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 GENERAL SEAFOOD COMPETITIVE OVERVIEW
Market Overview and Outlook
Edgewater has little or no direct competition in the farming of scallops. The primary British Columbia participants in scallop farming are Island Scallops joint venture farmers or independent scallop farmers who receive their supply of seed scallops and juvenile sablefish solely from ISL. The Company is also working to develop partnerships with First Nations groups and joint ventures on potential farm sites on First Nation owned lands, providing additional growing area and future joint venture revenues. With the expansion of the Company's infrastructure and farming capacity, Edgewater Foods plans to continue to build on new distribution relationships and enter additional global markets.
According to 2006 statistics from the Food and Agriculture Organization of the United Nations, aquaculture is the fastest growing food production sector in the world, averaging a compounded rate of 9.2% per year since the 1970s. Globally there is a shift from wild capture fisheries to aquaculture to meet the growing demand for seafood. Current U.S. consumption of scallops is 1.5 billion to 2.0 billion scallops per year.
General Industry Analysis
ISL is in the farmed seafood business. The main concentration of marine farming in British Columbia has traditionally been in the salmon sector. The salmon farming business has developed into a mature industry dominated by Norwegian farmers. Due to the world oversupply of farmed salmon, this industry has become very competitive, with pricing near the break-even level. The rest of the BC marine farming sector is in the shellfish industry, mainly in oysters and Manila clams and more recently mussels. Although this sector is rapidly expanding, it accounted for approximately US$16 million in British Columbia in 2002. Given ISL's expertise and significant research and development experience, management believes that there is little or no direct competition in the farming of scallops or farmed sablefish.
Competitive Advantage
Edgewater Foods has no known direct competitors in the scallop farming business in British Columbia. Because the United States prohibits the farming of this species in their waters, North America has traditionally relied on Chinese imports to fill the void. U.S. and Canadian Food Inspection Authorities, however, have curtailed Chinese imports due to high levels of pollution. Island Scallops operates the only hatchery outside of China that has successfully produced significant quantities of the Japanese Scallop. The Company's proprietary Pacific scallop is a hybrid of the Japanese scallop and the local weathervane scallop and is one of the largest scallops in the world.
As the only producer of culture Pacific scallops on the West Coast of North America, ISL can supply fresh scallops of predictable quality and quantity throughout the year. Unlike the vast majority of scallops entering the U.S. market that are chemically treated to maintain viability during shipping, the company can deliver additive-free, natural, fresh scallops to all major West Coast cities within 24 hours.
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 SCALLOPS BLACKCOD GENERAL FISHERIES  COMPETITIVE OVERVIEW |
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