Let’s talk indoor farmingProfitability

Entry Level Indoor Farm (~1,800 Square Feet)

Safe Harbour StatementOur discussion may include predictions, estimates or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. Throughout today’s discussion, we will attempt to present some important factors relating to our business that may affect our predictions.

Internal Rate of Return

-$70,000 Total Startup Costs

$12,000 year 1 net income

$15,000 year 2

$18,000 year 3

$21,000 year 4

$26,000 year 5

9% Internal Rate of Return over 5 years

Ready, set, business planning!

1. Calculate Annual Expenses2. Calculate Annual Revenue3. Calculate IRR over a period of time

Net Income

The income statement, also called the profit and loss statement, is a report that shows the income, expenses, and resulting profits or losses of a company during a specific time period.

Cost of Equipment $261,360Facility Upgrades and Misc. Equipment $22,600Truck $15,000Office $2,800Startup Cash Flow 9 Months $179,652

Total $481,412

Capital Investment

Operating Expenses - Fixed$51,228.00 Loan of $159,041 amortized at 8% over 10 years$54,000.00 1.5 FTE - Management at $3,000 salary$6,048.00 Worker's Comp$4,131.00 Payroll Taxes$1,884.00 Liability insurance$600.00 Insurance (vehicle)$300.00 Registration (vehicle)$900.00 Accounting/Legal$600.00 Office$600.00 Marketing$800.00 Fuel (vehicle)

$1,200.00 Regulatory$6,000.00 Consulting

Operating Expenses - Variable$5,040.00 Seed Plugs 780 towers, 12 plants per tower$252.00 Pest control

$4,500.00 Fertilizer

$10,158.00 Packaging and Distribution

$50.00 Water (11,000 gal per year)Energy Costs

$91,246.00$239,537.00 Total annual expenses

Lines of Business

10 oz. Lettuce Clamshell$2.60 Wholesale to Retail

Lines of Business

Kale - Wholesale by the pound$6 a pound

Lines of Business

Mini heads of lettuceCarton of 12$12 each

10 oz Lettuce Clamshell

Lines of Business

% of Production

CapacityVolume Unit Price Value per

HarvestHarvests per Year Revenue

Revenue per

tower

After 10% Crop Loss

10 oz Lettuce - Wholesale/Retail 28% 1397

10 oz clamshell $2.60 $3,634 12 $43,610 $199 $39,249

Kale - Wholesale by the pound

Line of Business% of

Production Capacity

Volume Unit PriceValue

per Harvest

Harvests/Year Revenue Revenue/

tower

10% Crop Loss

Kale - Wholesale 40% 1560 1 lb $6.00 $9,360 12 $112,32 $360 $101,088

Basil - Wholesale by the pound

Line of Business% of

Production Capacity

Volume Unit PriceValue

per Harvest

Harvests per Year Revenue

Revenue per

tower

After 10% Crop Loss

Basil - /lb wholesale 10% 351 1 lb $20 $7,020 12 $84,240 $1,080 $75,816

Mini heads of lettuce - carton of 12

Line of Business % of Production Capacity Volume Unit Price

Value per

Harvest

Harvests per Year Revenue

Revenue per

tower

After 10% Crop Loss

Mini Head of Lettuce - Wholesale/Retail 22% 2745.6

Carton of 12 $12 $2,745.60 12 $32,947 $192

$29,652.48

Year 1 - Net Income($481,412) - Total Investment Including 9 Months operating expenses

($59,884) - 3 months of additional operating expenses

$218,493.85 Total Revenue

($322,803) - Net Income Year 1

IRR Year 1IRR

Year 1 -$322,802 -

Revenue Year 2 Lines of Business

% of Production

Capacity

Volume Unit Price

Value per

Harvest

Harvests per Year

Revenue

Revenue per tower

After 10% Crop Loss

Basil - /lb wholesale 10% 351

lb wholesal

e $20 $7,020 12 $84,240 $1,080 $75,816

10 oz Lettuce - Wholesale/Retail 28% 1397.76

10 oz clamshe

ll $2.60 $3,634 12 $43,610 $199 $39,249Mini Head of Lettuce -

Wholesale/Retail 22% 2745.6Carton of 12 $12 $2,745 12 $32,947 $192 $29,652

Kale - Wholesale/Restaurant 40% 1560

Per lb Wholesa

le $6 $9,360 12 $112,320 $360 $101,088

Total $245,805.58

IRR - Scenario ATotal Annual Cash Flows Including Investing Activities

IRR

Year 1 -$322,802 -

Year 2 $6,269 -98%

Year 3 $6,269 -85%

Year 4 $6,269 -70%

Year 5 $6,269 -57%

Year 6 $57,497 -26%

A closer look at assumptionsYear 1 is at 80% of capacity - limited by market penetration

4 lbs per tower for lettuce

4.5 lbs per tower for basil

5 lbs per tower for kale

Pricing

LOB }

Products Scenario A

Lines of Business% of

Production Capacity

Price Value per Harvest Revenue Revenue

per tower

After 10% Crop Loss

Basil - /lb wholesale 10% $20 $7,020 $84,240 $1,080 $75,816

10 oz Lettuce - Wholesale/Retail 28% $2.60 $3,634 $43,610 $199 $39,249Mini Head of Lettuce - Wholesale/Retail 22% $12 $2,745 $32,947 $192 $29,652

Kale - Wholesale/Restaurant 40% $6 $9,360 $112,320 $360 $101,088

Lines of Business

3/4 oz. Herbs Clamshell$1.25 Wholesale to Retail

Additional packaging and distribution expense

Fixed Costs - Annual

$51,228.00Loan of $159,041 amortized at 8% over 10 years

$54,000.00 1.5 FTE Management Salary

$58,000.00 2 FTE Packaging and Distribution$12,000.00 Worker's Comp

$8,000.00 Payroll Taxes

$307,358.00 Total annual expenses

Optimize Your Lines of Business

Lines of Business % of Production Capacity

Basil - /lb wholesale 15%10 oz Lettuce - Wholesale/Retail 30%Kale - Wholesale/Restaurant 40%Mint .75oz Wholesale 5%Basil - .75oz Wholesale/Retail 5%Parsley 5%

Increased profitability

Lines of Business% of

Production Capacity

Price Harvests per Year Revenue Revenue

per tower

After 10% Crop Loss

Basil - /lb wholesale 15% $20.00 12 $126,360.00 $1,080 $113,724

10 oz Lettuce - Wholesale/Retail 30% $2.90 12 $58,631.04 $251 $52,768

Mint .75oz Wholesale 5% $1.50 12 $66,339.00 $1,701 $59,705

Kale - Wholesale/Restaurant 40% $6.50 12 $121,680.00 $390 $109,512

Basil - .75oz Wholesale/Retail 5% $1.50 12 $66,339.00 $1,701 $59,705

Parsley 5% $1.50 12 $66,339.00 $1,701 $59,705

Total $455,119

IRR - Scenario B

Total Annual Cash Flows Including Investing Activities

IRR

Year 1 -$322,803 -Year 2 $147,761 -54%Year 3 $147,761 -6%Year 4 $147,761 18%Year 5 $147,761 29%Year 6 $198,989 38%Year 7 $198,989 42%Year 8 $198,989 45%Year 9 $198,989 46%Year 10 $198,989 47%