Initiatives
Family Fish Farms Network

Text of draft report titled A Sustainable Business Model ... August 2013

Burgess COMMENTARY

Peter Burgess

A Sustainable Business Model ... Local Production – National Distribution

The Need -­‐ Urban Farming is a growing part of the overall food chain in supermarkets and grocery stores across the country. Restaurants also get their herbs and produce from local sources whenever possible. The availability of fresh, locally grown food is limited. Millions of Americans are without access to fresh food and additional millions living in food deserts in the inner cities. There is a significant pent up demand for locally grown, nutrition dense food. The Company –The Family Fish Farms Network, Inc. (FFFN) plans to revolutionize urban food production though the application of innovative urban farming, employing Aquaponics, which applies natural processes and appropriate technology to produce healthy food with minimum environmental impact. We will grow and sell superior pesticide-­‐free fresh food at a competitive price. We plan to build hundreds of urban aquaponic farms in and around the global populations centers, starting in the inner cities of America. The Technology -­‐ FFFN has developed proprietary technology and processes that radically improve the productivity of urban farming yields. These improved technologies and processes are widely applicable and will be employed to grow seafood, vegetables and, eventually, mushrooms. FFN’s improvements to the existing Aquaponics greatly increase the density of the product yields of fresh seafood and vegetables. The Company has developed a unique growing system that can produce year-­‐round, high-­‐profit specialty crops. The seafood, vegetables, mushrooms and other produce are free from all antibiotics, growth hormones and animal protein based fish feed, and the process is environmentally friendly. Business Model Our intention is to achieve local, regional, and finally, national districution through a progressive deployment of a hub and spoke system. In our model all of our production will be ‘local food.’ We will build ‘hubs,’ in the population centers and expand our hubs on the outskirts (10-­‐50 miles) from the hub. Each hub will support between 3 to 5 spokes depending upon individual market demographics and consumer demand. This approach provides for maximum flexibility to market demand, food security, and also provides for redundancy in the production system in case of crop failure, or other unforseen events. • We grow in the cities and surrounding areas where the demand exists; • We are a producer-­‐direct organization. • We produce and sell on a 12 month basis • We employ a distributive production model assures flexible response to consumer demand; • We employ efficient production automation to reduce costs and assure quality; • We invest heavily in training a high performance workforce; • We dis-­‐intermediate the supply chain and eliminate a large proportion of distribution costs; Our approach will be to establish our corporate image and reputation for sustainable and restoriative business practices early on as part of our overall strategic ‘branding effort. Creation and enforcement of an aggressive quality driven focus combined with a culturally sensitive community engagement and local hiring practices will enhance our reputation as good corporate citizens. When in the initial stages of expansion, before we can fully meet market demand, we will sell to the top end of he market. As more production comes online we will move down market and reach a wider demographic. Priceing and Margin -­‐ Price Point Positioning -­‐ A pound of Tilapia sells for $6.99 a pound in mainstream supermarkets (at the time of this writing). The standard markup is 30%. Our estimated cost of production is approximately $2.25 per pound. The planned selling price is $3.00-­‐4.20 Lb. As a local producer, we do not have significant transport costs. In fact many of our customers will actually prefer to pick up product improving their flexibility in response to demand. A pound of lettuce sells for $12.00 a pound. Incidentally, the average head of lettuce travels 1,500 miles from farm to table. We have virtually eliminated the cost of transport and wholesale markup. Our cost to produce is $1.80. The average wholesale cost is $8.40 per pound. This provides us with significant flexibility in both price and margin. As you can see in this table, the sales of vegetables provide the most significant contribution to gross margin. Gross Margin Table

Current Status We have a commitment for a $400,000 investment in exchange for 5% interest in the company from ProFish, Inc, a $50 million dollar regional distributor of seafood in the mid Alantic region. The company has 23 trucks that range from southern Virginia to northern Delaware selling to a wide range of restaurants, food service companies, caterers and food markets and other outlets. Virtually all of their customers are likely prospects for our fish and vegetables.

Competitive Advantages

• • Fresh Local Food -­‐ Our ability to deliver fresh (not frozen, not days but hours from harvest) fresh local food on a 12 month basis with price stability and predictable availability is a major market advantage. Coupled with our partner’s existing and extensive sales and distribution network, we can virtually sell everything we can grow from our proposed first site adjacent to US 95 North/South in Ivy City, Washington, DC.
• • Proprietary Technology – We have confrimation of the unique process strategies we have developed. Bellis & Katz, patent attorney’s have reviewed our concept and found a strong likelyhood that patentable are exists.
• • Distributive Production – As we plan to expand locally, regionally, and nationally using our hub and spoke method, all food production will be local. All production will be local as will al deliveries. The redndanncy built into the system assures a wide range of product delivered a the most cost effective price point and the freshest possible nutitional content.

Consolidated Financial Position Table