Research, Report & Profiling Services by IPOdesktop.com US Farms, Inc. (USFI.OB)

Stock symbol: USFI.OB……………….………………………………..Float: 2.3mm(est)

Stock price 12/13/06: $.50……..…………..…….Common shares (12/13/04: 14.5 est)

52-week price range: $.30 - $.85.…..…………Equity market capitalization: $7.25mm

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BUSINESS

. USFI is an operator of commercial nurseries and farms in North America, for the production and distribution of horticultural products through a number of subsidiaries.

. USFI’s horticultural products are sold through supermarkets, home centers, retail merchandisers, garden centers, re-wholesalers, and landscapers throughout the United States and Canada. . Through internal growth, consolidating supply agreements with growers, and strategic acquisitions USFI is expanding its market share in the farming and nursery space.

Q1 MANAGEMENT GUIDANCE

Q1, March 2007

. USFI expects Q1 sales to be in the range of $2.5 million and

. Expects a profit with a positive cash-flow. . Q1 will only be the second full quarter with all of USFI’s new business activities integrated and fully operational. USFI product summary

. Asparagus comes out of the ground in early January and USFI management expects it to produce $1.5 -1.7 million in Q1 revenues.

. Wheatgrass racks are expected to be delivered in Q-1, which will initiate USFI Wheatgrass sales, into what management estimates is a $25 million juice wheatgrass market. Wheatgrass has expanded from juice shops into other markets, including the pet market.

. Aloe Produce and Aloe Plant Sales are expected to be strong in Q-1, because ‘first of the year’ customers are fairly aggressive in placing orders for the new year. Also, East coast sales are expected to increase as cold weather wind burns and bad weather creates a demand for the skin application of Aloe, through a USFI customer.

. USFI is capitalized to expand growth with its Aloe operations.

. USFI will be expanding plant production in the first quarter of '07, to include Jade, Palm Trees, Cycads, Aloe.

Imperial Ethanol (USFI wholly owned subsidiary)

USFI’s Ethanol Subsidiary, will have its completed feasibility study with BBI International, the leading Ethanol feasibility consulting firm, by late January 2007. A favorable outcome from BBI will lead US Farms to apply for a permit to operate an Ethanol Plant in the Imperial Valley.

. US Farms will aggressively seek debt/equity financing in Q-1 '07 to fund its Imperial Ethanol Subsidiary to build its plant after the feasibility study is complete.

Acquisitions

. USFI is aggressively seeking to close on additional Nursery properties in Southern Cal in Q-1. These are purchase and or leases options that will increase its nursery facilities by more 200%. Newly acquired leases will have an immediate impact on increasing inventories and

production.

. USFI has a pipeline of acquisitions and lease options available to close.

MANAGEMENT REVENUE GUIDANCE

. 2007 $12.4 million

. 2008 $27.8 million

. 2009 $54 million

See GROWTH PLAN below

Does not include potential Ethanol operations

POTENTIAL MARKET CAPITALIZATION

. Based on management’s guidance discussed above, which is Q1 revenue of $2.5 million, profits, positive cash flow, and a rapid ramp-up in sales in succeeding years

. And given the stock market’s current hunger for new companies that show top line revenue growth with cash flow positive profits,

. A base market capitalization of valuation of $9 million seem reasonable, assuming USFI continues to show cash flow positive profits and yearly sales increases.

. Because the industry is fragmented, and because USFI uniquely appears on track to establishing a success pattern of consolidating profitable operations, signing new grower agreements and providing an public exit strategy for smaller operations on a roll-up basis, it also seems reasonable to assign a premium at the current time of $4 million to account for expected integration of smaller operations on an acquisition basis.

. Regarding the Ethanol operation: it is currently in the feasibility study stage and we cannot assign a value to that effort. However, if the feasibility study is positive and Ethanol plant permitting begins, then it seems reasonable that a significant market capitalization expansion could occur for USFI.

. With 14.5 million shares currently outstanding, it seems reasonable given the above assumptions, a per share value could approach $.90 in Q1, not including the potential Ethanol plant operations.

THREE CURRENT OPERATING SUBSIDIARIES

(% of total 2007 projected revenue & projected 2007 revenue)

. California Produce Exchange (CPE): 59%, $7.4mm

. American Aloe Vera Growers (AAVG): 18%, $2.2mm

. American Nursery Exchange (ANE): 23%, $2.8mm

IMPERIAL ETHANOL sub in process

. USFI plans to initially construct a 50 million gallon per year (MGY) Ethanol facility

. With capabilities of expanding to double the production or 100 million gallons a year.

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Address: 1635 Rosecrans Street, Suite D, San Diego, CA 92106

Telephone: : 858-488-7775, Fax: 858-488-2828

President: Yan K. Skwara

Web Site: http://www.usfarmsinc.com

State or other jurisdiction of incorporation or organization: NV

Transfer Agent: Holladay Stock Transfer

Investor contact: Yan K. Skwara, Tel: 858-488-7775, investor.relations@usfarmsinc.com

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MARKETS

Agriculture

. According to Economic Research Service of the U.S. Department of Agriculture, the nursery and greenhouse industry comprises the fastest growing segment of U.S. agriculture. Of the estimated $45 billion in U.S. agriculture sales in 2003, floral and nursery crops contributed a third, totaling $15 billion.

. Asparagus is over a $125 million dollar industry in California. Leading California asparagus production counties are San Joaquin, Imperial, Monterey, and Santa Barbara 70-80% of the United States domestic supply of fresh asparagus is grown in California.

. Southern California is an Aloe Vera hotbed; providing the best weather conditions for growing Aloe Vera, floral and nursery crops.

Ethanol

. By 2010, U.S. Ethanol production could displace the equivalent of 311,000 barrels of imported crude oil per day—more than one large oil tanker per week.

. Ethanol production in the U.S. hit a record 3.904 billion gallons in 2005—up 139 percent from 2000.

OPERATING SUBSIDIARIES, largest projected 2007 revenue first

California Produce Exchange, Inc (CPE)

expects $7.4mm in 2007 revenue

USFI management is moving aggressively to expand its crop brokering business.

. California Produce Exchange, through a contract growing agreement, will be one of the largest domestic growers of Asparagus in Q1-2007.

. In addition, management is in final negotiations with a mid-sized contract tomato grower which will provide immediate market share in both the fresh market tomatoes and bulk tomatoes which are processed for products such as paste, sauce, salsa, catsup, and juice.

. And USFI management is currently in negotiations for the purchase of a contract tomato grower in this industry.

Market trends

The fresh produce market has changed markedly over the last 15 years.

. Shifts in consumer demand, technological change in production and marketing, and retail consolidation have altered the traditional market relationships between producers, wholesalers, and retailers.

. Consumers are eating more fresh produce, purchasing a wider variety year-round, and demanding more convenience, like bagged salads.

. Information technology has introduced efficiencies throughout the supply chain, reducing production and marketing costs. Retail consolidation has occurred rapidly as large supermarket firms have merged or been acquired.

. Mass merchandisers and warehouse club retailers are selling an increasing volume of food products with low-price strategies.

. Fresh fruits and vegetables sold to restaurants, fast-food outlets, and other foodservice operators have grown to account for more than half of all retail produce sales.

• Fresh Market Asparagus

. CPE will be a major player in the Asparagus market during the first quarter of 2007 with projected revenues topping $1.5 million.

. The Favorable climate in the Imperial Valley enables US Farms to be one of the only capable growers of Asparagus in the US for this time frame.

. Seventy to Eighty percent of the United States domestic supply of fresh asparagus is grown in California. Statewide the harvest season is from January 15 to June 30. Early season asparagus is harvested in Imperial Co. and the harvest moves north as the weather warms in the spring. Asparagus fields are harvested by hand every 1 to 3 days depending on how quickly marketable sized spears are emerging, a function of soil and air temperature.

. Leading California asparagus production counties are San Joaquin, Imperial, Monterey, and Santa Barbara. Asparagus is over a 125 million dollar industry in California.

• Fresh Market Tomatoes

The farm value of production for fresh vegetables edged up 1 percent to $9.8 billion with tomatoes as the top fresh-market crop in terms of farm value at $1.6 billion.

. Florida and California are the top two fresh-tomato producing states in the United States, together comprising over two-thirds of total U.S. fresh tomato acreage.

. In California, fresh tomatoes are grown in several counties during all seasons except winter. San Diego County is the leading producer in the spring and fall, while Fresno County dominates summer production.

. Per capita consumption of fresh tomatoes has been increasing in recent years. Average annual per capita consumption in 1981 was 12.3 pounds and has steadily increased to approximately 20.0 pounds in 2005.

. Part of the increase in consumption has been due to the increasing popularity of fresh market tomato use in salads and sandwiches, improved varieties, as well as a growing population of immigrants with preferences for high vegetable diets. Tomatoes have also been marketed as a nutritional food, being promoted as a good source of Vitamin C, Vitamin A, and antioxidants. Tomatoes have also been promoted as a possible preventative against specific cancers.

• Processed Tomatoes

-The single largest processing vegetable, U.S. tomato processors had been expecting to utilize at least 11.9 million tons of tomatoes to produce products such as paste, sauce, salsa, catsup, and juice.

. Processors are considering packing a larger tomato crop in 2006 due to smaller international and domestic stocks and stronger wholesale prices for tomato products.

. U.S. domestic tomato product demand remains strong and according to preliminary USDA Economic Research Service estimates, per capita use of processing tomatoes during calendar year 2005 likely increased for the fourth consecutive year following the low reached in 2001.

• Additional Brokered Products

CPE will continue to expand its brokered produce product selection as market opportunities present themselves.

Planting acreage trends

. California, which accounted for 46 percent of this year’s summer-season vegetable area (about the same as a year earlier), reduced it’s acreage 1 percent.

. New York, the second-leading summer-season producer, with 17 percent of fresh-market vegetable acreage, expects to harvest 4 percent more area than a year ago, largely because of strong increases in snap bean and cabbage areas.

. Michigan, the third-leading summer fresh vegetable state in terms of area, expects to harvest 13 percent fewer acres this summer. Despite generally higher prices a year ago and favorable weather this spring, growers in Michigan reduced area for most fresh-market vegetables, including sweet corn.

Consolidation

These marketing channels have undergone considerable change since the late 1980s.

. Prior to 1987, fresh fruit and vegetable markets were more fragmented; most transactions took place between produce grower-shippers and wholesalers on a day-to-day basis, based on fluctuating market prices and quality levels.

. Today, a typical produce sale may take place between a multi-product grower-shipper and a large supermarket retailer under a standing agreement or contract specifying various conditions and terms, including marketing services provided by the grower- shipper, volume discounts, and other price adjustments and quality specifications.

. Changes in these marketing services coincided with the growth of value-added and consumer-branded products, increasing variety, consolidation of food wholesalers and retailers, the expansion of the foodservice sector, and the greater role of produce imports and year-round supply.

Competition

The competitive landscape for produce in California is highly fragmented with a number of large players, which include:

• Melissa's/World Variety Produce, Inc.

Established in 1984, currently the largest distributor of specialty produce in the United States, with over 800 items available at any given time. Melissa’s imports and distributes exotic fresh fruits and vegetables from around the globe. Products are marketed under specially-developed brand names: Melissa's®, Don Enrique®, Rookies®, and Jo-San® brands.

• Fridas, Inc.

Based in Los Alamitos, California, Frieda's has 125 employees and maintains an 85,000- square-foot warehouse for supplying retailers and food service distributors throughout the U.S. and Canada. Currently, the company supplies grocery retailers, wholesalers and food service distributors with more than 500 different items through our branded lines: Frieda's®, Cocina de Frieda's®, Asian Specialties™, and Vegetarian Solutions™.

Facilities & Operations

. With efficiency and economics in mind, American Nursery Exchange and California Produce Exchange will share a cross-docking facility.

. This facility will house the sales and distribution operations for both entities which will facilitate combo shipments of produce and nursery products reducing overall freight costs.

. The warehouse will have a cooler for fresh produce and will support quick turnaround packing and shipping operations.

American Aloe Vera Growers, Inc.

expects $2.2mm in 2007 revenue with a 38% gross margin,

increasing to 50% in subsequent years

. American Aloe Vera Growers is one of the largest growers and suppliers of domestic Aloe Vera. . This USFI subsidiary grows, packs, and ships Aloe Vera Plants, Aloe Vera Produce, and Bulk Aloe Vera Leaves to many brokers, re-wholesalers and direct to many major retailers throughout the United States and Canada.

. Facilities are dedicated to Aloe Vera production, which has enabled this subsidiary to be the leader in Aloe Vera in North America.

Customers

. Albertsons’, Ralphs, Vons, Kroger, Sfaeway, Acme

. Brokered national customers: The Home Depot, WholeFoods, Loew’s, Target, Trader Joe’s

. Potential national customers: Kmart, WalMart

Aloe markets & products

. Based upon the latest research by the International Aloe Science Council (IASC), the market for Aloe and products containing Aloe is in excess of $10 billion (at retail). The vast majority of these sales are for products in the cosmeceutical and nutraceutical industries.

. The focus is on growing Aloe Barbadensis Miller, which is the only recognized "Medicine Plant." Management believes it has opportunities to create a leading position with Aloe Vera in the United States, based the unmatched quality of Aloe product grown in Southern California, the geographic position of available farms and nurseries in the area, and the high level experience of the Company’s management team.

. American Aloe Vera Growers utilizes both in-house sales representatives and independent brokers to market the company’s products. The current product mix includes:

The Aloe Plant

. The semi-tropical plant, Aloe Vera, has a long and illustrious history dating from biblical times. It has been mentioned throughout recorded history and given a high ranking as an all-purpose herbal plant.

. There are over 250 species of Aloe grown around the world. However, only two species are grown today commercially, with Aloe barbadensis Miller and Aloe aborescens being the most popular.

. Aloe's thick, tapered, spiny leaves grow from a short stalk near ground level. It is not a cactus, but a member of the lily family, known as Aloe barbadensis. Aloe is related to other members of the Lily family such as the onion, garlic, asparagus and turnip families.

. Aloe's relationship to the lily family is evident from the tubular yellow flowers produced annually in the Spring that resemble those of the Easter lily. The native Aloe Vera plant gets its remarkable therapeutic properties from more than 200 biologically active compounds.

. The Aloe plant is grown in warm tropical areas and cannot survive freezing temperatures. In the United States, most of the Aloe is grown in the Rio Grande Valley of South Texas, Florida and Southern California.

. Internationally, Aloe can be found in Mexico, the Pacific Rim countries, India, South America, Central America, the Caribbean, Australia and Africa.

• Potted Aloe Plants

Management believes it is the largest player in this category and has determined that this segment alone could be $20-30 million annually at the wholesale level. The competition in this category consists of small mom and pop nurseries selling to local retailers.

. Houseplants are potted in 3", 4" & 6" containers. Baby plants (pups) are picked on the farm from the mother plant and planted in containers at the Nursery. It takes about 45-60 days for the pup plants to take root and be made saleable.

. Plants are sold directly through large regional customers and brokered to other regional and national customers.

• Premium Produce

Management believes it is the largest player in this category and has determined that this segment could be $10-20 million annually at the wholesale level. Texas growers are the main competition but do not provide a consistent; well packaged product.

. Aloe leaves are hand picked from the mother plants at our farm then cleaned, packaged and transported to market within days

. The Aloe leaf is in demand by the Asian and Hispanic populations.

. The Aloe produce is sold mostly though brokers and regional distributors.

• Bulk Leaf

The International Aloe Science Council puts the bulk leaf market at $125 million. The main competition for bulk leaf is small growers from both Mexico and Texas.

. Aloe leaves are hand picked from the mother plants at the farm and sent directly to the end customer by the ton.

. The largest customer uses Aloe products as a main raw material for their liquid dietary supplement.

. Management is currently engaged in talks with several companies to significantly increase sales volume

Aloe growing & production facilities

American Aloe Vera Growers, Inc. currently has 600,000 Aloe plants growing on 150 acres in Imperial Valley, California

. As growth and market opportunities continue to increase, the company has the ability to quickly increase existing farming operations.

. Nursery operations consists of a 100,000 square feet in 5 greenhouses in San Diego County, California. Current potted plant inventory stands at 125,000 units with a plant capacity of 400,000 units.

American Nursery Exchange, Inc (ANE)

expects $2.8mm in 2007 revenue, with a 40% gross margin in 2007

The nursery operations are currently running well under 10% of capacity which is expected to improve to 80+% by 2009

. American Nursery Exchange is also a wholly owned subsidiary of US Farms, Inc.

. ANE is in the business of supplying horticulture products, including select ANE branded ornamental shrubs, color plants and container-grown plants to the grocery, garden center and home improvement industries on a national level.

. ANE currently sells products via mail order but intends to create a direct sales force to market its future offerings to retail and commercial customers throughout the United States and Canada. . Management believes that the current sales relationships cultivated through American Aloe Vera Growers will allow for immediate market entry and acceptance.

. The ANE division has leased its first facility located in North County San Diego, California, a 100,000 sq. ft. green house facility along with a 10,000 sq. ft. warehouse which will be used for growing as well as staging orders for its customers.

Market & trends

. Sales of nursery products have been positively affected by societal and demographic trends, such as greater levels of homeownership, the aging of the American population and the increasing popularity of gardening.

. Recent trends in the retail distribution channel, such as the expansion of large "big box" retailers and their growing emphasis on the lawn and garden category, have increased consumer exposure to lawn and garden products. Management believes these trends will favorably impact USFI and provide excellent opportunities for growth.

. Domestic floriculture purchases reached $6.2 billion in 2005, which translates to an average $56 of floriculture crops sold at wholesale to each U.S. household. The share of imports in floriculture consumption remains at 14.1 percent, which is lower than the 16.2 percent a decade ago. The fastest growing crop group was potted foliage plants for indoor or patio use, increasing over 5 percent in 2005 and has averaged 5 percent since 2003.

. Sales of flowering plants in pots climbed 1 percent in 2005 to almost $809 million. Potted foliage plants expanded 7 percent in sales to $652.1 million, but foliage hanging baskets dropped 10 percent in sales to $68.9 million. Potted flowering plant sales’ gains in 2005 are attributed largely to orchids, which closed in on $144 million in sales, up from $129 million in 2004. Orchids are the fastest-growing potted flowering plant, more than tripling sales of $47 million a decade ago. While poinsettias remain the biggest seller at $242.3 million in 2005, sales were down 2 percent from 2004 and fell farther below their peak of $255.3 million in 2001. Imports of poinsettias, largely shipped from Canada, were more than $6 million in 2005, but were down from $10.4 million in 2002.

ANE product focus

• Boston Ferns

A species of fern in the family Davalliaceae native to tropical regions throughout the world. The Boston fern is a very popular house plant, often grown in hanging baskets or similar conditions. In general, the Boston Fern likes damp, but not soggy soil that is rich in nutrients. Of the common cultivated ferns, the Boston Fern is the most tolerant to drought. Projected market size is $3-7 million annually at the wholesale level. This product will be grown in the greenhouses of the AAVG facility along with the Aloe plants.

• Jade

Commonly known as jade plant or friendship tree is a succulent plant that sometimes has small pink or white flowers. Jade plants are popular as houseplants around the world. They are propagated by stem or leaf cuttings. As succulents, they require very little water in the summer, and none in the winter, and will grow in full sun to light shade. Projected market size is $5-10 million annually at the wholesale level. This product will be grown in a contracted 14 acre frost free facility which can be expanded as volume dictates.

• Exotic Palms/Cycads

Although once abundant across the globe, cycads are now greatly reduced in both numbers and distribution. There are now about 250 species in 11 genera, compared to possibly 300,000 species of flowering plants, the group that now dominates the world vegetation. All cycads are tropical or subtropical and each genus has a restricted geographical range. These rare varieties will be sold directly to interior landscapers, hotels and high end retail establishments.

• Wheat Grass

. Wheatgrass juice is considered one of nature's most nutrient rich plants and has demonstrated exceptional health promoting and healing qualities. Wheatgrass is consumed in one form or another by thousands of Americans and animals across the US on a daily basis. Everything from selling wheatgrass shoots to health consumers to offering different natural juices that have Wheatgrass mixed into the juice blend are some of the many uses for Wheatgrass today. Additionally, the pet market has become a very large market for Wheatgrass. With the above in mind, USFI continues to be committed to consistently providing safe, high quality fresh fruit, and vegetables, while protecting the environment in which its products are grown. "

. Also, Wheatgrass is a plant and or crop that is grown in small pots and flats that can be grown at USFI’s nursery location in Valley Center, Ca and only takes 7-10 days to grow before it is ready be shipped out the door to customers. The turn around time is very fast.

. With this in mind, USFI anticipates selling Wheatgrass to customers in the fourth quarter of 2006 into 2007, because many Aloe Vera and Asparagus customers also need of quality Wheatgrass for their customers.

. USFI estimates that the fresh juice and smoothie market for Wheatgrass is over a 10 Million dollar a year business, that USFI is attacking on a niche basis, by providing better quality and faster delivery for Wheatgrass.

• Mail Order/Web

Initially the Company will provide contract packing & shipping services for a third party mail order customer. By 2008, ANE will enter this market directly.

• Additional Brokered Products

ANE will continue to expand its brokered product selection as market opportunities present themselves.

Production trends

The production of floral and nursery crops in the United States is increasingly a capital-intensive industry. Two major industry trends are behind the shift.

. First, the growth of mass-market sales in big discount stores and supermarkets is encouraging crop specialization and price competition among growers. Fewer crop varieties are grown in larger quantities. Thus, more automated and year-round production in greenhouses is required. High-priced land closer to urban areas dictates space-intensive production. U.S. growers also outsource or import some production components, such as unrooted seedlings or plant cuttings from foreign producers in Central America and Mexico.

. Second, contract production, growers switching to floriculture from more traditional agricultural commodities, and imports are also shaping the U.S. floral industry. Many former tobacco farmers in the Southeast have contracts to produce floral crops for large retailers such as Home Depot and Wal-Mart. Other farms are switching from vegetable and livestock production to higher value ornamental crops. In addition, imports of poinsettias and other flowering plants are rising as retailers contract with foreign growers in Canada, Mexico, and Costa Rica. More U.S. companies also invest in or purchase flower farms in South America to supply the U.S. market.

Competition – the large getting larger

. The total number of U.S. floriculture crop growers declined in 2005 for the third consecutive year. The number of large growers with annual floriculture sales of $100,000 or more were 4,412 in 2005, the fewest since the survey of 36 major States began in 1992.

. Sales per large grower exceeded $1.15 million on average in 2005, almost twice the revenue in 1992. California still leads the industry in floriculture sales with $1 billion, followed closely by Florida with $976 million in 2005.

. According to the U.S. Department of Agriculture's National Agricultural Statistics Service, the nursery business is comprised of approximately 60,000 primarily small and regionally based growers. ANE’s large competitors are:

• Hines Horticulture

Hines Horticulture, Inc., through its wholly owned subsidiaries, engages in the production and distribution of horticultural products. The company supplies various ornamental shrubs, color plants, and container-grown plants with 13 nursery facilities located in Arizona, California, Florida, Georgia, New York, Oregon, Pennsylvania, South Carolina, and Texas. It produces approximately 5,700 varieties of ornamental shrubs and color plants. Hines Horticulture sells its products to home centers, mass merchandisers, independent garden centers, garden center chains, rewholesalers, and landscapers in the United States and Canada.

• Nurserymen’s Exchange

Founded more than 60 years ago, Nurserymen’s Exchange has grown into one of America’s largest Wholesale Home and Garden companies. Nurserymen’s Exchange has operations in California, Florida and Hong Kong.

• Monrovia

Produces more than 2,200 varieties of perennials, conifers, woody ornamentals, shrubs, trees, citrus, camellias, rhododendrons, vines, ferns, grasses and topiaries. For 80 years, the company has focused on growing their Distinctively Better®plants brand. In peak season, the company employs more than 2,000 workers in six growing locations. Monrovia is headquartered in Azusa, California, just east of Los Angeles, and operates nurseries in California, Oregon, Ohio, North Carolina and Georgia.

• Color Spot Nurseries

Sells to more than 2000 retail and commercial customers in the Western and Southwestern United States. The wholesale nursery distributes bedding plants, vegetables, herbs, shrubs, premium blooming plants, ground cover, and ornamentals. Color Spot also provides in-store merchandising, product displays, promotional planning, and product reordering services to customers such as Home Depot, Lowes, K-Mart, Rite-Aid, Wal Mart, Target, Kroger, Orchard Supply, Home Base, and many more. Color Spot operates 10 production facilities throughout

California and Texas.

GROWTH PLAN by subsidiary

in the order of highest gross profit first

AAVG Revenue

Potted Aloe Vera Plants-which are potted in 3", 4" & 6" for houseplants.

Management believes it is the largest player in this category and has determined that this segment alone could be $20-30 million annually at the wholesale level. The competition in this category consists of small mom and pop nurseries selling to local retailers.

• 2007-Finished goods inventory is at 80% capacity and the harvesting and cash flow issues have been addressed. Several large national retailers (WalMart and Kmart) are negotiating regional programs during this calendar year.

• 2008-The large national chains roll out the potted aloe plant program throughout the US.

• 2009-The Company achieves a projected 20-25% market share in the potted aloe plant market and has expanded reach to mid tier retailers.

Premium Produce

Management believes it is the largest player in this category and has determined that this segment could be $10-20 million annually at the wholesale level. Texas growers are the main competition for USIF’s produce but do not provide a consistent; well packaged product.

• 2007-New aloe fields are operational and harvesting and cash flow issues have been addressed. The Company is expanding distribution through large national brokerages.

• 2008-The Company rolls out product to nationally direct to targeted grocery stores.

• 2009-The Company achieves a projected 20-30% market share in the premium produce market and a targeted national reach.

Bulk Leaf

• 2007-New Aloe fields are operational and harvesting and cash flow issues have been addressed. Limited growth is expected this calendar year.

• 2008-Sales and marketing efforts in 2007 land several medium to large nutrition/cosmetic companies which enter into significant bulk purchase agreements.

• 2009-The Company achieves a projected 1-2% market share in the bulk aloe leaf market as the first international export agreements are reached.

Direct costs by Aloe product line

• Potted Aloe, 45%

• Produce, 39%

• Bulk Leaf , 43%

The single largest operating expense is commissions, about 12% of sales. Sales reps are on a

100% commission based structure.

American Nursery Exchange Revenue

Boston Ferns

• 2007-The Company is entering this business in 2007 and expects Revenues to start in Q3. Initial customers will be at local retail nurseries and home garden centers.

• 2008-Operations are at 25% capacity and the sales and marketing focus is on regional garden centers and retailers.

• 2009-The Company achieves a projected 5-10% market share in the Boston Fern market and is starting to expand reach to national retail channels.

Jade

• 2007-The Company is entering this business in 2007 and expect Revenues to start in Q2. Initial customers will be at local retail nurseries and home garden centers.

• 2008-Operations are at 25% capacity and the sales and marketing focus is on regional garden centers and retailers.

• 2009-The Company achieves a projected 25-50% market share in the Jade plant market and is starting to expand reach to national retail channels.

Exotic Palms/Cycads

• 2006-The Company is negotiating a purchase agreement with a Cycad nursery operator and expects to close in late 2006. 2006 activity is minimal.

• 2007-The Company expects to begin marketing to high end interior landscapers in San Diego, Las Vegas and Los Angeles.

• 2008-The Company solidifies its regional presence and begins marketing efforts in Arizona and Northern CA.

• 2009-Sales and marketing efforts and the client base built in 2007 & 2008 enable the Company to expand further into the Southwest and Northwest.

Wheatgrass

. Wheatgrass is a plant and or crop that is grown in small pots and flats that can be grown at USFI’s nursery location in Valley Center, Ca and only takes 7-10 days to grow before it is ready be shipped out the door to customers. The turn around time is very fast.

. With this in mind, USFI anticipates selling Wheatgrass to customers in the fourth quarter of 2006 into 2007, because many Aloe Vera and Asparagus customers also need of quality Wheatgrass for their customers.

Mail Order/Web

Initially the Company will provide contract packing & shipping services for a third party mail order customer. By 2008, ANE will enter this market directly.

• 2007-The Company expects to redesign its web site/direct marketing materials and add growers to its client base for a late year internet marketing campaign.

• 2008-Sales expand and more growers are added to the Company’s list of clients.

• 2009-Repeat customers, internet advertising and word of mouth double the business with very little infrastructure requirements.

Additional Brokered Products

ANE will continue to expand its brokered product selection as market opportunities present themselves.

• 2007-The Company is aggressively pursuing small regional growers to broker their products through the Company’s existing sales channels.

• 2008-The Company lands several large west coast growers and has regional garden centers and retailers as end customers.

• 2009-Management is starting to expand reach to national retail channels and is adding growers throughout the US as suppliers.

Direct cost

• Boston Ferns, 36%

• Jade, 40%

• Exotic Palms/Cycads, 83%

• Mail Order/Web, 85%

• Additional Brokered Products, 87%

CALIFORNIA PRODUCE EXCHANGE

Fresh Market Asparagus

• 2006-Growing agreement signed for 2007 asparagus delivery.

• 2007-Asparagus harvest and delivery in Q1-Q2. Expected signing of 2008 asparagus growing contract Q3.

• 2008-Multiple growing agreements for 2009 expected.

• 2009-Company becomes largest asparagus grower in CA.

Fresh Market Tomatoes

• 2006-Growing agreement final negotiations.

• 2007-Expected signing of growing agreement in Q1, tomato delivery targeted for Q2-Q4 and 2008 growing agreement signed in Q4.

• 2008-Multiple growing agreements for 2009 expected.

• 2009-Company becomes large regional tomato grower.

Processed Tomatoes

• 2007-Q2-Q3 contract reached for 2008 tomato delivery for large CA processor.

• 2008-Multiple CA processor agreements for 2009 expected.

• 2009-Company becomes largest regional tomato supplier to CA processors.

Additional Brokered Products

CPE will continue to expand its brokered produce product selection as market opportunities present themselves.

• 2007-The Company is aggressively pursuing regional growers to broker their products through the Company’s existing sales channels.

• 2008-The Company lands several large west coast growers.

• 2009-Management is starting to expand reach to national retail channels and is adding growers throughout the US as suppliers.

Seasonality

USFI’s business is highly seasonal. The seasonal nature of operations results in a significant increase in working capital between the growing and selling cycles. As a result, operating activities in the first and fourth quarters use significant amounts of cash, and in contrast, operating activities in the second and third quarters historically have generated cash as USIF ships inventory and collect accounts receivable. USFI has experienced, and expects to continue to experience, significant variability in net sales, operating income and net income on a quarterly basis.

ETHANOL OPPORTUNITY

. USFI recently established a wholly owned subsidiary dedicated to establishing a leading Ethanol processing facility located in Imperial County, Ca.

. The wholly owned subsidiary has been named Imperial Ethanol, Inc. and has been registered fully with the State of California.

. USFI has initiated the due diligence process on the Ethanol industry as a whole and how it connects and correlates with its existing agriculture business. Management plans to utilize its resources and contacts in the agriculture sector to begin building its energy sector holdings.

. Through its wholly owned subsidiary, USFI is near completion of it business plan to build its first ethanol plant. The company is looking at 3 potential areas to build Ethanol production facilities

. The plan is to initially construct a 50 million gallon per year (MGY) Ethanol facility with capabilities of expanding to double the production or 100 million gallons a year.

. This USFI subsidiary anticipates using sugar beets and sugar cane as the main stock for the ethanol.

HISTORY

In May 2006, USFI entered into an Asset Purchase Agreement with Phrixus Holdings, Inc. through which USFI acquired the revenue producing assets of this company to form American Aloe Vera Growers, Inc. Phrixus Holdings, Inc.’s original charter was to supply Seasilver USA, Inc. Aloe Vera bulk leaf (raw material) to support its rapidly expanding Dietary Supplement business. The Company expanded operations to include potted Aloe Vera plants and produce which have been very successful commercially.

MANAGEMENT

Yan Skwara-Chairman & President

Mr. Skwara is currently Founder/Chairman of US Farms, Inc. Mr. Skwara has been employed full-time with US Farms, Inc for the past eight years. Mr. Skwara brings over 18 years of Investment Banking, Marketing and Communications experience to US Farms Inc.

Jason Berkes-Consultant

. Mr. Berkes co-founded Seasilver USA, Inc., which at its peak, was a $100 million manufacturer of a liquid dietary supplement. Mr. Berkes’ strategic vision led to industry innovations in internet marketing, online ordering /fulfillment and back office support software for the 5,000+ company distributors. The streamlined online ordering system worked seamlessly with an internal customer database, enabling the company to track hundreds of thousands of customers, their orders and the associated distributor. He also developed and launched the company’s direct mail/post card program and the online "First Bottle Free" coupon program, which is unique in the industry and was responsible for the acquisition of thousands of new customers.

. Mr. Berkes has proved to be an industry innovator and brings to US Farms a high-tech savvy and youthful energy that brings cutting-edge ideas into the mainstream. He also founded Phrixus Holdings, Inc. which was sold (asset sales) to US Farms and is operating as American Aloe Vera Growers, Inc.

Darin Pines-VP Operations

. Mr. Pines joined Phrixus Holdings, Inc dba American Aloe Nurseries in August 2002 and has over 18 years experience in farm and nursery operations. He has been instrumental in the acquisition of both the farm and nursery properties, the strategic restoration of the nursery, development and planting of the Imperial Valley farm, and establishing the Company’s proprietary farming techniques which have provided superior quality and yield.

. He began his career in 1988 with his family’s Aloe Vera business. In 1992 he joined the Carlsbad Floral Exchange Inc. where Mr. Pines was responsible for managing their various nursery facilities, as well as managing business development and customer retention initiatives. At US Farms, he is responsible for day to-day operations, including nursery and farming operations and business and channel development activities.

Donald Hejmanowski-Director/Consultant

. Mr. Hejmanowski has over 25 years of experience in the financial markets. In 1980, he began a career in the brokerage community, going on to serve in various positions in the investment world, including stockbroker, branch manager, vice president of trading operations and as a principal of a firm. In 1990, Mr. Hejmanowski left the brokerage community to work directly for public companies, and with private companies seeking to go public. His work has included corporate capital structure, mergers and acquisitions.

. Mr. Hejmanowski has served on the board of directors of 3dShopping.com, an American Stock Exchange listed company, and four companies listed on the Over-the- Counter Bulletin Board: from January 2001 to February 2002, Mr. Hejmanowski served on the board of NuTek, Inc.; from February 2001 to November 2001, he served on the board of NetCommerce, Inc. and from December 2001 to May 2003, he served on the board of Photonics, Inc.

. He has also served on the compensation committee and audit committee for 3dShopping.com. Currently, Mr. Hejmanowski serves as a director of LitFunding Corp. Mr. Hejmanowski has also served as an officer or director of five start-up private entities. In 1981, he earned his Bachelor of Science degree in finance and a Bachelor of Arts degree in economics from Eastern Illinois University.

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IPOdesktop (ID) SAFE HARBOR STATEMENT: Statements contained in this document, including those pertaining to estimates and related plans, potential mergers and acquisitions, estimates, growth, establishing new markets, expansion into new markets and related plans other than statements of historical fact, are forward-looking statements subject to a number of uncertainties that could cause actual results to differ materially from statements made. ID provides no assurance as to the subject company's plans or ability to effect any planned and/or proposed actions. ID has no first-hand knowledge of management and therefore cannot comment on its capabilities, intent, resources, nor experience and makes no attempt to do so. Statistical information, dollar amounts, and market size data was provided by the subject company or its agent and related sources believed by ID to be reliable, but ID provides no assurance, and none is given, as to the accuracy and completeness of this information.

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