Auric,
I thought you might find this of interest
Rob
Anyway, I visited the Food Tech plant this morning (02/24/99) and got a grand tour of
the facility by the plant manager. He was very helpful and
he answered a lot of questions which many of the Food Tech supporters have been
asking over the past several days. I was also very glad to hear
that many of my theories about Food Techs future and business plans were right on. The
nay- sayers appear to be missing the point on some
issues. It is definately an advantage living close to the company and visiting it first hand.
So I will try to recap my visit today including the answers
to many of the questions I asked him.
Plant Inspection: First, It was real exciting visiting the actual plant. At the time of
inspection, it appeared kind of dead, with very little activity going
on. However, I quickly discovered that there were several scientists or personal
performing experiments on different citrus fruits (mainly oranges)
for the USDA. The plant manager said they perform a tremendous amount of research
projects for numerous companies. He quickly followed up
though, that the company must usually sign confidentiality agreements with these
companies who are doing research at their facility but he did state
that many food companies and restaurants have done research at their plant.
The most exciting part of my visit was a tour of the radiation chamber. I actually got to
go inside where the cobalt 60 was and saw it with my own
eyes lying 10 feet below the surface of a pool of water. It was really strange to know
that I was within 15 feet of radioactive material which could
fry me in an instant if it was quickly lifted out of the protective pool. The manager stated
that only 3 feet of water is necessary to protect us but 10
feet is used for additional safety measures. The cobalt 60 rods had a continuous light
blue glow to them, it was real pretty but very lethal. I also
actually got to witness them irradiating some of the citrus.
Also, one other interesting note, there were blowers in the irradiation chamber. I ask the
plant manager about them and he says that they are used
to exhaust one of the by-products of the process which is O-zone. Get aload of that, we
acutally get O-zone as a by-product which actually helps
our atmosphere. Gee, its funny that the environmental groups don't talk about that, do
they. However, the only problem is that O-zone is heavy
and it would have to be captured, bottled up and flown near space to help the
atmosphere.
Question 1: How many employees does the facility currently employ? Ans: 9
Question 2: According to some of the internet messages, some people have stated that
the company is out of cash (working capital), if so, who is
funding the company?
Ans: Food Tech ran out of money months ago. I wasn't really surprised to hear this
because I kinda figured that Nordion was funding them. And
of course it was true, Nordion was supplying all of the monthly working capital to run
the company. However, the monthly expenses are not that
much, with 9 employees and all and they do have some clients which bring in some
money. Some of these clients include NASA, Church Street
Station (chicken), research projects, and some others.
Nordion really doesn't loose any "real" money. For example: If you look at the company
profile in Yahoo, there are currently around 10.1 million
shares of outstanding stock and Nordion currently owns around 6 million share they
obtained as debt payment for the equipment and cobalt 60
they supplied Food Tech. Nordion acquired that stock around $1.00/share. Given the
average price over the last few months of between
$2.50/share and $3.00/share and the most recent prices over $4.00/share to
$5.00/share, Nordion can easily sell some of its shares on a daily and
make $3.00 to $4.00 per share profit.
Only a very small fraction of them (lets say 10,000 to 30,000 shares) could be sold to
supply enough capital to run the plant for several month if
they sell those share around a minimal $4.00/share. At 10,000 shares, that would be a
$30,000 profit, at 30,000 share that would be a $90,000
profit! Ninety thousand dollars can go a long way with only 9 employees. Take it from
me, I run my own real estate appraisal company and
$90,000 can pay a lot of bills. There are plenty of shares and plenty of profit (especially
at the current market price) available thru the sale of stock
to run Food Tech for several years without Nordian ever putting a dime of their own
company money into Food Tech and still retain enough
shares to get most if not all of their initial investment back.
Some people have stated that they think that Nordian might fold the company, liquidate
the assets, sell the equipments as used or salvage value to
another user and get out. I personally and strongly don't believe this position and after
researching who Nordian is, I have a pretty good inclination
that they won't do this because of the type of company Nordion is. I personally did
some research in the Canadian trade associations and found
out that Nordian sponsers several prominent universities in Canada on food irradiation
research. Refer to Message #381 where I give the address
of an article about the University of Guelph and some of there research. You will see at
the end of the article that the project is sponsered by
Nordian International. Note that Nordian International is now called MDS Nordian,
refer to Message #390 for company location and corporate
history. If you want to contact MDS Nordion yourself, their corporate phone number is
(613) 592-2790 in Canada, ask for yourself.
Food Tech confirmed my beliefs. Nordion is a supporter of Food Tech and is also using
Food Tech as a research facility. The staff is pretty
adement that Nordion was in it for the long haul because they have been in the
irradiation business for many years and they also realize that the
process takes a long time considering all of the governmental regulations which must be
achieved. Nordion is currently going through the same
process in Canada and the meat associations in that country. They also wouldn't pull the
plug now because they are only within a month or two
from getting the final USDA approval for meat irradiation. It would be pretty stupid to
close the plant now after going through years of
governmental red tape to get this far in the approval process.
Another point is that, if you saw the plant, Nordian would not get that much in salvage
value if they closed the plant down considering the way it is
constructed. A lot of the cost is in the concrete structure which can't be moved. The
walls around the radiation chamber are 4 feet thick, top,
bottom, sides, the concrete cobalt 60 pool, building, etc., the structure is built like Fort
Knox. Based on the construction, it would be real difficult
to use the building for another type of use, even a warehouse, without substantial
retrofitting thus, the resale value of even the real estate would also
be extremely low. The only real salvage value would be the cobalt 60 and even that has
already gone through one of its half-life cycles which
happens about every 5.5 years. Food for thought - the current replacement cost of the
cobalt 60 within the Food Tech plant is around 4 million
dollars and the cobalt has already experienced one half-life cycle thus, the cobalt is not
as valuable as when first sold to Food Tech, we call that in
the real estate business as depreciation. That brings up another reason why Nordion
would not close the plant down.
They are in the business of selling irradiation equipment. It is in their best interest to help
Food Tech succeed. If they do, Nordion would supply all
of the equipment and cobalt 60 for all of the proposed plants around the country. The
cobalt alone is around $4mil per plant and needs to be
replaced periodically.
What about the cost of people transporting raw food materials to the plant in Mulberry,
wouldn't it be cost prohibited?
Ans: Again, the answer to this is obvious and I couldn't convince "Pluvia" on the
message board no matter how hard I tried.
No body would transport their product that kind of distance. There is more than enough
clients in the immediate area to run several plants at full
capacity. The plant manager stated that they would build plants around the country
because they have the knowledge, experience, and could even
train people. Nordion could supply all of the equipment and cobalt 60. Or even Food
Tech could actually build the plants for larger beef
companies like Hormel, Sara Lee, or others around the country and Food Tech can
train their personell. Either way Food Tech and Nordion
would win and you wouldn't have to transport the food any great distances. Note also
that the cost to irradiate is very cheap, the plant manager
said that the cost to irradiate chicken for example is between $0.02 to $0.03 per pound.
In my opinion, this is nominal and shouldn't have any
bearing on the cost to sell irradiated food products. In addition, for the $0.02 to
$0.03/pound cost, poultry would have an extended shelf life of an
additional whole week!
Give some examples of the increased shelf life for some foods?
Ans: The shelf life for chicken is extended one whole week, strawberries are two full
weeks, and mushrooms a whole month.
Lykes (Large Florida Meat Manufacture of Hot Dogs, Bacon, Bologna, cold cuts, most
process meats) Company is located in central Florida and
sell a large amount of processed meats. Could they be a prospective client?
Ans: Even though red meat will be approved very soon, processed meats with
perservatives and additives, and the key word here is
perservatives/additives, would not be allowed via government regulations to be
irradiated. Food Tech is currently working on obtaining
government approval to irradiate "process" meats like hot dogs and cold cuts. Isn't it
unbelievable the red tape. If they can get this, I personally feel
this would also be a big hurdle for them, especially in the overseas market. At this point,
we will have to wait for this for at least a little while.
Just for your knowledge, Food Tech was initially started or at least strongly encouraged
by the local strawberry growers in the central Florida
area. In case you did not know, central Florida is one of the world's largest strawberry
producing areas in the world next to California. The
strawberry farmers association at one time were going to try to market their
strawberries to overseas markets and the irradiation process would be
a big plus because it would extend shelf life for strawberries an additional two weeks.
However, after Food Tech was created, this idea was
abandoned by the local strawberry growers and they have since stuck to providing fresh
strawberries to the local area and grocery store chains.
Why don't the strawberry farmers use the irradiation process?
Ans: Obvious answer I didn't think of. Farmers actually benefit from not irradiating
strawberries because they wanted to keep the shelf life of their
product down which would force the grocery stores to buy more of their product more
frequently. This basically tells me then that the real market
is not the farmers or cattlemen but the wholesalers and retailers of food products.
1. VIFL doesn't have much going on. You must have enjoyed the echos that your
footsteps made while in the product warehouse (I also have
been to VIFL many times - even did some research there - gratus).
2. VIFL has no cash.
3. Nordian controls stock of VIFL.
4. Nordian sells irradiation equipment.
This supports my theory that Nordian will sell the facility at the right time. For now, they
are keeping their finger on the pulse of the industry by
controlling VIFL. Once demand for equipment picks up, they will not want to compete
with their customers, so they will fold VIFL and sell the
facility as an irradiator (not salvage value of parking lot).
I dont own VIFL and I'm not short (too little float). Just an informed opinion. There are
better irradiation plays than VIFL. My advise is to get
while the getting is good.
Regards.
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