China’s onlyChina’s only

Integrated Aquatic ProductsIntegrated Aquatic Products

CompanyCompany

HQHQ Sustainable Maritime Sustainable Maritime Industries, inc.Industries, inc.

2

HQHQ’s processing facilities and aquaculture operations are located on the pristine tropical island province of Hainan.

HQHQ’s Unique Location’s Unique Location

HainanHainan offers: offers:

• Only in Hainan can sashimi-grade tilapia be raised year round. 20% per year increase in Tilapia farms over the last 2 years in Hainan which will continue at the same pace for the next 5 years.

•

4

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

(es

t.)

2006

(es

t.)

Year

Met

ric

ton

s

Aquaculture Fishery

Global production of tilapia

5

Sources of Imported Tilapia to the US

0

50000

100000

150000

200000

250000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

(LW

E in

metr

ic t

on

s)

others

Thailand

Indonesia

Colombia

China

Mexico

Jamaica

Ecuador

Costa Rica

Taiw an

US. Tilapia Imports 1993-2004:US. Tilapia Imports 1993-2004:China Now Dominates Market ShareChina Now Dominates Market Share

Source: American Tilapia Association

60

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Met

ric

tons

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

US Tilapia consumption229,000 mt of live weight-2004

306,410 mt of live weight-2005

7

Value of US Tilapia Forms Imported into the US

297,413,000 (2004) $392,978,298 (2005)

8

2000 2001 2002 2003 2004Tuna 3.5 Shrimp 3.4 Shrimp 3.7Shrimp 4.0 Shrimp 4.2Shrimp 3.2 Tuna 2.9 Tuna 3.1Tuna 3.4 Tuna 3.4Pollock 1.6 Salmon 2.0 Salmon 2.0 Salmon 2.2 Salmon 2.2Salmon 1.5 Pollock 1.2 Pollock 1.1 Pollock 1.7 Pollock 1.7Catfish 1.1 Catfish 1.1 Catfish 1.1Catfish 1.1 Catfish 1.1Cod 0.8 Cod 0.6 Cod 0.7 Cod 0.6 Tilapia 0.7Clams 0.5 Clams 0.5 Crabs 0.6 Crabs 0.6 Cod 0.6Crabs 0.4 Crabs 0.4 Clams 0.5 Tilapia 0.54 Crabs 0.6Flatfish 0.4 Flatfish 0.4 Tilapia 0.4Clams 0.5 Clams 0.5Scallops 0.3 Tilapia 0.35 Flatfish 0.3 Scallops 0.3 Scallops 0.3Tilapia 0.28

Top Ten Seafoods (U.S.)per capita (lbs)

Tilapia is the 4th most popular seafood import in 2006 according to USDA

9

0

20

40

60

80

100

120

140

160

180

200

220

240

1950's 1970's 1990's 2010

Mil

lion

Met

ric

Ton

s

All seafood & aquaculture productionAll meat production

Ocean Catch

All meat includes: beef, poultry, swine & sheep.All seafood includes: ocean and farm catch.Ocean Catch: ocean catch only.

Aquaculture Market

Projected

Total World Protein Production

Fish consumption is currently 70 percent the size of all other meat products combined.

World Fish Consumption will Surpass all World Fish Consumption will Surpass all other Protein Consumption Combinedother Protein Consumption Combined

The future is fishThe future is fish

Current

10

• World tilapia production expected to reach 1,500,000 mt in 2004 and 2,000,000 mt by 2010

• 2004 world sales over $2 billion • 2010 sales projected

to be over $5 billion

Projected World Tilapia Projected World Tilapia Production and SalesProduction and Sales

Source: American Tilapia

Association

11

HQHQ’s Cost Advantage’s Cost AdvantageTilapia ProductionTilapia Production

• China - $0.70/kg• Philippines, Indonesia - $0.80/kg• Brazil, Ecuador, Thailand - $0.85/kg• Honduras, Costa Rica - $0.90/kg• Mexico - $1.00/kg• Taiwan Province - $1.05/kg• US - $2.00/kg• Canada - $2.10/kg

Sou

rce:

Am

eri

can

Tila

pia

A

ssoci

ati

on

• China - $3.50/kg• Philippines, Indonesia - $4.00/kg• Brazil, Ecuador, Thailand - $4.25/kg• Honduras, Costa Rica - $4.50/kg• Mexico - $5.00/kg• Taiwan Province - $5.25/kg• US - $10.00/kg• Canada - $10.50/kg

At PondAt Pond At Plant At Plant (Frozen tilapia fillet)(Frozen tilapia fillet)

HQHQ competes at Chinese price levels while competes at Chinese price levels while producing sashimi-grade frozen fillet.producing sashimi-grade frozen fillet.

12

Quality Labor, Quality Quality Labor, Quality Conditions, Cost AdvantageConditions, Cost Advantage

• Low labor costs in China let HQHQ operate at a cost advantage over international competitors, while providing workers with quality working conditions and good pay.

13

HQHQ Mission Statement Mission StatementVertically integrated qualityVertically integrated quality

• To bring quality and excellence to every aspect of HQHQ’s vertically integrated aquatic products business.

• To be the world’s leader in tilapia markets based on market driven products of the highest quality while generating strong profitability.

14

Our BusinessOur BusinessQuality responding to demandQuality responding to demand

• HQ is the leading direct Chinese exporter of quality tilapia (frozen) products to the US.

• HQHQ has uniquely integrated operations:– R & D – Aquaculture (through cooperative supply

arrangement)– Processing of aquatic products in response to

evolving market demand – Nutraceutical manufacture and – Sales and Marketing

15

The Market OpportunityThe Market Opportunity Global demand ….increasing and changingGlobal demand ….increasing and changing

• The global ocean catch has not increased for the last five years and cannot keep pace with demand.

• The shortfall is being met by aquaculture production, and China is the leading producer.

• Higher quality aquaculture products are demanded by consumers.

HQHQ’s on-hand orders are greater ’s on-hand orders are greater than current production capacity.than current production capacity.

16

HQHQ Growth StrategyGrowth Strategy

• Distribution and branding initiativeDistribution and branding initiative..

• PPatented nutraceutically enriched organic atented nutraceutically enriched organic feed formulae with expanded plant feed formulae with expanded plant production.production.P

has

e 2

Ph

ase

1

The TiLoveYa brand is the symbol for HQ’s future growth...vertically integrated quality supporting a strong brand

17

HQHQ Growth StrategyGrowth Strategy ®

Distribution and Branding InitiativeDistribution and Branding Initiative• HQ has relocated its corporate and sales offices to the Pacific

North-West, and acquired Pacific Supreme Seafoods, headed by Trond Ringstad, who becomes HQ’s Executive VP, Sales and Distribution ;

• Trond has begun rolling out the new TiLoveYa® brand with appropriate support documents, web site, and marketing campaign.

• New corporate presentations are airing on CNBC through paid programming on PTG’s Business and Beyond & World Business Review with Alexander Haig

Ph

ase

1

18

HQHQ Growth StrategyGrowth Strategy

Distribution and Branding InitiativeDistribution and Branding Initiative• HQ will sell directly to major purchasers of Tilapia a

differentiated product at higher margins supported by the new branding and marketing initiative.– Such targetted buyers include;

• Wholefoods• Albertson’s• Stop “n Shop• Appleby’s• Denny’s• Red Lobster Restaurants

Ph

ase

1

®

19

HQHQ Growth StrategyGrowth Strategy

Distribution and Branding InitiativeDistribution and Branding Initiative

New Sales Team will;• Enhance sales margins through marketing

campaign;• Manage import of product and distribution;• Begin sales of fresh product including zero-

toxin shrimp products;• HQ’s processing plant and shrimp farms are

being certified to ACC standards making HQ the first such certified operations in China;

®

20

• Profitability will be enhanced through the demands of traceability and applied technologies including;– Real time inventory of products and raw

materials– Business intelligence data analysis tools– Ongoing quality and environmental monitoring

HQHQ Growth StrategyGrowth Strategy

Distribution and Branding InitiativeDistribution and Branding Initiative

Ph

ase

1

®

21

All Tilapia are not created All Tilapia are not created equal,..TiLoveYa equal,..TiLoveYa ® Zero toxin Tilapia Zero toxin Tilapia

for Lovers of healthy Foodfor Lovers of healthy Food

Ph

ase

1®

22

HQHQ Growth StrategyGrowth Strategy

Feed Mill and patented FeedFeed Mill and patented Feed

• Construction of local Feed Mill ill provide newly formulated feed for HQ including “floating feed”

• Feed production to organic standards and nutraceutically enriched

• Partnership through licensing agreement with American organic feed formulation companies and others to benefit from their proven technology

• R & D input from Chinese nutraceutical and feed experts

Ph

ase

2

®

23

HQHQ Growth StrategyGrowth Strategy

Nutraceutical Products ManufactureNutraceutical Products Manufacture

Health and nutraceutical product plant and Specific Gravity Molecular Separator owned by HQ

Ph

ase

2

®

24

HQHQ Growth StrategyGrowth Strategy

Nutraceutical ProductsNutraceutical Products

Ph

ase

2

25

HQHQ Growth StrategyGrowth Strategy

Expanded ProductionExpanded Production • Construction of a new production plant

or acquisition and upgrade of an existing plant will more than double capacity and introduce some value added products such as breaded fillet.

Ph

ase

2

®

26

ConclusionConclusionResponding to demandResponding to demand

• World protein markets will be dominated by fish in the coming years

• Traceability and consumer awareness of health issues create opportunities for farmed organic products nutraceutically enriched by a vertically integrated company

• HQ is the leader in responding to these challenges

HQHQ

27

HHighest ighest QQualityuality