Indoor Harvest Looks to Scale & Expand in 2016
Ryan Allway
March 21st, 2016
News, Top Story
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: WHM) 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. Some companies, like Urban Barns Foods Inc. (OTC: URBF) and Affinor Growers. (OTC: RSSFF) (CSE: AFI), have early-stage operations, while mCig Inc. (OTC: MCIG) offers grow room design and consulting. But, there are no large and established pure-plays and only a handful of small start-ups that show promise.
Indoor Harvest Corp. (OTCQB: 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.
Growing Pipeline
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.
Looking Ahead
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.
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
About Ryan Allway
Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.Disclaimer: Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.
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