SEATTLE, WA / ACCESSWIRE / March 21, 2016 / The vertical farming industry is estimated to reach nearly $4 billion by growing at a 30% annual clip between 2015 and 2020, according to Markets and Markets. With companies like Whole Foods Inc. (NYSE:WFM) financing vertical farming research and development, many privately held companies have entered the space, including AeroFarms, FarmedHere, and Green Sense Farms, among others, with fairly sizable organizations.
For public investors seeking opportunities, there are few publicly traded start-ups in the space. Companies like Urban Barns Foods Inc. (URBF) and Affinor Growers (RSSFF) (CSE:AFI), have early-stage operations, while mCig Inc. (OTC:MCIG) offers grow room design and consulting, yet there are no large and established pure-plays and only a handful of small start-ups that show promise.
Indoor Harvest Corp. (INQD), a design-build, engineering, procurement and construction contractor, is one opportunity that investors may want to consider in the space. In a letter to shareholders, Founder and CEO Chad Sykes outlined the company’s current operations, future projects, R&D initiatives, and various other upcoming catalysts that investors may want to take a closer look at.
The complete shareholder letter is available here: https://www.linkedin.com/pulse/article/shareholder-letter-from-indoor-harvest-corp-ceo-chad-sykes.
Existing $5M Backlog:
Indoor Harvest has already entered into numerous design-build contracts across several different markets that are now driving existing revenue.
The most recently completed project falls under the owner-operator model in Houston where its VFRacking food and drain system will be used to produce gourmet microgreens for local area customers. In Michigan, the firm was also engaged to design-build a custom platform for a research group conducting scientific studies on plant lighting that’s ongoing. These commercial contracts are outside of the cannabis industry entirely.
Within the cannabis industry, the company was hired late last year to build a 38,000 square foot medical cannabis production facility in Maryland using its state-of-the-art HPA, HVAC, and VFRack systems. The firm was also recently hired to design-build a 7,000 square foot cannabis production facility in Alaska, including 59 HPA units, three process skids, and HVAC. And finally, the company continues to consult with a Colorado grower in building custom solutions.
The full performance of these projects is estimated to be about $4.6 million if they move forward towards construction as planned. In addition, management is working closely with several parties to expand these services into other areas that could accelerate these revenues.
Indoor Harvest has seen a growing number of inquiries from potential customers as it has transitioned from development stage to commercialization.
The company entered into a three-year agreement with IGES Canada Ltd to provide engineering, procurement, and construction services for a controlled environment agriculture portfolio of 15 facilities across several countries. The initial facility will be a 22,000 square foot vertical farm in Pennsylvania. If the project proceeds, the first phase alone could generate an additional $4.7 million in revenue for the company.
The company's B2B relationships with companies like Illumitex and Freight Farms have also started to generate a significant number of leads around the world. Through these channels, management has received over a dozen potential project referrals along with direct inquiries for build-outs at a pace of about ten per week. The firm is also working through government channels with its CLARA project in the City of Pasadena.
The company's current pipeline stands at 16 facility design-build negotiations, including six early-stage discussions and 10 late-stage discussions. In terms of revenue mix, these projects consist of about 44% cannabis and 56% edible produce projects.
Research & Development:
Indoor Harvest is actively working to measure and improve the performance of its technology portfolio, while simultaneously building up its client base.
The company's primary focus in 2016 is its soon-to-be-announced case study by Chris Bayley of Horticulture Inc. In conjunction with The Green Company – a Washington State cannabis producer, the company will showcase the technology proficiency of its HPA platform in the production of cannabis. The results of the study will be published in Marijuana Venture Magazine – an industry-leading B2B publication.
In Canada, the company is wrapping up is second cannabis pilot project with Canopy Growth Corp, which is the largest licensed producer under the MMPR program. Management reported that the data collected so far has been very positive and confirmed the promising early-stage data that it reported from the first phase. The company has also begun discussions with other licensed producers to conduct similar programs in the near future.
These R&D efforts should help set its technology apart from the competition by bringing real-life case studies to potential customers proving its claims. Moreover, these agreements could create a valuable new source of leads in both U.S. and international markets.
Indoor Harvest has surpassed a number of key milestones in becoming a revenue-generating operation and building a significant backlog. Management's focus in 2016 will be on sustainably scaling up its operations, while developing and expanding its project pipeline. With financing in place from Kodiak Capital, the company is well positioned to execute on its plans and significantly grow revenue over the coming quarters.
For more information, visit the company's website at www.indoorharvest.com.
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