Olmito Agriquatics
Treating Wastewater to Produce
Macrobrachium
&
Tilapia
Some “Numbers” and Graphs
The Project Context
A Close-up of the Olmito WWT Plant site
Olmito Agriquatics Project Abstract
The Olmito Agriquatics project will treat the wastewater now collected by the Olmito Water Supply Corporation (OWSC) to a fully recyclable condition – achieving the highest quality treated effluent in the state of Texas. It will also desludge and formally decommission the two lagoons that now serve as OWSC’s wastewater treatment plant. The project will also treat wastewater now being produced by the neighboring town of Los Fresnos. It will continue, in the future, to accept and treat wastewater flows originating in the existing Olmito Water Supply Corporation service area, as well as adjacent neighborhoods currently served by the City of Brownsville and the community of Rancho Viejo. Production is expected, in future, to expand to the North Alamo Water/Wastewater district, a region having the potential to treat approximately 10 times as much wastewater as is now received in the Olmito district.
In addition to treated wastewater, the principal byproducts of the Agriquatics System are a superior quality biogas and harvested duckweed. The former will be used in a combined heat and power context to produce thermal energy and electricity for local consumption as well as peaking electricity for export to the grid. The latter will be solar dried (gas assisted) blended with corn and milo carbohydrates and fed to Tilapia fish and Macrobrachium prawns grown onsite using the Company’s innovative dome-housed, intensive, recirculating aquaculture system. Fish will be harvested daily, filleted onsite and packaged for shipping to clients: Sysco Foods, Whole Foods and HEB.
Olmito Agriquatics is expected to generate pre-tax profits of almost $3.5 million in 2016 on a projected sale of 1,054 tonnes of tilapia fillets and 105 tonnes of whole macrobrachium prawns.
Duckweed Aquaculture Scenario
Scenario-Specific Notes
In this scenario, with minor exception, the entire 1,200+ tonnes (dry weight) of duckweed produced annually as a byproduct of the Olmito Agriquatics wastewater treatment process is committed to supplying internal aquaculture of Tilapia fish and Macrobrachium prawns. The system is unique among intensive aquaculture systems for it’s ability to remove all wastes – including residual nitrates and phosphorus – from the water the fish are grown in. It is also unique in that it captures these wastes – both solids and dissolved solids -- leverages them with photosynthetic energy (sunlight on duckweed), and then feeds the product back to the fish. By slaughtering and processing fish onsite, the project is also able to recycle as feed, 100% of fish discards (skin, head, guts, bones and fins). This brings feed costs for the Agriquatics system to the lowest among all global aquaculture systems/technologies.
This scenario presumes a cash investment of approximately $1.3 million by third party investors. The cash investor is being offered a first-in-first-out return on his/her investment (year 4) and a convertible B preferred share/unit that will pay dividends equal to 22% of the invested amount in circumstances where post-tax net earnings permit (presumably year 5, going forward). The preferred shares/units are convertible through the end of year 5 to 20% of the company’s then outstanding shares. The conversion is presumed to allow the investor to share, proportionately, in the company’s future growth in the South Texas Valley. These shares/units are projected to have obtained a value of $4.36 million within 5 years – just as the company begins a rapid expansion phase by taking in wastewater from the City of Brownsville.
While, in this circumstance, guarantees are presumed to be provided by The Olmito Water Supply Corporation, were they to be offered to third party investors, they would be valued at 50% of cash. $3.0 million in guarantees would, therefore, obtain an equivalent share/unit value (20%) as is here offered to the cash investor – presuming the cash investor opts for conversion.
Income Statement
Cash Flow Statement
Note under “Dividend Paid” in 2015, the Investor is fully reimbursed for his capital investment. Dividends paid in 2016,equal to 22% of the original cash investment, will be paid to the investor continuously thereafter, or until such time as the investormakes a decision to convert his preferred “B share/unit to a common A share/unit.
Balance Sheet
Note: Project partner, The Olmito Water Supply Corporation, is presumed to retain ownership of the project’s land and existing Lagoon facilities. As such, the “Land and Improvements” line shows a zero value across the board. This circumstance isconsidered “open” to further clarification and interpretation.
Start-up Costs & Sources of Financing
Investment Scheduling
Labor and Wage Summary
Product Gross Margins
Breakeven Analysis
Ratio Analysis
Shareholder Value Calculations (A)
Shareholder Value Calculations (B)
Shareholder Value Calculations (C)
Olmito Agriquatics Stock / Units Matrix
Olmito Agriquatics Key Parameter Value Assumptions (A)
Note: The only product assumed to be manufactured in this scenario is the “Milled to <10 microns” duckweed powder. AllOther products may, however, be produced under differing, feasible scenarios.
Olmito Agriquatics Key Parameter Value Assumptions (B)
Olmito Agriquatics Key Parameter Value Assumptions (C)
Olmito Agriquatics Capital Structure
NOTE: OWSC contribution of land, lagoons and developed infrastructure are assessed to have a present value of approximately $3.0 million
Cash Invested, $1,300,000
Term Loan, $ 5,142,247
Working Loan, $ 1,500,000
Olmito Agriquatics Capital Structure
$ 4,544,386
$ 337,324
$ 85,845
$ 72,676
$ 480,000$
325,000
$ 300,000 $
80,000
$ 129,718
$ 30,000
$ 100,000
$ 150,000
$ 300,000
$ 1,050,00
0
Olmito Agriquatics Capital Allocations
Tissue Culture Lab - AD and SteviaWWT (series of 22 l/s units - including fish,worms & digesters)Local Hydraulics & Sludge MiningRoadsSecurityElectricity and Backup Power UnitsPhase II Park Project LandscapingPhase II Park ConstructionNon-Farm Rolling StockMiscellaneous Equipment + Spare Parts Closing Costs Preliminary Expenses Initial inventory Initial accounts receivable Initial operations, admin & sales costs
Mon01 Mon02 Mon03 Mon04 Mon05 Mon06 Mon07 Mon08 Mon09 Mon10 Mon11 Mon12
$0
$50,000
$100,000
$150,000
$200,000
$250,000
Olmito Agriquatics Year 1. Cost Distribution
Debt Service Depreciation General & Admin. R&D/Quality Assurance & Prelim Expenditures Sales, marketing, & distribution Production Costs Production Labor Raw Material
Raw Material; $684Production Labor; $21,326 Production Costs; $21,326
Sales, marketing, & distribution; $1,500
R&D/Quality Assurance & Prelim Expenditures; $28,000
General & Admin.; $170,103Depreciation; $332,296
Olmito Agriquatics Year 1. Cost Structure
Mon
01
Mon
02
Mon
03
Mon
04
Mon
05
Mon
06
Mon
07
Mon
08
Mon
09
Mon
10
Mon
11
Mon
12
$ 0
$ 200,000
$ 400,000
$ 600,000
$ 800,000
$ 1,000,000
$ 1,200,000
$ 1,400,000
$ 1,600,000
Olmito Agriquatics Year 1 Cash Flow
Cash & short-term investments; $ 678,212
Inventories; $ 50
Plant & Equipment; $ 5,917,794
Olmito AgriquaticsYear 1. Assets
Short-term debt and notes payable; $ 1,304,025
Accounts payable; $ 14,197
Long Term Debt; $ 4,860,921
Equity; $ 416,913
Olmito Agriquatics Year 1. Liabilities
Cash & short-term investments; $ 416,446
Accounts receivable; $ 541,732
Inventories; $ 62,314
Plant & Equipment; $ 5,714,854
Olmito Agriquatics Year 2. Assets
Short-term debt and notes payable; $ 1,279,741
Accounts payable; $ 148,443
Long Term Debt; $ 4,565,133
Equity; $ 742,029
Olmito Agriquatics Year 2. Liabilities
Mon01 Mon02 Mon03 Mon04 Mon05 Mon06 Mon07 Mon08 Mon09 Mon10 Mon11 Mon12
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
Olmito Agriquatics Year 2 Cost Distribution
Debt Service Depreciation General & Admin. R&D/Quality Assurance & Prelim Expenditures
Sales, marketing, & distribution Production Costs Production Labor Raw Material
Raw Material; $939,738
Production Labor; $546,491
Production Costs; $546,491
Sales, marketing, & distribution; $223,516
R&D/Quality Assurance & Prelim Expenditures; $82,694
General & Admin.; $605,535
Depreciation; $316,794
Debt Service; $1,237,164
Taxes; $195,171
Olmito Agriquatics Year 2 Cost Structure
Mon01 Mon02 Mon03 Mon04 Mon05 Mon06 Mon07 Mon08 Mon09 Mon10 Mon11 Mon12
0.00
50.00
100.00
150.00
200.00
250.00
Olmito Agriquatics Year 2. Production (tons)
Aquameal Macrobrachium Tilapia
Mon01 Mon02 Mon03 Mon04 Mon05 Mon06 Mon07 Mon08 Mon09 Mon10 Mon11 Mon12
$ 0
$ 100,000
$ 200,000
$ 300,000
$ 400,000
$ 500,000
$ 600,000
Olmito Agriquatics Year 2. Sales ($s)
Tilapia Macrobrachium
2012 2013 2014 2015 2016
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
Olmito Agriquatics 5-Year Cost Distribution
Taxes Debt Service Depreciation General & Admin. R&D/Quality Assurance & Prelim Expenditures Sales, marketing, & distribution Production Costs
Production Labor Raw Material
Raw Material; $1,677,788
Production Labor; $779,338
Production Costs; $779,338
Sales, marketing, & distribution; $199,587
R&D/Quality Assurance & Prelim Expenditures; $74,976
General & Admin.; $725,622
Depreciation; $328,062
Debt Service; $1,259,803
Taxes; $1,040,224
Olmito Agriquatics Year 5 Cost Structure
2012 2013 2014 2015 2016
0
500
1,000
1,500
2,000
2,500
3,000
Olmito Agriquatics 5-Year Production tons)
Macrobrachium Tilapia Aquameal
2012 2013 2014 2015 2016
$ 0
$ 1,000,000
$ 2,000,000
$ 3,000,000
$ 4,000,000
$ 5,000,000
$ 6,000,000
$ 7,000,000
$ 8,000,000
Olmito Agriquatics 5-Year Sales ($s)
Tilapia Macrobrachium
2012 2013 2014 2015 20160
0.5
1
1.5
2
2.5
3
Olmito Agriquatics 5-Year Cash Flow ($ millions)
Note: The pronounced dip in Year 4 is a consequence of compensating the Investor on a first-in-first-out basis
2012 2013 2014 2015 2016
-$1,500,000
-$1,000,000
-$500,000
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
Olmito Agriquatics 5-year Pretax Profits
Cash & short-term investments; $ 2,511,158
Accounts receivable; $ 714,960
Inventories; $ 628,775
Plant & Equipment; $ 4,974,979
Olmito Agriquatics Year 5 Assets
Short-term debt and notes payable; -$ 276,947
Accounts payable; $ 726,103
Long Term Debt; $ 3,391,059
Equity; $ 4,989,656
Olmito Agriquatics Year 5. Liabilities
2012 2013 2014 2015 2016$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
Fresh Tilapia FiletsBreak Even Price ($/ton)
Break Even Price Target Price
2012 2013 2014 2015 20160
200
400
600
800
1000
1200
1400
Fresh Tilapia Filets Break Even Volume (tons/yr)
Break Even Volume Target Volume
2012 2013 2014 2015 2016$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
Fresh Macrobrachium Prawns Break Even Price ($/ton)
Break Even Price Target Price
2012 2013 2014 2015 20160
20
40
60
80
100
120
Fresh Macrobrachium Prawns Break Even Volume (tons/yr)
Break Even Volume Target Volume
2012 2013 2014 2015 20160
5
10
15
20
25
Olmito Agriquatics Current & Quick Ratios
Current ratio Quick ratio
2012 2013 2014 2015 2016
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
Olmito Agriquatics Profit Ratios
Gross margin Operating margin Profit margin on total sales Return on assets Return on equity
2012 2013 2014 2015 2016
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
Olmito Agriquatics Sales to Fixed Assets
2012 2013 2014 2015 2016
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
Olmito Agriquatics Debt Ratios
Debt to total assets Debt to total capitalization Debt to equity
2012 2013 2014 2015 2016
-0.5
-0.3
-0.1
0.1
0.3
0.5
0.7
0.9
Olmito Agriquatics Efficiency Ratios
Production Sales, Marketing & Distribution R&D/Quality Assurance General & Administration
2012 2013 2014 2015 2016
0
0.2
0.4
0.6
0.8
1
1.2
Olmito Agriquatics Asset Turnover
2012 2013 2014 2015 2016
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
Olmito Agriquatics Cost Structure
Total Variable Costs Total Fixed Costs
2012 2013 2014 2015 2016 2017$0.000
$5.000
$10.000
$15.000
$20.000
$25.000
Olmito AgriquaticsShare Prices
Series1
1 2 3 4 5 6 7 8 91
01
11
21
31
41
51
61
71
81
92
02
12
22
32
42
52
62
72
82
93
03
13
23
33
43
53
63
73
83
94
04
14
24
34
44
54
64
74
84
95
05
15
25
35
45
55
65
75
85
96
0
0.00
50,000.00
100,000.00
150,000.00
200,000.00
250,000.00
300,000.00
Olmito Agriquatics Wastewater Treated (cubic meters treated monthly)
Year 1
Year 2
Year 3
Year 4
Year 5
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
Olmito Agriquatics Sales
Macrobrachium Tilapia
Year
Do
llars
in S
ales
Yea
r 1
Yea
r 2
Yea
r 3
Yea
r 4
Yea
r 5
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
Olmito Agriquatics Fresh Tilapia Filet Sales
Yea
r 1
Yea
r 2
Yea
r 3
Yea
r 4
Yea
r 5
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
Olmito Agriquatics Fresh Macrobrachium Sales
Ye
ar
1
Ye
ar
2
Ye
ar
3
Ye
ar
4
Ye
ar
5
$ 0
$ 100,000
$ 200,000
$ 300,000
$ 400,000
$ 500,000
$ 600,000
$ 700,000
$ 800,000
Olmito Agriquatics Accounts Receivable
Ye
ar
1
Ye
ar
2
Ye
ar
3
Ye
ar
4
Ye
ar
5
$ 0
$ 100,000
$ 200,000
$ 300,000
$ 400,000
$ 500,000
$ 600,000
$ 700,000
Olmito Agriquatics Finished Inventories
Yea
r 1
Yea
r 2
Yea
r 3
Yea
r 4
Yea
r 5
$ 0
$ 200,000
$ 400,000
$ 600,000
$ 800,000
$ 1,000,000
$ 1,200,000
$ 1,400,000
Olmito Agriquatics Capital Spending
Yea
r 1
Yea
r 2
Yea
r 3
Yea
r 4
Yea
r 5
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
Olmito Agriquatics Outstanding Debt