e.g., adding special chemicals or tilling oiled substrate)..." In addition to cleaning up oil spills, Ergofit Water Restorer can be used in conjunction with oils to create rich humus for the purpose of enriching barren soils. Oil, like all hydrocarbons, is made up of long chains of carbon and hydrogen, which can be in gaseous form, (e.g. methane) in a fluid form (oil), or a solid or semi-solid form (tar, bitumen). Fluid hydrocarbons, solid and semi-solid, have the advantage of a high carbon content, and constitute an excellent high-grade base with which to manufacture organic fertilizers and organic minerals. These have a high humus content that will stay in the ground for a long period, thanks to their very slow mineralization. Applications of ERGOFIT WATER RESTORER There are five different ERGOFIT WATER RESTORER products: (1) Sewage Bio-Remediator: When used on raw or processed sewage the Ergofit Sewage Concentrate will interact with and breakdown organic matter, reducing it to its base components and in so doing forming a rich humus – turning previously toxic material into a valuable top soil. (2) Oil Eater Deep Sea: If there is an oil spill anywhere off the coast line, this product can be applied via sprayers from ships or even airplanes. Hundreds of square miles can be covered in a very short time. A spill can be completely eliminated within 5-10 days, depending on the severity of the spill. (3) Oil Eater Shore Line: A slightly different mixture is necessary on sand and rocks. When the bacterium is mixed with earth, the enzymes are actually more effective and require a different concentration. (4) Oil Eater Concentrate: Oil Eater Concentrate is used in situations where there is a large concentration of oil, gasoline, or sludge, such as when power companies flush the expended oil used to cool the high voltage transformers into a pool called a bubble gum pit (a nightmare for environmentalists). This product is also used for the clean-up of gas stations floors, mines, and used oil and when everyday oil is spilled. (5) Universal Water Restorer: This product can clean up any body of water containing sewage or any other organic pollutant. Ergofit Water Restorer is the most complete organic bio-remediation agent available today. It contains everything needed to make it a fast-acting, natural remedy with no harmful residual by-products, for oil spills on water or land, and for sewage breakdown. 17
  18. 18. BEA Business Plan Recent Interest in ERGOFIT WATER RESTORER: During a recent trip to Brazil, representatives from BEA attended meetings with directors from Petrobras and Unicontrol International. Both companies expressed a strong interest in utilizing the extreme bio-remediation properties of Ergofit to help with their issues of waste oil based products from their ongoing operations. Petrobras have nine large pools, 100m long, by 18m wide, by 8m deep full of a toxic combination of waste oil, water and sand. The oil is the waste product from the giant oil cooled transformers and the result is a sludge they cannot use and they cannot legally or ethically dispose of. Petrobras have set aside $300m to deal with this pressing issue. Through the use of Ergofit, with simple applications over a matter of weeks, the waste matter will be broken down into rich humus, safe enough and nutrient rich enough to be used for growing fresh produce. This can be done by Petrobras at a fraction of the cost of alternatives, with no environmental side effects and will actually result in a by-product that can be sold or given away to the local farmers as part of their commitment to maintain and rebuild the local ecology. Unicontrol International, one of the largest oil platform owners in the world, are in talks with BEA to use Ergofit for cleaning purposes, particularly for the cleaning of oil pipelines (some of which run to many hundreds of miles) and the inside of oil tankers. During meetings with the local government representatives in the region of Bahia in Brazil, concerns over the activities of the local paper pulp factories and the effect they were having on the region’s water systems were discussed. Pulp mills are voracious water users. Their consumption of fresh water can seriously harm the habitat near mills, reducing water levels necessary for fish, and altering water temperature, a critical environmental factor for fish. Mill waste water wreaks havoc on surrounding ecosystems. The local authorities in Bahia receive annual contributions from the local paper mills to tackle the issue; to date they have a budget in excess of $1.5 billion. Thus far, little to none of these funds have been used to clean up the water systems, as they have yet to find an effective product to repair the damage. BEA is in talks with the local authorities of Bahia, to supply them with the Ergofit water restorer necessary to return their local waterways to their natural state. A recent example of the ERGOFIT WATER RESTORER being successfully used was in Cape Town Harbor in South Africa. Below is an account of the project by our South African partners, along with images of the treated water. In the separate document can be found the official tests done by Eskom, the number one power utility in South Africa: 18
  19. 19. BEA Business Plan Cape Town Harbour – Bacteria Treatment Results Trial Period -12 May to 08 June 2009 Product - Ergofit Oil Eater Dosage - 2Kg Diluted with 10 liters of water sprayed once a week on affected area. Result - Oil separator effluent at Cape Town harbor was made fit for discharge into sewage system. Briefing: At Cape Town Harbor on 12 May 2009 a chemical analysis by ESKOM, the national utility provider and owner of the best laboratories in South Africa, found that the effluent at the outlet to the sewer was too toxic to be discharged into the municipality’s sewage system. After four weeks of bacterial treatment with Ergofit Oil Eater another sample was taken which revealed an 87% drop in contaminate concentration. The plant was subsequently approved for effluent discharge into the city’s sewage system. The bacteria in the effluent continued to act on the organic matter in the sewage pipes and substantially reduced the residue build-up to the extent that sewage water stopped backwashing into the plant during rain spells. Another beneficial side effect was that the plant stopped operating their rope skimmer because there was no longer excessive oil floating in their separator tanks. (See over for chemical results). 19
  20. 20. BEA Business Plan 12 May 8 June Analysis Analysis Compound Concentration Concentration Tested mg/l mg/l % Drop Chromium 0.1 0.01 90% Copper 2.9 0.63 78% Fat, Grease & Oil 197 7.7 96% Iron 16 2.3 86% Lead 1.3 0.18 86% Suspended Solid 263 44 83% Zinc 16 1.1 93% Ave % Drop 87% Significantly the COD (Chemical Oxygen Demand) figure dropped from 8740 to 683, more than a twelvefold reduction. 20
  21. 21. BEA Business Plan Cape Town Harbour: water sample before treatment. Note the dark grey color from the oil discharge: Cape Town Harbour: water sample 48 hours after treatment. The water now has a brown color due to the bioremediation of the oil content to humus: 21
  22. 22. THE MARKET BEA Business Plan Market Analysis The fertilizer and agrochemical market consists of fertilizers and the broad range of insecticides, herbicides, and fungicides, it may also include synthetic fertilizers, hormones and other growth regulator substances. Fertilizer consumption refers to the amount, in thousand metric tons, of the nutrients nitrogen (N), potash (K2O), and phosphate (P2O5) consumed in agriculture on an annual basis. The global agrochemical market generates over 176 billion per year in revenues. Our current target within the industry mainly deals with fertilizers and to a lesser extent the pesticides within the United States, Brazil, Mexico, Chile, UAE, and the middle east. Brazilian Market Brazil is the world's largest producer of sugarcane, coffee, soybeans and ethanol, and a net exporter of orange juice, tobacco, forest products, and other tropical fruits and nuts. It is also the fourth largest consumer of fertilizer in the world, managing to consume over 25 million tons per year, making Brazil's posted revenues $25 Billion. Brazil is also one of the fastest growing agricultural producers in the world, with a growth rate of 6% per year over the last 10 years. The largest fertilizer corporation in Brazil is Bunge. They currently employ 9,000+ people, and have an excess of 60,000 clients. In 2007, Bunge posted revenues of 6.5 billion dollars, and accounted for 26% of the market. Mosaic is the second largest with projected 2009 revenues of 3+ billion dollars. Fertilizers are facing a constant rise in prices that is likely to continue during the next few years. The main reasons for the price increases are the fluctuating prices of oil, and the steady increasing prices of natural gas, phosphorus, potassium and nitrogen, as these substances account for most of the production cost of chemical fertilizers. In addition, the increase in demand due to increased consumption of developing countries such as China, India and Russia are creating a shortage of supply. The high cost of fertilizers is the Achilles heel of Brazilian agriculture at the moment. Seeking more competitive prices, 21 cooperatives (totaling 60,500 members) in the state of Parana have decided to join forces and establish the National Consortium of Agriculture Cooperatives (Coonagro). The consortium has been established due to the simple fact that Brazil is incapable of producing enough of its own fertilizer and is too dependent upon the foreign fertilizer markets. Its sole purpose, as of right now, is to find a cheaper source of fertilizer for its members, as the drastic increases in fertilizer costs have gravely impacted farmer’s productions costs. 22
  23. 23. BEA Business Plan The cost of chemical fertilizer in Brazil has been rising even faster than fuel prices. According to the Brazilian Ministry of Agriculture, farmers paid an average of 65 percent more for chemical fertilizer in April 2008 than they did the previous year. Add higher fuel prices to the mix, and the costs for farmers have been overwhelming. Many farmers who have traditionally used chemical fertilizers can no longer afford them and are simply making the switch to Organic. • A ton of nitrogen fertilizer that cost $200 in 2003 now sells for $800 -- a 400 percent price increase. • A ton of phosphate fertilizer that cost $240 in 2003 now sells for $1,199 -- a 500 percent price increase. • A ton of potassium fertilizer that cost $144 in 2003 now sells for $700 -- a 450 percent price increase. In addition, the short supply and skyrocketing costs of fertilizer is a large part of the rising food prices in the world. This should be seen as an opportunity for greater investment in the organic fertilizer market from private companies, triggered by governmental programs that aim to control the increase in food prices. The meteoric rise in chemical fertilizer prices has led farmers, homeowners and growers of all types to reconsider their practices and look for alternatives. In addition, as increasingly health- conscious consumers have sought more organically-grown food, the number of organic farmers has further increased and significantly increased the demand for natural organic fertilizers. Target Market Segment BEA Global will focus primarily on the relationships that have already been established by their Brazilian Contact Sergio Norris. Sergio distributed the product in Brazil for over five years and had a large and satisfied consumer base, but, due to unfortunate circumstances he was unable to continue supplying his customers with ERGOFIT and ceased business operations approximately 18 months ago. Sergio has already begun to re-establish old relationships and built new ones in preparation for BEA Global’s launch in Brazil. Sergio has spent much of the past five years compiling market research and case studies for the Brazilian market. At the same time he has been building relationships with many of the country’s largest agricultural and timber companies, who are ready to move as soon as the product is in place. Sergio’s experience and connections give BEA Global a considerable advantage, utilizing his existing and eager consumer base to build a foundation in Brazil. While maintaining and satisfying the requirements of Sergio’s existing leads BEA Global will concurrently form a seasoned sales team in Brazil armed with a sales materials, a marketing plan, ERGOFIT samples, and existing client testimonials to help continue successful distribution. Chemical Competitors In very basic and general terms, a chemical fertilizer is a compound (collection of ingredients) that has been chemically processed or refined to increase its potency. 23
  24. 24. BEA Business Plan The introduction of chemical fertilizers in the early to mid 20th century is in many ways responsible for the massive increase in food an individual farmer can produce. The main problem is the result of applying too much or an over-application of this class of fertilizers. Any plant (wheat, corn, etc.), can only use so much food during its growth cycle. What's left over tends to travel into groundwater, streams, lakes and the ocean, due to rain or irrigation. This pollutes the natural environment and has caused a great number of problems. In the Brazilian market BEA has identified the below as its main competition. While these are the biggest players in the market, BEA does not consider them direct competitors, as to date they do not produce a comparable bacteria based organic fertilizer. Bunge The largest fertilizer manufacturer in all of South America, with its fertilizer division focused on and located in Brazil. They produce and sell a full line of fertilizers, fertilizer services, and animal feed nutrients, and also market a majority of Brazil's most well known and trusted fertilizer brands such as: Serrana, Manah, IAP, and OuroVerde. Due to the vastness of Brazil, Bunge has 40 different, strategically placed facilities that are spread throughout the countries primary agricultural regions, as this allows them to be close to their clientele and raw materials. The retail division processes, distributes, and sells blends of NPK( Nitrogen, Phosphate, Potassium) fertilizer formulas, mixed nutrients, and manufactures liquid fertilizer products. Bunge Brazil employs 9,000 people and have 60,000 clients. Bunge was also recognized as one of the ten best, sustainable companies in the country, and was the only company in the sector of food, agribusiness and mining, to join the Top 10 list of English Consultancy Sustainability. In 2007, the company’s posted gross revenues of $22.5 Billion. Mosaic With operations in over 40 countries and are recognized as one of the largest fertilizer companies in the world. Mosaic specializes in importing, marketing and the distribution of raw materials for animal feed and fertilizers, and offers a wide variety of successful products and services to its clientele. In Brazil alone Mosaic recorded $ 1.5 billion in gross sales and a net income of $ 150 million in fiscal year 2007/2008. The capital invested in Brazil totalled $ 1.3 billion, and future revenue projections exceed $ 2.8 billion for the fiscal year 2010. Mosaic has several regional production plants, warehouse facilities strategically located to serve the primary consumer base. They also have control of 62% of the fertile manufacturing facilities and port terminals in Brazil. Mosaic currently employs 1,094 employees. 2 Adubos Araguaia 1 Started out as a wholesaler of agricultural products, and is now one of the largest fertilizer companies in Brazil. The company has over 300 employees, three production plants and eight stores, providing fertilizers, crop protection products, seeds, machinery and animal nutrition products. Upon the completion of their third factory in 2004, Adubos Araguaia became capable of producing 2.3 million tons of fertilizer a year. Adubos Araguaia claims to have the advantage over everyone else in the fertilizer industry because of 3 main points: 24
  25. 25. BEA Business Plan • Customization of formulas to better suit each customer needs • On time delivery • Use of top quality raw material in the production process reassuring commitment to quality. Adubos Araguaia offers a full line up of traditional fertilizers such as urea, potassium nitrate, ammonium sulphate, mono ammonium sulphate, ammoniated single superphosphate, triple superphosphate, and potassium chloride. Besides offering traditional fertilizers, they also offer product personalization. Farmers can bring soil analysis reports to them, allowing them to make up a more effective, efficient product. Araguaia launched a new product line called Hortimax. This product line claims to offer the best solution for most horticulture needs. It attends the need of fruits and vegetables, especially in the garden, and helps them throughout stages of most production intensity. Organic Competitors Consumer demand for all things clean, green, and organic, including foods, hybrid automobiles, and other items, is growing at a rapid rate. Once considered a boutique product, organic fertilizers now find themselves in the unique situation of being less expensive than the petroleum based synthetics, and capable of performing at the same, or even higher levels. Most organic manufacturers operate regionally, resulting in a fragmented market, with a diverse customer base and very few large national players, with only a couple of companies being the exception to the rule. Buyers of organic fertilizer include grocers such as Whole Foods Market Inc., golf courses and parks, small farms and home gardeners. With environmental issues, soil scarcities and the problems of nutrient management on farms, enterprising organic fertilizer plant owners are branching out to test these sources. The heavy demand for organic fertilizer plants seems never-ending. While the organic sector represents a tiny share of the giant fertilizer market, its demand is increasing faster than its supply; this is being recognized by the likes of Scotts Miracle-Gro Co. and Purdue Farms Inc. Four years ago, Scotts Miracle-Gro (SMG), the world’s largest lawn products company, recognized the opportunity and added organic plant growing products under its Organic Choice brand. Since then, sales have basically doubled every year from the start. Scotts has seen sales in its organic fertilizer products increase by 15%-20%, compared to the 5% increase in conventional fertilizer products. Scotts Miracle-Gro estimates the total organic lawn and garden market at $400 million, with fertilizers at $60 million. Perdue Farms Inc. was the first poultry company to develop a large scale alternative use for surplus poultry litter, operating the first-of-its kind facility to convert poultry litter into organic fertilizer products. The 65,000-square-foot, totally enclos ed organic fertilizer plant utilizes environmentally friendly processes that recapture the nitrogen and phosphorus while preserving the organic matter of poultry litter. This method can convert poultry manure into 80,000 tons of fertilizer pellets. Perdue Farms Inc posted revenues in 2007 of $4.3 Billion; however, this number does not solely reflect the fertilizer division. It includes all activities of 25
  26. 26. BEA Business Plan Perdue Farms Inc, which is primarily focused on poultry products sold throughout the eastern half of the United States. Even though Scotts Miracle-Gro and Perdue Farms are the leaders in Organic Fertilizer around the globe, other companies such as Converted Organics and Advanced Growing Systems are starting to make their mark in their respected territories. Converted Organics is dedicated to producing a valuable organic bio-stimulant (a natural fertilizing product used for organic farming, gardens and lawn & turf applications) through food waste recycling. Converted Organics uses a licensed microbial digestion technology similar to that found in the pharmaceutical industry. It uses a patented mechanical aeration device that force feeds the microbes tremendous volumes of oxygen. This dramatically shortens digestion times and self generates sufficient heat to fully pasteurize the product. This means you can use their products around pets and children with confidence knowing it is pathogen-free. Converted Organics has announced revenue from sales of its organic fertilizer products and tip fees totalling $1.5 million for the first six months of 2009, representing a 51 percent increase over the same period in 2008. The Company also announced revenue of $992,364 for the second quarter of 2009, an increase of 50 percent compared to the second quarter of 2008. Converted Organics has also seen their stock price soar from $2.25 in 2008, to $12.20 in 2009. Advanced Growing Systems, Inc. (AGS) is the parent company of Organic Growing Systems Inc., a scientifically based fertilizer manufacturer who utilizes exclusive chemistry to enhance the way Nitrogen is delivered to any plant through a base poultry litter…organically. Their organic fertilizer is radically different because they change the nitrogen from the 100% soluble manure form – nitrate nitrogen designated NO3 – to the insoluble ammonium nitrogen form – designated NH4. This important nitrogen capture, which prevents plant burning, is accomplished while retaining the tremendous micro-nutrition in raw organic poultry litter. Advanced Growing Systems is quickly gaining traction and visibility with fertilizer sales growth exceeding 100% quarter over quarter. In 2008, Advanced Growing System saw an increase in revenues that skyrocketed from $463.2K to $1.3M in a matter of just 12 months. In that same year, AGS had a Gross Profit of over $700,000. Market Needs- Ergofit Organic Fertilizer The demand for organic produce is more than anything else a direct consequence of the great concern that has mounted over the years about modern scientific farming systems which have become unbalanced. We have depleted the land and we are now seeing the consequences of those actions and, hopefully, we are learning from our mistakes before it is too late. Toxic chemicals are contaminating groundwater on every inhabited continent, endangering the world's most valuable supplies of freshwater, according to a Worldwatch paper, Deep Trouble: The Hidden Threat of Groundwater Pollution. Calling for a systematic overhaul of manufacturing and industrial agriculture, the paper notes that several water utilities in Germany now pay farmers to switch to organic operations because this conversion costs less than removing farm chemicals from water supplies. When chemical fertilizers are put into the 26
  27. 27. BEA Business Plan soil they dissolve and seek natural combinations with minerals already present. New combinations glut or overload the plant, causing it to become unbalanced. Others remain in the soil, many in the form of poisons. Plants that are chemically fertilized may look lush, but lush FUTURE MARKETS growth produces watery tissues, which become more susceptible to disease; and the protein quality suffers. United States Market The fertilizers and agricultural chemicals market in the US is the third largest in the world, after Asia-Pacific and Europe. The US fertilizers and agricultural chemicals market reached a value of $87 billion in 2003, having declined with a compound annual growth rate (CAGR) of -1.4% in the 1999-2003 period. This growth was lower than that of the global market itself, leading to the US market’s global share decreasing by 0.6 percentage points between 1999 and 2003, accounting for 15.2% of the global market by the end of this period. The leading sector in terms of volume for the US fertilizers and agricultural chemicals market in 2003 was the nitrogenous fertilizers sector, which accounted for 55.4% of the market’s volume, which is equal to 10.93 billion tonnes. The potash fertilizers sector generated the second largest volume in 2003, reaching 4.56 billion tonnes, equivalent to 23.2% of the market’s volume. During the next five years, the market is expected to experience slightly fluctuating growth rates. By 2008, the market is forecast to reach a value of $85.86 billion, which equates to a CAGR of -0.3% in the 2003-2008 period, lower than the predicted global average. Nitrogenous fertilizers hold a majority share of the market with 55.4%. Potash fertilizers account for a further 23.2% Although a growing proportion of US consumers are demanding organic products, the amount of manufactured fertilizers still used is substantial. Nonetheless, pesticide use in the US has continued its slow downward trend, while manufacturers of fertilizers have further suffered from the consequences of high natural gas prices, the major cost component of many fertilizers. Dow AgroSciences, which is part of Dow Chemicals, is the largest chemical company in the US and number two worldwide. AgroSciences, which accounts for around 10% of Dow Chemicals sales, makes insecticides, herbicides and fungicides for agricultural applications, as well as for pest control. It also develops genetically modified seeds under the names of Phytogen and Mycogen. It operates in more than 50 countries around the world. Monsanto is a leading provider of agricultural products and solutions. It uses plant biotechnology, genomics and breeding to improve productivity and to reduce the costs of farming. It produces leading seed brands and develops biotechnology traits that integrate insect control and weed control into the seed itself. It also makes Roundup, the world’s best-selling herbicide. Through its Holden’s/Corn States business, it also provides other seed companies with genetic material and 27
  28. 28. BEA Business Plan biotechnology traits for their seed brands. Monsanto manages its business in two segments: Seeds and Genomics, and Agricultural Productivity. The seeds and genomics segment consists of global businesses in seeds and related biotechnology traits, and technology platforms based on plant genomics, the science of studying and using the genes in living plants. The agricultural productivity segment consists of Roundup and other herbicides, its lawn and garden herbicide business, and its animal agriculture business. DuPont Crop Protection, another leading player, serves production agriculture with products for the grain and specialty crop sectors, as well as providing forestry and vegetation management. Its operations include herbicides, fungicides and insecticide products and services. Headquartered in Wilmington, Delaware, DuPont Crop Protection is part of the overall Agriculture & Nutrition business. The mission of Agriculture & Nutrition is to best satisfy the world's need for food and nutrition by transforming the ways renewable resources are grown, processed and distributed. Target Market Segments BEA Global’s major focus within the US Market will initially consist of specialty and troubled crops. The agricultural market in general is huge in the united states, but due to extreme competition the margins are not large enough to draw BEA Global’s focus initially. In sectors such as the Golf Course, Wine, and nut industries provide much larger margins. BEA Global fully intends to flood the general agriculture markets once manufacturing facilities and distribution channels offer at least a 30% margin. The Golf Industry Golf is so much more than just a game. It is a significant industry, a major contributor to the American economy and to the economic vitality of individual states. The US golf industry is worth over $76bn a year, which is bigger than the motion picture industry and the recording industry combined, in addition it had a total impact on the U.S. economy in 2005 of $195 billion. The North American golf industry is the largest in the world, with an estimated 18,000+ courses across the USA and Canada. These courses typically have a minimum of 35 acres of playing area, with some running up to 6,000 acres of land in the larger country clubs. Courses across America spend on average $40,000+ each year on the fertilizing and pest control of their courses, putting a value of just this sector of the industry at in excess of $720m each year. This is not accounting for savings to the courses bottom line through reduced overall cost of water for irrigation, maintenance staff and course closure for particular treatments etc. Ergofit Golf Pro (EGP) brings numerous benefits to the maintenance of golf courses, which not only improve the quality of the soil, the turf grass, the surrounding water systems and the local environment, but also saves the course money, man hours and improves the public image: • Re-establishes the correct organic soil composition • Roots dig deeper • Any cut grass left on the green will transform into Humus • Can reduce the water required for irrigation by up to 50% 28
  29. 29. BEA Business Plan • Will potentially eliminate the need for all pesticides • This is the only product required • No chemical pollution of water tables • Up to 50% cheaper than fertilizing chemically • Mixed with water during irrigation • Just 30kgs of EGFP required per acre per year • Easy to use • 100% compliant with strict European environmental laws To date BEA has been testing EGP on courses from Europe, South Africa (Pearl Valley the Jack Nicklaus signature course and Paarl Golf Club) and various courses across the US. All with stunning results in as little as one to two weeks of the initial applications. Through BEA’s partnership with Mike Kahn, a veteran of the US golf industry, with more than 50 years experience in course management, superintendant, financing consultant, PGA assistant pro, teaching professional and course owner, Mike is a true all rounder of the industry, who provides the extensive yet personal contacts required to take EGP to every course across ther nation. The Wine Industry The U.S. wine industry is the leader among New World wine producers. Mostly concentrated in California, the wine industry is evolving, experiencing rapid production growth and the proliferation of many new wineries in recent years. As recently as 2007, there were over 4700 producing wineries in the country, more than double the number that existed in 1995. Producing about 8 percent of the world’s wine, the United States is the world’s fourth largest wine producer and viewed from a global perspective, the United States has evolved as the third largest market for wine. Although small relative to imports, U.S. wine exports have also shown remarkable growth since the early 1990s. The move toward more use of high-end wine varieties enabled the domestic wine industry, especially in California, to offer more premium quality wine, and this has helped U.S. wines earn more international recognition. U.S. wine exports has increased in volume by almost five folds between 1990 and 2007, setting a record of 109.9 million gallons and valued at $872 million, also at an all-time high. The U.S. wine export industry is the seventh largest in the world. Wine is a high-value by-product of grapes, the highest valued fruit crop in the United States. California holds a distant lead in U.S. wine production. Wine grape acreage in California grew over 40 percent since 1990 to 471,887 acres in 2007. 29
  30. 30. BEA Business Plan In the current environment, there is a big push towards ‘green’ and ‘sustainable’ wine production. The "green" buzzword is a movement toward earth-friendly, sustainable, non- climate-changing principles and practices. Green is infiltrating the wine business at every level, from vineyards and vineyard management, to winery practices, winery facilities and winery buildings, and to distribution, transportation, packaging and marketing. In line with this there is a big push to see a reduction in the amounts of chemicals used for fertilizers, pesticides and herbicides within the industry. As consumers grow increasingly concerned about the impact of commercial farming practices on both the environment and on their personal health, there has been a soaring popularity of organic wine. The organic wine industry has seen growth numbers at 20% plus each year since 2003. It is these rapidly growing sectors that were once the niche of the market, but are now moving onto the larger playing field, for which BEA’s wine products are perfectly designed. Nuts According to the USDA Census there are approximately 1,857,179 Acres of farmland dedicated to the growth and harvesting of nuts. Nut trees absorb a lot of nutrients from the soil and require large amounts of fertilizer. Due to the extra fertilizer required a toxic build up of chemicals occurs very quickly leading to weakened trees and increases in disease and lack of nutrition. BEA Globals goal within this market is to gain .25% of the market per year. This represents approximately $232,000.00 net profit per quarter percent of the market. Sugar Within the United States there are approximately 1,857,179 Acres of farmland dedicated to the growth and harvesting of sugar beets and sugarcane specifically for the extraction of sugar. Sugar beets and Sugarcane are extremely demanding on soil nutrients. These plants consume large amounts of raw materials are used by the plants and turned into energy. Most of which is stored in the plant in the form of sugar. The large amounts of fertilizer required to enable to plants to produce at the highest level is simply toxic for all but the plants themselves. The pricing of current fertilizers are well within the margin range of our product and represent a great opportunity in this sector. BEA Globals goal within this market is to gain .25% of the market per year in the first four years the campaign is launched. This represents approximately $262,000.00 in net profit per quarter percent of the market. Leading Competitors in the USA Dow AgroSciences LLC Dow AgroSciences is a global leader in providing pest management and biotechnology products that improve the quality of the earth's food supply and contribute to the health and quality of life of the world's growing population. Dow AgroSciences is a wholly-owned indirect subsidiary of The Dow Chemical Company. Dow AgroSciences is based in Indianapolis, Indiana, USA and has a workforce of approximately 5,700 employees. For the fiscal year ending December 2003 it recorded $3.01 billion in sales, an 11.4% increase over 2002. 30
  31. 31. BEA Business Plan DuPont Crop Protection DuPont Crop Protection participates in the production agriculture market. Its principal products are hybrid seed corn, soybean seed and other crop seed lines sold to customers in key markets worldwide. The crop protection product offerings include herbicide, fungicide and insecticide products and services. Headquartered in Wilmington, Delaware, DuPont Crop Protection is part of the DuPont Agriculture & Nutrition business. Monsanto Company Monsanto Company is a provider of agricultural solutions to growers worldwide. The company offers technology-based solutions and agricultural products for growers and downstream customers, such as grain processors and consumers, in the agricultural markets. Monsanto is headquartered in St. Louis, Missouri, and has a workforce of about 13,000 employees. For the fiscal year ended August 2004, the company reported revenues of $8.91 billion. Mexican Market Mexico is among the top 15 world leaders in the agribusiness industry, with 27,300,000 hectares of permanent cropland. 2008 was one of the most dynamic years for the Mexican agribusiness industry, thanks to a steady influx of new technologies, machinery, and fertilizers from US, Canadian, and European firms. NAFTA’s eradication of virtually all tariffs concerning agricultural imports starting on January the 1st of 2008 have provided Mexican producers with P P the ability to move their products with more ease into US markets, doubling their efforts in production and quality. President Felipe Calderon told an audience of agricultural entrepreneurs that despite the world and domestic economic turmoil, Mexico’s agricultural sector registered 3.2 percent growth in 2009. He noted that the agricultural sector registered 1.5 percent growth in the first quarter of 2009, and forecasts a similar result for the second. In June 2009, Mexican agricultural exports increased 5.43 percent compared to the precious month. While the agribusiness industry may not be the greatest contributor to the national GDP at only 5%; it is a sector with continuous expansion with an average annual growth of 2%. It is also responsible for 9% of the nation’s FDI (Foreign Direct Investment). The government’s investment plan has provided the sector with over $700 million USD in the past 5 years, and has projected a similar amount for 2009 in an effort to diversify the national economy. A massive infrastructure plan targeted at providing a major boost to roads and ports near the nation’s most important agribusiness centers have boosted producers’ moral and enticed them to invest in modernization to guarantee sustainability. 31
  32. 32. BEA Business Plan Some of the many opportunities in the agriculture sector in Mexico both in terms of products and services are: • Harvesting Systems, used and OEM machinery • Sustainable production models to reduce pollution sources in soul, air and water • Biotechnology • Transformation and distribution systems (Added Value Chain) • Packaging Technologies • Irrigation systems • Organic Fertilizers • Agrochemicals The performance of the Mexican economy is one of the most important factors affecting future agribusiness related purchases. The large number of free trade agreements that Mexico has negotiated has created a more open and globalized economy, affecting local producers demand and ability to compete with international and more subsidized product Only 6% of agricultural producers in Mexico are highly efficient as they produce high value crops like vegetables, fruits, and organic products targeted to international markets. According to the Mexican Institute of Competitiveness, if Mexico is not competitive in corn production; it should focus on crops with a more competitive advantage or potential for development such as; tropical fruits, wheat, barley, artichoke, cabbage, cucumber, banana, sugar cane, beetroot, avocado, mango and peppers. Agricultural production in Mexico, mainly corn and other grain products, are facing serious issues such as high cost of chemical products. Demand for organic products is growing in Mexico. Although there are no official statistics, more stores are selling organic products. Eggs, chicken and meat are the most demanded products in this category. Mexico has no national fertilizer industry whatsoever, which results in farmers either fertilizing their crops with traditional products or not fertilizing them at all. During 2008, farmers continued to express their discontent with the high prices of fertilizers, mainly because they wished to acquire them but did not have the resources to do so. Fertilizers, chemical and organic, at competitive prices, especially considering government subsidies, will provide a strong market for US firms in the agricultural sector in 2009. Mexico has 500,000 hectares registered and certified as organic, which represents only 1.6% of the world organic area, though this figure is gradually increasing. The regions with the most organic production are: Chiapas, Oaxaca, Michoacán, Baja California Sur, Guerrero, Yucatan, Chihuahua, Sinaloa, Colima and Veracruz. The main organic products in Mexico are: coffee, honey, agave honey, avocado, cacao, mango, pineapple, banana, orange, apple, tomato, lettuce, squash, pepper and other vegetables, sesame seed, maize, nopal (cactus), vanilla, milk, egg, aromatic plants, and some processed products such as ground and toasted coffee, juices, jam, biscuits, sugar, cheeses, yoghurt, etc. 32
  33. 33. BEA Business Plan Chilean Market Chile hosts the fastest growing economy in South America, with an average GDP growth of 4.1% over the past 15 years, and growing an average of 5% over the past 5 years. With 57 bilateral or regional trade agreements, Chile allegedly has the highest number of such agreements in the world. Chile’s top agricultural products include grapes, apples, pears, onions, wheat, corn, oats, peaches, garlic, asparagus, beans, beef, poultry, wool, fish and timber. About 15% of Chile’s work force is employed by the agriculture sector. Due to its geographical isolation and strict customs policies, Chile is free from diseases such as Mad Cow, fruit fly and Phylloxera. This, plus being located in the southern hemisphere and its wide range of agriculture conditions are considered Chile’s main competitive advantages. The Chilean government enforces a countercyclical fiscal policy which accumulates surpluses during years characterized by high copper prices and economic growth, translating these surpluses into sovereign wealth funds and giving Chile the strongest sovereign bond rating in South America. The government allows deficit spending only in years of low copper prices and economic growth. In September 2008, these sovereign wealth funds amounted to over US$20 billion which have delayed the global recession in Chile. Although the recession has proven unavoidable in 2009-2010, these funds are expected to aid in providing a quick and full economic recovery for Chile, with GDP growth expected to rise substantially as early as 2011. As a result of good economic returns obtained from wine selling during the last few years, farmers continue to plant new vineyards for production of wines in higher demand, but at a lower rate of expansion. As a result the Ministry of agriculture’s new estimate of total planted area of vines for wine is no 119,000 hectares, Out of the total planted area, around 76 percent are red varieties. Also close to 75 percent of all planted area is irrigated. As a result, Chile’s total volume of exportable wine is expected to continue to expand in the coming years. Chile’s wine production expanded in 2009, as weather has been excellent in most growing areas and additional new planted areas are coming into production. Another small expansion is expected in 2009, as still a large area is in the increasing stage of production. Chile has an estimated 8,000 producers of wine grapes. Planted area has increased over 70 percent during the last 8 years. Industry sources believe that once the new areas come into production, wineries will have to invest in new processing and storage facilities to absorb the additional annual output. Chilean winemakers reported just over a billion liters of wine produced between July 1, 2008 and June 30, 2009, and increase of 14.5% over the previous year. Chile reported sales exceeding $1.3 billion dollars in 2008. 33
  34. 34. BEA Business Plan According to a study, conducted by the Ministry of Agriculture, close to 35,000 hectares were certified as organic in Chile during the past two years. “More and more farmers are realizing that it is profitable to produce according to organic guidelines. Organic farming is the only agricultural sector which grows by 20% a year”, a representative of Agrupacion de agricultura organic cilena (Group of Organic Agriculture of Chile) commented. Almost 17,000 hectares of organic land are used for the collection of products in the underbrush and for herbs, 4,200 hectares for orchards, 3,000 ha for vineyards and 17,000 for strawberries, blueberries and similar products. According to the report, the area of organic crops (fruits and vegetables) increased by 17% in 2008. Competitive Edge BEA Global’s competitive edge comes from the advantage of already having preexisting, well established relationships with some of the largest agricultural companies in Brazil such as, Suzano and Aracruz. BEA will be in a position, through its partnership with local - Sergio Norris, to speak directly with the largest agricultural producers in Brazil at management level. Many of these companies have used ERGOFIT in the past with great success and many other companies have already verbally committed to purchase the product as soon as the infrastructure is in place. BEA Brazil is ready to hit the market at the highest level with the most effective and most environmentally friendly product available, while at the same time saving money for the end users. With companies like Suzano and Aracruz using ERGOFIT, their reputation alone will put the company far ahead of the organic competition, and will make it that much easier for BEA Global to reach its goal of being Brazil’s leader in organic fertilizer distribution. Negative Effects of Chemical Fertilizer Chemical fertilizers have had a negative impact on the environment, and human life ever since the beginning of the chemical fertilizer industry in the early 19th century. Human life has been negatively affected in many different ways - the toxic chemicals found in fertilizers can be absorbed into the plants and enter the food chain via vegetables and cereals, although the biggest health risk is when the chemicals seep into the ground water which is then extracted for drinking water. This water can contain high levels of nitrates and nitrites and have been known to cause blue-baby syndrome (methemoglobinemia) and can also lead to miscarriage in pregnant women. Mercury, lead, cadmium and uranium are some of the toxic heavy metals that have been found in fertilizers and can cause disturbances of the kidneys, lungs and liver and cause cancer - depending on how much has been consumed. Herbicides can have neurological impacts, hormonal impacts and immune system impacts. They are not the harmless chemicals they are sometimes portrayed to be. They can be every bit as biologically active as insecticides or fungicides. The apparent influence of pesticide and fertilizer 34
  35. 35. BEA Business Plan mixtures on the endocrine system -- the system of glands such as the thyroid that secrete hormones into the bloodstream -- may have a cascade effect, spilling over to the immune system and affecting fetal brain development. Thyroid disruption in humans has multiple consequences which include effects on brain development, level of irritability, sensitivity to stimuli, ability or motivation to learn, and altered immune function. Phosphate fertilizer manufacturing and mining are not environment friendly operations... People living near the fertilizer plants and mines, experience lung cancer and leukemia rates that are double the regional average. Phosphate fertilizers also contain radioactive lead and polonium. In 1984, a chemical fertilizer plant exploded and killed 3800 people, in Bhopal India. Reports say that 300,000 people were immediately affected by the chemicals, and nearly 50,000 people are still to this day suffering from a variety of serious ailments. One person dies every 2 days from the effects. In 2001, a chemical fertilizer plant in Toulouse, France exploded killing 29 people, severely injuring 34, and injuring 2400 others. The chemicals are still affecting the town of Toulouse, and the surrounding area. People are still to this day told to use tap-water as little as possible because of the affects it could have on their health. These are examples of extreme cases where chemical fertilizers have affected us; However, the same fertilizers that are still killing off people in India and France, are the chemicals still used worldwide. They are destroying and poisoning our waterways, breaking down ecosystems, and directly and indirectly poisoning all of us. Besides having an extremely negative impact on human life, chemical fertilizers also damage the environment and its ecosystems. Excessive and repeated dressings of Potassium fertilizers cause Magnesium (Mg) deficiencies in plants, particularly grasses. It's even bad for the animals that depend on them; they too develop Mg deficiency: this Mg deficiency has caused an epidemic amongst livestock called “Grass Tetany”. Phosphate and Potash fertilizers don't just raise the chemical P and K levels; they also add damaging soil salts. Even though most soils in the U.S. have perfectly adequate levels of Phosphorus and Potassium, they are still added in large quantities through chemical fertilizers. This causes problems as too much Phosphorus locks other nutrients OUT of plants. These chemical fertilizers create a steroid effect on the plants, they see immediate results, but the plants, the soils, the community and the environment pay serious consequences down the road. Aquatic and Marine Dead Zones: Dead Zones are hypoxic (low oxygen) areas in the world’s oceans, the observed incidences of which have been increasing since oceanographers began noting them in the 1970’s. These occur near inhabited coastlines, where aquatic life in most concentrated. In March 2004, when the recently-established UN Environment Programme published its first Global Environment Outlook Year Book (GEO Year Book 2003) it reported 146 dead zones in the world's oceans where marine life could not be supported due to depleted oxygen levels. Some 35
  36. 36. BEA Business Plan of these were as small as a square kilometer (0.4 mi²), but the largest dead zone covered 70,000 square kilometers (27,000 mi²). A 2008 study counted 405 dead zones worldwide. Use of chemical fertilizers is considered the major human-related cause of dead zones around the world. Aquatic and marine dead zones can be caused by an increase in chemical nutrients, particularly nitrogen and phosphorous (which are key component of most chemical fertilizers), in the water, known as eutrophication. These chemicals are the fundamental building blocks of single-celled, plant-like organisms that live in the water column. Through both cellular respiration and bacterial decomposition they result in a significant depletion of dissolved oxygen in the water, creating hypoxic conditions, where marine life cannot be supported. Currently the most notorious dead zone is a 22,126 square kilometer (8,543 mi²) region in the Gulf of Mexico, where the Mississippi River dumps high-nutrient runoff from its vast drainage basin, which includes the heart of U.S. agribusiness, the Midwest. The drainage of these nutrients are affecting important shrimp fishing grounds. This is equivalent to a dead zone the size of New Jersey. Dead zones are reversible. The Black Sea dead zone, previously the largest dead zone in the Operations and Exit world, largely disappeared between 1991 and 2001 after fertilizers became too costly to use following the collapse of the Soviet Union and the demise of centrally planned economies in Eastern and Central Europe. Operations BEA Brazil will be owned and ultimately managed by BEA Global. The Brazilian, limited entity will be run at a management level by Sergio Norris and Kyle Hardy, who will have a direct reporting line to BEA Global. Sergio’s wealth of experience in the fertilizer industry and his extensive connections will prove invaluable in launching BEA in Brazil. BEA Brazil will initially employ a minimal work force until a constant revenue stream is generated. In this growth period the administrative, legal and accounting functions will be outsourced to a local company to allow our team to focus on generating business. BEA Global has enlisted the services of local Brazilian legal firm Mesquita Ribeiro Advogados to handle all legal matters. BEA Brazil’s initial route to market strategy will be solely through Sergio’s existing contacts and previous consumer base. Through Sergio’s existing leads it is believed that BEA Brazil will achieve considerable business in the first 3 months. Upon execution of a minimum of 10,000kg per month, BEA Brazil will employ a full time sales team, dedicated to developing and 36
  37. 37. BEA Business Plan enhancing BEA’s market share within Brazil. In addition, all currently outsourced functions (legal, accounting etc.) will be bought in house for increased control and cost management. The product will initially be sourced from the existing mixing plant in South Africa, until monthly contracts exceed a critical level (20,000kg per month) at which point it will become economically viable to build a standalone mixing plant in Brazil, using local labour and sourcing materials locally while only importing the pure enzymes directly from Italy. Thus bringing production costs significantly lower through reduced, shipping costs, import taxes, labour costs, government tax breaks for employing local labour and the reduced risk factor of the 4 week lead time for product delivery. EXIT STRATEGY Industry Acquisition: As represented by the five year cash flow forecasts, with a simple 1% market penetration, in a five year period, BEA Brazil can conservatively aim to achieve market cap of around $210m. For some of the larger fertilizer companies in Brazil (Bunge, Mosiac) this would create an attractive acquisition opportunity, as it would not only give them access to a market sector they are currently not exploiting to any extent, the organic sector, but also allow them to retrieve customer base that they had lost to BEA Brazil. Such an acquisition would prove to be a financially rewarding exit strategy and one that could potentially be viable within three years. Listing Listing a company for IPO can be seen as an evaluation event that allows shareholders to revalue their investment in the company, by allowing borrowing against the now listed vehicle. It allows BEA’s founding shareholders to sell some of their investment and also allow the company to raise more capital. Listing helps a company deliver its message to a wider audience both in Brazil and on the global markets, while also raising its profile. The higher profile should lead to increases in revenue and better access to new capital. Listing on an exchange involves legal, documentation and broker fees (estimates below). However, listing is not always necessary and there are many companies that have grown without listing. 37
  38. 38. FINANCIAL CONSIDERATIONS BEA Business Plan Set up Costs BEA Global (BEA) has gone to great lengths to prepare an accurate assessment of our total financial needs. A significant amount of capital is going to be needed to get BEA Global up and running, as our current and future prospects will expect BEA to have office and warehouse space, sales and support staff, and a significant amount of ready to order inventory. These demands give our prospects a certain level of comfort in knowing that were not a “fly by night” company, and if they need help, or product, it’s just a phone call away. Both Suzano and Aracruz have made it very clear that these demands need to be met before any contracts are signed, and will send an executive to verify. To meet these demands BEA will need an investment of $1,000,000 for the expenses listed below. Administrative Expenses - $344,867.46- These expenses include all necessary expenses not directly associated with the product itself through November 2009. This includes payroll, legal fees, office supplies, rent, utilities, advertising etc. We expect that for the first several months these expenses will remain steady. As the company grows and additional man power is needed these expenses will necessarily increase. Our projections indicate that these costs will be approximately 4.5% of Gross Sales initially. That percentage will actually increase to around 7.5% when the Mixing Plants are set up due to additional fixed costs. It should be noted however that when the mixing plant is set up the COGS will reduce 25%. Cost of Goods Sold (Variable)- $562,111.00- In order to sell in Brazil we must supply our warehouse with at least two container s(40,000 KG’s) of ready to sell product. After the first two containers are sold, the profit as well as the reclamation of capital from the sale of goods will enable us to be self sustaining when it comes to product costs and additional investment will not likely be necessary. In the event additional capital is needed the contingency capital will drawn upon. Contingency Costs- $100,000.00- In every business venture there are unforeseen difficulties and expenses that need attention. To hedge ourselves against potential losses, delays, government intervention, recalls and other liabilities it is important to have significant contingency capital to keep things moving forward. 38