The short public markets life of Arcturus Growthstar Technologies Inc. (“AGS”) has been one in which investor education has played a big part. From explaining what vertical farming is, to introducing the revenue potential of cannabis grow light technology, to the impact investing nature of building indoor farms in urban areas of the United States (CSE: AGS) (OTC Pink: AGSTF) has hit a chord with a younger, more ethically and environmentally focused crowd.
In fact, the stock is up 53% in less than a month.
We sat down with CEO Bill Gildea to go a little deeper on the opportunity, and found a multitude of opportunities tied into one company.
Q: Explain what vertical farming is, for those unfamiliar with the technology.
A: Arcturus provides scalable, indoor vertical farming (or Controlled Environment Agriculture) systems that utilize minimal land, water and energy regardless of climate, location or time of year and are customized to grow an abundance of crops close to consumers, therefore minimizing food miles and its impact to the environment. The Company holds a worldwide license to use a patented vertical farming technology that, when compared to traditional plant production methods, generate yields up to 10 times greater per square foot of land. The contained system provides many other benefits including seed to sale security, scalability, consistency due to year-round production, cost control, product safety and purity by eliminating environmental variability.
Q: What crops are best suited to vertical farming, and are they traditionally high margin products?
A: Leafy green vegetables and herbs such as lettuce, spinach, basil and micro-greens are best suited to vertical farming due to the ability to maximize space between the growth racks. Other plants such as Cannabis have also been proved to thrive in vertical farming scenarios.
Q: There have been a few high profile companies spending a lot of money on vertical farming over the last few years, mostly on the development side, with mixed fortunes. What sets your opportunity apart from those?
A: Thousands of private companies are entering the CEA industry in markets across the world. AGS is positioned to take advantage of emerging tech companies selling at a steep discount to the public equivalent and the fact that many AgTech companies are owned by a large and fragmented group of entrepreneurs. Management believes strongly that the rollup opportunity is HUGE and ripe for a public acquisition vehicle with a CEA farm portfolio.
Q: In the legal cannabis space in Canada, grow houses have proved expensive to build, and maintain. How will your planned US urban farms differ from those?
A: We have assembled an excellent development and operations team. Our team’s operating depth and experience will allow us to avoid some of the mistakes that others have made.
Q: You’ve kept your financing rounds fairly small early on in AGS’ life, and your outgoing expenses smaller. What will it cost to build a vertical farm like those you’re planning, and how will the financing of those happen?
A: Total project cost for a CEA urban produce farm will be +/- $4.5MM US. We plan to use New Market Tax Credits to minimize the demand on Arcturus’ capital.
Q: At just $1.5 million, your market cap is tiny in relation to competitors, and your share structure is extremely tight, which is great for investors. Early investors have already seen the stock jump from $0.045 to $0.12 in six weeks, but you must still feel there’s a ton of value to be unlocked going forward.
A: We plan to build additional value in AGS slowly over time. As we execute our development plans and meet our milestones, we think the market will respond.
Q: Let’s talk about grow lights – you acquired some technology that was recently used to win 1st place in the “Indica – Private Grower” category at the BC Cannabis Cup, which is a tough audience. What’s the revenue potential on that sideline, and how does it compliment your base business?
A: We plan to build the LED Canada and COB Growlights revenue streams in the commercial and cannabis markets. Right now we are focused on bringing efficiency to the ecommerce systems needed. We should see an uptick in revenue over the next 6 months.
Q: Recently Invictus (IMH.C) sold their Sunblaster line of grow lights for some $4 million, which is double your entire market cap right now. With the lights and the farms and the tech IP behind both, what news or event do you think will really help the market properly value what you do?
A: We have identified a series of milestones and plan to keep the market informed of all news. At this point we believe that the combination of these offerings will help the market realize the value in AGS.
Q: Are you looking into other potential acquisitions along similar lines as the grow lights?
A: The company’s business plan is to build its CEA portfolio and take advantage of the best undervalued agricultural technologies and roll them up into a large vertically integrated, multi-stream cash-flow operation that uses stock as its currency to scale up quickly.
Q: Impact investing – that is, investing in things that will benefit the community – is an increasingly important segment of the financial community. Are you finding that investors both at the retail end and the project development end of Arcturus have a serious eye on how their dollars will do good in the real world?
A: A key element of our development approach is to work with our host communities as partners. Bringing fresh produce farms to inner city neighborhoods while creating jobs is a rewarding way to create value for our shareholders.
— Chris Parry
FULL DISCLOSURE: The author does not own AGS stock. This story has been reposted from Stockhouse.com, which has a commercial arrangement with the company.