Aqua Farming Tech Production and Progress Report

Writtern by Charlotte Luer

January 19, 2017

Aqua Farming Tech Production and Progress Report

Aqua Farming Tech is continuing to build its inventory of fish.  As of September of 2016, tilapia inventory was estimated to be 1,400,000. The spawning program during the fourth quarter of 2016 added another 1,000,000 newly hatched fish to the Thermal farm’s nursery tanks.

Aqua Farming Tech is absolutely committed to performing in full and satisfying every fish forward contract that is currently in place, however, due to unforeseen circumstances, there have been production delays. These delays have resulted in the necessity to postpone the fulfillment of the Company’s cash forward contractual obligations (both past due and coming due from now until May), to commence this June and continue monthly thereafter.

One of these unforeseen circumstances was the expectation of additional Financing that was anticipated to occur in 2016, and was delayed. This Financing delay, in turn, caused the postponement of important farm improvements that were forecast to increase production throughout the year, which would have enabled the Company to fulfill the fish forward contracts in the expected timeframe. One such postponed improvement to the farm is the implementation of an aeration technology that would greatly increase year round productive capacity and prevent seasonal overcrowding of fish, which inhibits growth. .As a result, the Company has been forced to make adjustments to its business plan, and is now diligently working with the existing resources to effectively increase its production of market size tilapia.

Production delays were also partly a result of a recent shift in consumer preference: historically the market size of tilapia for the California Asian market was one pound per fish; during the previous 12 months, Aqua Farming Tech discovered that the Asian consumer preference has shifted to preferring tilapia 1.2 to 1.5 pounds in size. Growing our tilapia to a larger size requires more time and cost but of course the product is sold by the pound, so the amount of received will increase.

The farm’s program of manufacturing its own feed is yielding the objective result of cutting feed cost while maintaining feed nutrition. In furtherance of this goal, during the second and third quarters of 2016, Aqua Farming Tech harvested an estimated 1,000,000 Moringa seeds which will be utilized to plant 10 acres of organic certified acreage on its Thermal farm.  This harvest will provide a continuous supply of Moringa for inclusion in the Company’s manufactured fish feed (which lowers feed cost and improves feed nutrition).

The Moringa based feed has already generated excellent results with our tilapia and during the third quarter of 2017.  Following a steady diet of feed that contains as much as 30% Moringa, we intend to have the quality of our tilapia meat tested to determine the effect of Moringa in the fish’s diet. Moringa contains among many other nutritional factors omega-3, omega-6 and omega-9, and farm management believes that nutritional value of our farm’s fish will be correspondingly increased.

Consequently, we anticipate that this could be an important selling point in the premium market.

Once the Company receives its expected financing, a number of additional improvements to the farm will be undertaken that will have a direct effect of increasing tilapia production and maximizing the price and profit of tilapia sold.  Such farm improvements will include aeration, water quality instrumentation, fish genetics, additional netting, additional Moringa cultivation and additional marketing.

We look forward to a profitable 2017 and we will keep you informed as to the farm’s progress.

Sincerely,

Rocky French, President