I thought I had heard almost everything but this shocked me. Found in
today's morning newspaper and thought I'd share with you all. Please read
paragraph 2 for the intended uses.

Rosie Lloyd


July 26, 1999, 11:23 p.m.

Turning trash into profits
By REBECCA MOWBRAY
Copyright 1999 Houston Chronicle

In an abandoned rice mill on the edge of Fifth Ward, Clyde Oatis hopes to
soon be cooking up a nutritious porridge of spent hens, spoiled yogurt,
spilled dog food, contaminated sauerkraut, unusable baby food, half-eaten
hamburgers, and even the occasional cardboard box, which has 21 percent
protein.

If his plan works out, Oatis will be the executive chef of a new breed of
fusion cooking -- transforming food waste destined for landfills into animal
feed pellets customized for different species of livestock and pets.

In the process, US Custom Feed will be solving an environmental problem,
creating jobs and developing a concept easy to reproduce in other low-income
neighborhoods around the country.

As Oatis says, he's turning trash into profits.

Some 21.9 million tons of food waste is tossed into landfills each year, the
U.S. Environmental Protection Agency says, occupying precious landfill space
and costing companies thousands of dollars each year in "tipping" fees.
Instead of paying $7 to $9 per cubic yard at the landfills, Houston-area
supermarkets, restaurants, breweries and farms will be able to deliver their
scraps to Oatis and pay him a smaller amount of money to take them off their
hands. In other words, the raw materials for Oatis' business are better than
free.

Once the food is in US Custom Feed's custody, a machine will roast it to
kill any bacteria, grind it into a powder and squeeze it into pellets. Plant
operators will test the mixture to make sure it meets the nutritional needs
of, say, llamas. If not, they'll blend in more grain, meat or vegetables,
said Roger Hoestenbach Jr., a Texas A&M Agricultural Experiment Station
director and chemist who is working with Oatis.

Oatis' service is a welcome option for the Houston Food Bank, which is stuck
with 1 million pounds of unusable food donations each year. "This has always
been a logistical problem for us," said director of marketing Warren Brice.
"Dumping fees are high all over the country and getting higher."

Oatis first seized upon the food waste problem years ago when the dairy
processing plant where he was working in his native Chicago had to move to
rural Wisconsin because of the butterfat waste it generated. Ever since he
came up with the idea for his reprocessing business, he's been tortured by
food waste.

"It's just sickening to see the amount of food we throw away. I can't sit in
a restaurant anymore," Oatis shuddered.

Oatis' biggest problem in starting US Custom Feed has been raising capital,
a process he hopes to complete by September so he can start renovating the
rice mill. Oatis already has bought the rice mill and the patents for the
food processing machine, but he needs more money to get the plant running.

After exhausting his personal funds, Oatis has managed to take advantage of
every community development program designed to help entrepreneurs like him.

He rents discounted office space from the Palm Center, the city of Houston's
incubator, where he has office support and access to the Small Business
Administration's One-Stop Capital Shop and resource library. He received
$100,000 in seed money from a local community development financial
institution, Intrust USA. Now he's applying for $900,000 in loans from the
development corporations run by the city and the county, $1 million in
equity money from the Enron Corp.'s new venture capital program and $1.3
million in regular bank loans.

"I try to find projects that balance community interests with job creation
and excellent profitability," said Intrust USA President James Mingey, who
has been working with Oatis for two years. "People have been looking at ways
to try to solve the environmental problem of landfills for a long time. To
be able to do that and create a value-added product is phenomenal."

Oatis' business plan is strong, Mingey said. The Texas A&M Agricultural
Experiment Station is making sure he develops a sound product. He will be
able to duplicate the process in other cities and, in addition to his core
business, he will earn royalties from his machine patent. Once US Custom
Feed is humming along, Oatis also could start other businesses, roasting soy
or coffee beans with his machine.

Oatis tried to start his business a few years ago with a group of investors
from Dallas and different technology, but he scrapped the deal after their
plan whittled his ownership stake down to 14 percent.

Back at the drawing board, Oatis found a machine that combined grinding,
roasting and pellet-making in one system. Koch Industries, a huge, privately
held Kansas company, had paid more than $5 million for the rights to the
Jet-Pro Waste Recovery System, but sold it to Oatis for $850,000 because the
company couldn't integrate it into its operations. "It's a steal," said
Oatis, who made one of the machine's inventors his partner to ensure that US
Custom Feed uses Jet-Pro to its fullest capability.

For Oatis, starting US Custom Feed has been all about balancing a moral
mission to help build his adopted city while building a profitable business.

He located in Fifth Ward because of its proximity to the Port of Houston,
because of the tax abatements that come with being in a federal Enhanced
Enterprise Community area and because he wanted to have a hand in the
neighborhood's revitalization.

Oatis has forgone opportunities for automation in order to hire more people.
He said he could have opted for a can-smashing machine that would require
only two people; instead, he chose a simpler machine that will allow him to
employ six people as sorters. Oatis vows to pay a living wage to the 19
workers who will operate his plant.

"You've got to have some social responsibility," said Oatis, a former
college basketball All-American who was drafted by the Rockets when the team
was in San Diego. "I think I should do my part."

A fully streamlined plant could create 50 percent returns. Oatis said he
could live on 20 percent returns. The compromise appears to be 37 percent.
"That's good enough for the banks, that's good enough for the venture
capitalists and that's good enough for me."