Executive Summary of EVVEN C.A.

1a.) Introduction:
Seldom do we have the opportunity to participate in the transformation of an industry, a time when all the conditions are right for one enterprise to gain a substantial competitive edge. Right now the shrimp industry is poised on the brink of a revolution, and EVVEN is poised to become the leader of that revolution.

EVVEN (Equipo de Valor de Venezuela) is a joint venture between (1) the intellectual developers of the project, ARNE EBERMANN and GREG VITKO, and (2) the FUNDACIÓN LA SALLE DE CIENCIAS (FLASA). After extensively researching the shrimp industry for over 18 months, EVVEN has designed a state-of-the-art production facility that is projected to be able to grow shrimp at the incredibly low production cost of US $2.25 per kilo (about $1.00 a pound). Plus, by making use of every part of the shrimp, including its residue, this facility will be environmentally friendly ("green"), without releasing the kind of effluents responsible for "red tide" algae blooms. Moreover, through vertical integration, this environmentally clean and efficient operation will also produce valuable byproducts -chitin and chitosan from the shrimp shells and a highly mineralized fertilizer from the shrimp waste. By conservative estimates, in the very first year the facility will convert feed costing under $1.4 million into products worth almost $11 million. (See Revenue chart for a more detailed profit projection.)

1b.) Purpose of This Plan:

The purpose of this plan is to provide information to investors in order to solicit proposals for the equity financing of the joint venture. In order to build the proposed super-intensive shrimp aquaculture facility, EVVEN needs an initial capital investment of US$ 9 million to buy the land, build the ponds and their associated support facilities, plus sustain operations for the first year.

1c.) Background:

Most of the shrimp that people eat are harvested at sea, not farmed under controlled conditions. That's like hunting cattle in the wild instead of raising them on ranches. The few operations that raise shrimp do so either in a primitive manner that pollutes the environment or in an over-sophisticated manner that is too complex and expensive for use in developing countries.

Raising shrimp isn't really difficult. In fact, it has been likened to "raising cockroaches." In a suitable environment, the shrimp themselves do all of the work. The key is maintaining that environment. In primitive shrimp ponds, that environment gradually deteriorates until the shrimp choke in their own waste. Moreover, the waste contaminates the soil, so the pond can't be re-used. Therefore, many shrimp farming operations discharge the waste into the environment. With the "greening" of the world, the greater awareness and concern for environmental issues, operations that pollute the environment will be under greater and greater pressure either to make expensive changes or to shut down.

Yet this semi-liquid waste, which is toxic to the shrimp, can be transformed from a liability into an asset. The shrimp live in seawater, the shrimp waste extracted from the ponds is therefore "salty." However, this ocean salt isn't just sodium chloride (table salt). On the contrary, ocean salt contains a whole range of minerals essential for life, of which sodium chloride is only one.

All around the world, generation after generation of crops have depleted the soil of nutrients and made it deficient in minerals. Thus farmers have become dependent upon chemical fertilizers. However, because of the expense of adding additional minerals, these fertilizers are generally poor in trace minerals. Highly mineralized ("salty") fertilizer would be ideal for replenishing mineral-poor soils caused by long-time use of mineral-poor fertilizers.

Another opportunity that has presented itself is the condition of the world market for a remarkable material called Chitin. Chitin, and its derivative chitosan, are becoming extremely important in such varied fields as chelation of heavy metals, cosmetics, food coloring, animal feed additives, human nutritional supplements, medical sutures, and pharmaceuticals, including in the latter category the well-known "starch blockers" used by dieters. A ton of medical-quality chitin currently sells for about US$ 15,000 on the international market. Shrimp shells are 45% chitin.

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1d.) Products and facility design:

The key to the success of EVVEN's super-intensive shrimp farming facility lies in a three-pronged approach: Shrimp, fertilizer, and chitin. By making use of every part of the shrimp—the meat, the shell, and even the waste—and creating a vertically integrated industry, EVVEN will attain profits unheard of in the shrimp business.

Shrimp. The most obvious part of the shrimp is of course the meat. The shrimp will be grown in a cascade of 216 ponds in strings of six. Each pond string will be isolated to prevent the spread of disease. Ocean water will be circulated with pumps into the ponds of each string and fed by gravity to the remaining pond.

In keeping with its goal of vertical integration, EVVEN will produce an end product for the consumer in its own facility, selling packages of its own brand of peeled, fresh-frozen shrimp meat to consumer markets in Europe, the United States, and Japan.

Fertilizer. To be environmentally friendly, EVVEN needs to deal with the problem of shrimp waste. But is this shrimp waste really a problem? By taking advantage of the unique characteristics of shrimp waste, the facility designed by EVVEN will extract it for sale as highly mineralized fertilizer. Moreover, the ponds will be constructed with special liners to prevent the poisoning of the soil and allow reuse of the same pond for the 20-year plus lifetime of the liner.

These liners will also speed turn-around time between crops of shrimp by reducing the time that it takes to dry the ponds between harvesting the old crop of shrimp and seeding a new one. Shortening the turn-around time will enable EVVEN to achieve as much as an extra crop of shrimp a year more than conventional operations. This achieves from 25% to 33% greater efficiency of operation, just from using pond liners.

Turning the shrimp waste into fertilizer is a key part of EVVEN's "green" approach to farming shrimp. By not releasing shrimp waste effluents into the environment, its facilities won't contaminate the local environment or produce "red tide" algae blooms.

Chitin. Although the initial end products of EVVEN's vertically integrated shrimp industry will be packaged fresh-frozen peeled shrimp and mineral-rich fertilizer, the real key to the long-term profitability of the facility lies in another byproduct, the shrimp shells peeled from the shrimp. These shells are about 45% chitin, yielding a rich source of this important raw material.

Chitin is a natural polymer with an increasing number of applications. Initially it will be sold as a raw material. Currently a ton of medical-quality chitin fetches about US$ 15,000 on the international market. The long-term goal of the EVVEN facility is to use sales of shrimp, fertilizer, and chitin to finance the development of a high-tech production of consumer products made from chitin.

During the first year of operation, the end products will be (1) packaged, peeled, fresh-frozen shrimp, (2) mineral-rich fertilizer, and (3) Chitin sold as a raw material. Venezuelan tax laws are structured to reward enterprises for capital reinvestment in plant. Therefore, beginning in the second year of operations, following its goal of vertical integration, the EVVEN facility will begin adding facilities for the manufacture of consumer products based on chitin and chitosan, such as bandages, medical gauze, surgical suture thread.

1e.) Location

The beautiful tropical island of Margarita is possibly the best location in the world for the cultivation of shrimp. EVVEN has decided to locate its facility there for many reasons:

(1) Cheap land: Margarita's large tracts of relatively inexpensive arid mountainous wasteland that aren't useful for other purposes provide economical ocean access and ideal topology.

(2) Free port: Margarita has the status of a free port within Venezuela, which will reduce import and export shipping costs.

(3) Excellent weather: Margarita's even temperature (which remains in a range of about 75º to 95º F all year) allows for a constancy of operations. There will be no slow season when it too cold for the shrimp to grow. This even temperature also reduces the stress on the shrimp and on the equipment (like pond liners) from changes in the ambient temperature. Moreover, Margarita is located outside of the hurricane belt. Many aquaculture operations in less sheltered locations worldwide lose entire crops because of bad weather.

(4) Economical labor: Because Venezuela's economy is in a long-term recession, wages for skilled employees, even university-educated ones, remain lower than minimum wages in Europe and the United States. The EVVEN facility will become a major employer on the island, providing the opportunity to make a positive social contribution to the local community and to sustain good community relations.

(5) Native expertise: Margarita is the location of two oceanic institutes, the Fundación La Salle de Ciencias Naturales and the Universidad de Oriente. Both of these institutions have high current expertise in shrimp cultivation. They will be sources of expert workers for the facility. Moreover, Fundación LaSalle has even signed an agreement to establish an enterprise with EVVEN to provide a variety of necessary support services.

(6) Venezuela is free from shrimp disease, and the country already has regulations in place to avoid the kinds of disease problems encountered in Central America and other locations in South America.

1f.) Environmentally friendly

EVVEN is dedicated to creating and maintaining a clean, environmentally sound operation that won't pollute the environment. This is essential not only in and of itself, but also to maintaining good community relations. The EVVEN facility uses up or sells the byproducts of its aquaculture, and it is designed to comply with the current international guidance concerning shrimp aquaculture operations, as expressed in the Cholutecan declaration and in decisions by the Supreme Court of India. This allows us to continue operating as other, dirty operations face increasing pressure to either to make an expensive clean up or to shut down.

top 1g.) Technical Expertise

EVVEN has the necessary technical expertise to develop and support shrimp aquaculture. We have completed and are continuing extensive research of other shrimp aquaculture facilities currently operating around the world to cull and distill the best ideas and operating principles. Moreover, a study of similar enterprises in different fields has yielded ideas that aren't yet employed in current shrimp aquaculture operations, but need to be realized

However, the real key to success will be the support agreement signed with the Fundación La Salle. The marine biologists of the Fundación La Salle www.flasa.org.ve , www.edimar.org are among the world's leading experts in shrimp aquaculture. They provide invaluable assistance with selecting, stocking, and feeding the shrimp as well as maintaining the quality of the water. These experts, along with other local experts in other fields, such as plant security, help to guarantee the success of the operation.

Not only will this technical expertise enable the EVVEN facility to start operating at the highest level of technology, but the commitment of EVVEN and Fundación La Salle to vertical integration and development of chitin and chitosan products will help to maintain their leadership in the industry.

1h.) High-tech by being low-tech

The EVVEN facility will operate 24/ hours a day, 7 days a week, harvesting on the average three ponds a day. To maintain this continuity of operations, we have adopted a unique strategy to manage harvests. Because skilled labor is cheap and plentiful in Venezuela and because it´s often impossible to quickly obtain spare parts for fragile and complicated machines, EVVEN will hire workers to manually harvest shrimp. The unique plant design that gives the ability to quickly flush the holding tanks makes the speed of manual harvesting comparable to that of machine harvesting. The real key is that manual shelling is more efficient than machine shelling. Machines waste up to 10% of the shrimp meat. That 10% saved is sufficient to cover the workers' wages. Effectively, the harvesters pay themselves through the increased efficiency of manual harvesting.

1i.) Competitive advantage

The time is right for a strong new entry into the world shrimp market. An expanding world population supplies plenty of demand for increased world supply of all foods, including shrimp. The depletion of the earth's natural resources has turned sustainable enterprises, such as the aqua-culture of shrimp, into a growth industry.

Moreover, no one in the shrimp industry has put together all of the latest scientific advances in shrimp cultivation at the proper scale of operations. Economies of scale and simplicity of operation gives the EVVEN facility an advantage over current operations worldwide. This competitive advantage, as well as our environmentally-sound approach, will maintain our advantage against any future competition.

1j.) Conclusion

After projecting initial startup costs, continuing expenses of operation, and revenues, we forecast that the shrimp facility will break even between two and three years after initial startup. In other words, by two or three years after starting up, the facility will have earned enough not only to cover its expenses of operation, but also to pay back all of the initial capital investment.

For this reason, we recommend investment in our project.
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