Q1: Smart Farm 2.0: Do you have a prototype to make sure it works? On which assumption do you set revenue to 40.2 million in the first year? It seems highly unrealistic to me. The farm has to be built first, how long should that even take? On which calculation do you expect an increase of output of 1000–3000% in smart farming?
First of all, we would like to show you this image. It’s a smart farm using hydroponics to produce Boston lettuce. It is a system that has proved for decades that it produces about 14 times more output than a soil farm. In terms of cost, we are able to produce more than 417 pieces/m2 of Boston lettuce per year at 1.3ha cultivation area via hydroponic farming. In terms of weight, it means that it can produce more than 1,050 tons.
Hydroponics is the foundation of a smart farm. Hydroponics come in many forms, such as Deep Water Technique (DWT), Nutrient Film Technique (NFT), and Aquaponics. Nowadays, one can find agricultural systems companies that have been developing such technologies worldwide.
And for the past few years, ATFS has been reviewing and analyzing hydroponics systems and investigating the different systems’ advantages and disadvantages. Through this, we have determined the most suitable system for the market that could incorporate one of world’s hottest topics, deep learning (AI system): one that combines DWT and NFT.
We call this chosen system “Best of Breed” as we have been analyzing, assembling and testing this system for a long time based on different types of output data.
Let’s take herb production, different from lettuce types. Herbs show a productivity rate difference that is over 30 times greater than soil farming. Herb species’ shorter growth cycle allows for DWT adoption and thus easier to manage, and this is why we need a combined system of NFT and DWT hydroponics.
With our Smart Farm 2.0, we plan to cultivate lettuce first, because we will enter the value-added salad market with our own product mix of specialized functional salads using our lettuce as its main ingredient (we will also supply lettuce as raw material to select markets as well). The financial forecast of $40M reflects profit from projected advancement in the salad market, and we did not mention it in the whitepaper to not disclose our business tactics. However, we believe that our plan for producing premium salads from our smart farms is a good match with the eco-friendly image that hydroponics reflects, and we are confident that it will make a significant contribution to our profitability early on in the business.
Q2. In the white paper, you say that 40% of the crowdfunding goes into farm construction as a cost. Is this figure based on your soft or hard cap?
Most of the 40% of crowdfunding will go into establishing Smart Farm 2.0, but this does not represent pure expense, as ATFS’s Smart Farm 2.0 consists of land and facilities and in turn, an asset. Land does not depreciate, but would contribute to the increase in ATFS asset value through land price increase. In regards to our facilities, the depreciation will be reflected slowly over 20 years, and therefore is more capital than expense.
This is why we closely categorize ATFS tokens as asset-backed tokens, and ATFS token value would not be declined in a way that many simple blockchain platform companies’ tokens do.
Generally, these platform companies use most of the funds procured through an ICO as expense, and the value of the token in the cryptocurrency market is likely to decline if the development is delayed or the platform is not mainstream commercialized.
As we have noticed that many ICO’s did not achieve hard cap in the recent years, our calculations are based on our soft cap (see our conservative estimated financial statements in our white paper).
Q3. How will you proceed if you do not get enough money from crowdfunding?
This is a very important question. For ATFS, this impacts the scale of our business’s starting point.
We will no matter what start on the first step of our road map, Smart Farm 2.0, as shared with you.
We have plans to work with the Korean government under Korea’s agricultural support policy edited in the past year which allows us to use even a smaller sum of crowdfunded total to establish a Smart Farm 2.0. Apart from the farm, we will begin the R&D for Plant-Based Meat on a scale that matches our crowdfunded total.