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Neptune Industries
is poised to become a leading supplier of eco-friendly technology and sustainable products
to the $250 billion seafood industry. The
Company has a unique business model in the United States as well as worldwide, because
they integrate innovative, patent-pending technologies with production and distribution.
Technology and Consumer Goods
Seafood
(NPDI-OTC: BB)
Neptune Industries, Inc.
21218 St. Andrews Boulevard, Suite 645
Boca Raton, FL 33433
Phone: 561-482-6408
Ernest D. Papadoyianis
Chairman, President and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
November 9, 2006
BIO:
ERNEST D. PAPADOYIANIS
CHAIRMAN, CHIEF EXECUTIVE OFFICER AND PRESIDENT
OF NEPTUNE INDUSTRIES, INC.
Mr. Papadoyianis, age 47, has been an active figure in Seafood/aquaculture for over
twenty-five years. He has successfully implemented his production strategies in a
diversity of aquaculture businesses throughout the world. He is the founder of Exotic Reef
Technologies, Inc., and Marcon Development Corporation, and co-founder of Taurus
Investments, Ltd. and Aquaculture Specialties, Inc. Mr. Papadoyianis was a former Director
in S.M.A.R.T., Inc. and The Watermark Corporation. He is also a member of the Board of
Directors of the Striped Bass Growers Association, where he represents that sector of the
industry. He has formulated business plans and management strategies for a number of prior
and on-going businesses. His reputation as a top producer of quality products is well
substantiated in both the aquaculture and seafood industries. He has appeared in, and has
been interviewed for, numerous industry publications including Fish Farming News, Fish
Farming International, South Florida Business Journal, etc. In May 2005, he appeared on
the CNBC’s World Business Review with General Alexander Haig to discuss
environmentally friendly technology.
Over the last 15 years, Mr. Papadoyianis has
engaged in the development and capitalization of emerging businesses. He had structured
management teams and directed activities for new product development, design and
engineering of new technology applications, website and CD marketing and promotional
development, and international sales.
Company Profile:
Neptune Industries, Inc. is a public Florida corporation (OTC.BB-NPDI). The
Company=s mission is to become a leading supplier of disruptive technology and sustainable
products for the $250 billion Seafood Industry, through the development of a vertically
integrated business model. The catalyst to the [WINDOWS-1252?]Company’s business
model is the patent-pending [WINDOWS-1252?]Aqua-Sphere™
and [WINDOWS-1252?]Aqua-Cell™ technologies.
[WINDOWS-1252?]Aqua-Sphere™ provides a highly
efficient, environmentally friendly solution to current seafood production requirements,
while opening up new areas of the world to commercial production. The Company has already
received interest from around the world to license, purchase, and distribute the
technology. Licensing, sales and joint venture activities will further expedite and
enhance the [WINDOWS-1252?]Company’s business model. The Company has also
just filed a process patent on the production process of an advanced nutritional
component called [WINDOWS-1252?]Ento-protein™.
[WINDOWS-1252?]Ento-protein™ is intended to
provide a sustainable replacement to fish meal in fish, animal and human diets. The
final strategic phase of the [WINDOWS-1252?]Company’s mission involves the
utilization of its publicly traded vehicle to conduct a roll-up of the highly fragmented
aquaculture and distribution industries. The acquisition of other seafood related
businesses should allow the Company to expand, diversify, and integrate its technology in
the most efficient capacity.
CEOCFO: Mr. Papadoyianis, what was your vision when you
started Neptune and where you are today?
Mr. Papadoyianis: “Our vision when we started Neptune
was to create a diversified seafood business, much in the model of a Tyson Foods (NYSE:
TSN), who are vertically integrated from production, purchasing, distribution and value
added products. The business model in the seafood industry is very popular in Europe and
Southeast Asia, but virtually no one is doing it in the U.S. today in seafood. The
industry itself is fragmented in terms of product, i.e., production and/or catch from the
wild. Distribution and value added products are also pretty much segmented, therefore, we
see a very solid niche in that market.”
CEOCFO: Where you in the process of developing this model?
Mr. Papadoyianis: “We began with our production model
and we are producing hybrid Striped Bass for the industry right now, which is sold up and
down the eastern seaboard from Montreal down into the Caribbean. We are in the process
right now of bringing 2 patented technologies to market; one in biotechnology. It is a
nutritional component, a protein called Ento-protein™, which will be a fish meal
replacement for different animal diets, such as fish, cattle, poultry and hog. The other
technology is our Aqua-Sphere™; it is a patent pending technology, which is a
disruptive technology that we believe will replace the cages and net pens commonly used to
raise salmon and other fishes in the open ocean environment, as well as in cages and fresh
water. Our systems all utilize alternative energy and they are eco friendly in operation,
so we feel that we have a very strong niche in that area as well, bringing an eco friendly
technology to the industry.”
CEOCFO: Is the environmental side a separate part of your
model; a dual path that you are taking?
Mr. Papadoyianis: “It is definitely a dual path and it
is very integrated. The key buzzwords in our industry right now are sustainability and
eco-friendly. Many chefs and seafood proprietors look to see how the seafood is raised and
prepared now, particularly with farm-raised products, and that it is raised in an
eco-friendly manor. Legislation has also gotten very strict in terms of seafood
production, both discharge and permitting for off shore sites. They want to know that the
operations are in strict compliance in a non-pollutive manor. Therefore, we continue with
both our land base site and our future operations with our Aqua-Sphere™ technology to
make systems that are environmentally friendly and sustainable, so that they will be in
place and operating year after year in a non-polluting fashion. That is key to creating
quality seafood as well.”
CEOCFO: Tell us a little more about the new technology and
what you will be doing that is not being done before.
Mr. Papadoyianis: “Our Aqua-Sphere™ technology is
very unique; it is the world’s first articulated jointed tank. It is a solid
containment system, a floating tank, that floats in any existing body of water, such as a
quarry lake, pond, stream, estuary or even the open ocean. The technology was designed to
take advantage of existing resources for us here in South Florida, which would be our
quarry lake mines, for which we have tens of thousands of acres. What the technology does
is the tank has joints in it, so that when it is hit with a wave or wind, it actually has
a flexing capability, so that it can flex in an ovoid shape and return to its round shape.
The ability to utilize a tank for growing fish in a floating body of water does so many
positive things. First, it isolates the entire crop from the outside environment; one of
the huge problems that they have with net pen farms is outside predators that stress the
fish. They destroy the cages, rip them and allow escapism. With our system, there is a
solid wall there, the tanks are made out of fiberglass and also polyethylene, therefore,
the predators can’t see in, nor get into the system and the fish can’t see out
nor get out of the system. What it also allows us to do is to collect solid waste; all of
the waste that is generated by the fish goes to the bottom center of the tank and taken
out into a solid waste recovery system. It can then be disposed of or alternatively as we
would like to do, used to raise organically produced basil, other herbs and spices from
that waste. Therefore, it is a wonderful system that also runs on very low energy, so we
are using alternative energy such as solar, wind and wave energy. We are working in
conjunction with 2 other publicly traded companies in the alternative energy field right
now; one with solar energy and one with an autonomous wave generator that uses wave energy
to generate electricity. We are therefore well positioned to market our product in a
diversity of habitats.”
CEOCFO: What are the next steps?
Mr. Papadoyianis: “We have a prototype of our system
on-site right now and it should be going into the water within the next 2 weeks. We
anticipate within the next 90 to 120 days that we will have a market ready product, with
all the testing complete.”
CEOCFO: What is the financial picture for Neptune?
Mr. Papadoyianis: “We are just in the process of
completing a $2 million convertible debenture raise through Dawson James Securities. The
proceeds are going to accomplish 3 things; first, we are going to be doubling our
production at our Florida City farm, which is a land based farm. We are currently
producing about 300,000 pounds of hybrid Striped Bass a year; it is shipped fresh into the
seafood industry and we will be doubling that up to about 600,000 pounds. We will also be
bringing the Aqua-Sphere™ technology to a market ready status; and thirdly, we will
be utilizing our Aqua-Sphere™ technology to develop a quarry lake here in South
Florida to produce another ½ million pounds of product. Therefore, we anticipate at that
particular time it will be in a position with our revenues being at about $6 million per
year, to be able to enter onto the American stock exchange. In addition, we anticipate
doing a full fledge secondary offering in the neighborhood of 7 to $10 million to
facilitate further expansion and also diversification of our product line and our
technology through mergers and acquisitions.”
CEOCFO: Why did you start with Striped Bass and what might
you go to next?
Mr. Papadoyianis: “We actually didn’t start with
just Striped Bass; in the early stages we Neptune we ran 3 pilot operations in quarry
lakes in South Florida. We originally raised hybrid Striped Bass, we also had Channel
Catfish, Tilapia and we did Koi for the ornamental aquarium industry as well. In the third
operation, we also did Redfish, and what we found was that by the process of elimination
in the marketing that hybrid Striped Bass had a stronger gross margin on the product and
was at the very tip of a huge iceberg. This is because it is a relatively new product in
the seafood industry, and has probably been around for about 15 to 18 years. Therefore, we
are about where the Catfish farmers were about 25 years ago and in terms of penetrating
the market there is roughly 11½ million pounds of hybrid Striped Bass produced a year
verses almost 900 million pounds of Catfish produced. Hence, we are a very small sector of
the industry. We have a very high quality product that virtually sells itself. The demand
for our product eclipses our ability to supply right now by about 5 fold. In addition, we
have yet to use dollar one in marketing; all of our demand is all self generated.”
CEOCFO: You are looking to team up with various government
state and local entities as far as economic development opportunities; could you explain
that idea?
Mr. Papadoyianis: “Our operations are very synergistic
with a lot of the agriculture communities and we have had a chance to visit a number
around the country over the last 6 months. One in Southern Michigan, one in North
Carolina, which are communities that have suffered in different areas such as agricultural
trends, and certainly Michigan and the Mid-West with the automobile industry. They are
looking for synergistic industries to come in to create jobs in the area and export
products. Therefore, we are looking at several different sites, and to state and local
governments with regard to tax abatements and other incentives for us to go there and
produce product. We are looking at creating some multi-dimensional projects there to not
only produce fish, but also process, conduct fee-fishing operations and other businesses
such as restaurants. There is a synergy there as well.”
CEOCFO: As you start to market your Aqua-Sphere™ and
other products, will you need to add staff?
Mr. Papadoyianis: “Absolutely! We have a very good core
of employees at Neptune right now and we always like to hire from within as we just
recently promoted our Farm Manager to our Vice President of Operations. However, certainly
as we grow and diversify we will be needing qualified sales and marketing people to work
both domestically and on the international platform. We anticipate that the international
market is where most of our sales, joint ventures and licensing will take place. There is
a significantly greater number of farms, and demand for Aquaculture systems and technology
in the international marketplace as opposed to the United States right now.”
CEOCFO: Address potential investors; why is this a good time
to be interested and what do people tend to miss when they look at Neptune?
Mr. Papadoyianis: “You couldn’t ask for a better
time to invest in Neptune; we are clearly in a breakout stage right now. Our stock is very
suppressed with the volume being down and the price suppressed, which is not
representative of what the company is doing and where it is going. We also just had a
significant influx of capital through our raise, so we have the ability to execute our
business model, which has been an issue for over the last year and a half. We have not had
the capital to grow the business, so we have a very good partnership with Dawson James
Securities, our investment banker, which frees up our ability as the executive management
team to run, diversify and grow the company. This keeps us from having to wear two hats;
raising capital and running the company. Therefore, it is an excellent opportunity and we
anticipate that there will be significant growth in the company over the next 16 to 24
months and it’s an exciting time for us.”
CEOCFO: In closing, what should people take away from this
interview about Neptune?
Mr. Papadoyianis: “We are a unique industry in the United
States as well as worldwide, because we are not just a fish farming company. We are on the
verge of creating that new business model of being vertically integrated from production,
purchasing, distribution and value added products in the seafood markets. However, most
excitingly is we have technology to bring to the industry in a diversity of forms and with
the success of any one of those aspects of patent pending technology, there will be a huge
windfall for the company. There is a lot of opportunity as well in Neptune, because of the
fact that we are a public entity. We are on of only 2 public companies in our industry,
the Aquaculture industry in the United States and we are the only operating company.
Therefore, that affords us a number of key capabilities and one of which is to consolidate
a very fragmented industry.
There is about 3,000 fish farming operations domestically in the U.S., right now and all
of them are privately owned, so we anticipate conducting a consolidation over the next 2
to 5 years. This will allow us to diversify our product line, add other entities to our
business such as value added product and distribution and build our model from the ground
up through acquisitions rather than develop each segment on our own. We will as well be
perfectly positioned to enter the international marketplace. Our intension with our
technology is to be able to conduct licensing and joint ventures with international
partners to secure other product. For example, we can go to a joint venture partner in a
European country and provide the sales and marketing on the products raise, because we
will agree to take all of the product. It will give us an extra product that we know is
eco-friendly in nature, sustainable and sell it into the U.S. market. Therefore, it is a
win, win situation.”
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