Future Farming – statement of the Managing Directors 05/24

The original intention of Future Farming was to become the main producer of African catfish and leafy vegetables in the projects in Kale, Heršpice, Letonice, Přerov nad Labem, Senica and Lážovice. The sharing of infrastructure and the high volume of production were to lead to the economic stability of a network of farms, warehouses, processing facilities and distribution centres. This entire vision required an investment of CZK 2 billion. Once this threshold was reached, the next stage would be to duplicate the system we had created in other countries.

Unfortunately, at the end of 2023, the company was hit by a media attack that fundamentally affected its ability to raise funds to implement its plan. We have achieved approximately 40% of our planned investment resources during the period of operation, which is slowing us down considerably in achieving our stated goals.

Use of resources

We would like to answer questions about the use of your invested funds. We understand that you are interested in clear and transparent information.

• Proper disinvestment of funds
  • We assure you that all the funds you have invested have been properly invested in the project. Our goal is to maximize the value of each investment. The funds invested have been used in key areas that are essential to the development and success of our project.
• Documentation and proof of expenditure
  • All expenditures associated with your investments are properly documented and recorded. Whenever necessary, we have submitted these documents to the relevant authorities for inspection. Our finance department ensures strict transparency and compliance with all legal requirements.
• Investments in the project and its development
  • Every penny of your investment has been invested directly in our project and its development. The funds have been used for specific activities that include:
    • standardisation of aquaponic, hydroponic and RAS technologies
    • research and development
    • production farms
    • marketing
    • business
    • working capital

Completed projects and achievements

At the same time, we have achieved significant results that clearly confirm that, had it not been for the loss of funding, we would have achieved our original plan during the end of 2025. It was during this period that the results of our work were to be capitalised by the sale of part of our shareholding in the parent company Future Farming. This would consolidate about 50% of the original investment and use the other part for expansion and duplication of the system in other countries in Europe.

• We have been able to build and operationally validate larger production systems for aquaponic, hydroponic and recirculating aquaculture (RAS) in the Czech climate, which is characterized by both winter and summer temperature extremes throughout the year.
• We have standardized 5 technological units which are now ready for distribution to foreign markets.
• We have prepared a business model for the distribution of the technologies, which we are about to launch on the market (we are currently negotiating in the following countries: Poland, Austria, Hungary, Spain, Romania, Morocco, Slovakia, Slovenia).
• We have produced very high quality food and learned how to get this food to the customers themselves.

How it is today and what is our goal

Unfortunately, at the moment when we started to place a larger volume of products on the Czech market and successfully started cooperation with companies like MAKRO or Košík.cz, our efforts were attacked. For some unknown reason, the most read Czech online media chose us as a target and started to fundamentally damage our reputation in a series of articles.

We can argue about its intentions, but the fact that they were the only ones to cover the “case” and no other news outlets covered their news speaks volumes. Unfortunately, their efforts have caused irreversible damage to our reputation and negatively impacted negotiations with potential partners and investors.

The result then could not have been other than an extreme decline in cash flow both in sales and investment capital. Unfortunately, many of our partners were very frightened by the whole situation and withdrew from business and cooperation even when the company had no problems except negative PR. This is what has caused the current problems with our entire expansion plans and we are forced to change our planned strategy to be able to meet all commitments.

One of the steps to turn our company around is the possibility of scaling back operations at our production farm. It is currently at 40% of its production capacity despite being more than 70% funded. The difference in figures makes perfect sense, given that the investments to date have been mainly in renovating and adapting buildings, greenhouses and facilities, which are significantly more financially demanding. The missing 30 % of the funding was for production technology, which would have raised production capacity to 100 %. Unfortunately, the lack of investment funds necessary to complete the operation to the final projected size and the fixed costs, combined with the introductory prices of the products, nullify the economic benefits of the current production.

However, the project objective of a functional long-term operation with subsequent sales has been met. We are therefore currently considering several options for continuation, the most likely being the aforementioned reduction of operations during the downturn. After that, the priority objective is to refinance and continue production. Another option is to relocate to more economically viable premises and then continue production.

To give you a better idea, here are the aforementioned achieved objectives: 

• In just 5 years, the technology has been developed and operations have started.
• The operation meets the most demanding certifications and quality standards, which opened the way to attractive partners as one of the few.
• The farm’s production reached 2 tons of market fish, 6,000 pieces of lettuce and 8,000 pieces of herbs every week, including the winter of 2023/2024. 

Similarly, the entities with which we have been in long-term cooperation negotiations see the decline of activities in the Czech Republic as inevitable. They themselves know the demand for these technologies and the idea of Future Farming is more feasible for them abroad.

All of the above therefore points to a change in strategy, which for the past 5 years has been focused on rapid expansion in the Czech Republic. We have had to retreat into ourselves and preserve the achievements we have made in order to best protect what we have built.

For us, this is unfortunately an unwelcome, yet opportunity, to learn from the mistakes we have made over the years. With this change of course, we can not only manage the current situation and achieve what we had planned. At the same time, we can meet all our commitments to the investors and partners who have chosen to support this ambitious project. 

We have therefore taken our first strategic steps since January 2024.

The main changes include:

• We will focus on attracting larger equity investors (funds, private investors, investment groups).
• We will focus on SELLING TECHNOLOGY:
  • Selling technology and building farms abroad.
  • Selling “Business Licenses” abroad (partners who want to supply our technologies to their markets themselves)
• We limit our development (investment) areas in the Czech Republic. 
• We are reducing operating costs throughout the Future Farming structure.

Outlook for the next 5 years

Within the framework of the defined strategy, we want to achieve the following results in the coming years:

It is then necessary to add the following context to the table:

• The current year is fixed as a restructuring year. 
• The outlook for 2024 and beyond is therefore based on the new strategic planning.
• The implementation of the activities leading to this forecast will take place mainly abroad.
• Actual and planned meetings with partners, clients and customers served as the basis for the data. 
• The figures are largely made up of technology sales, and to a lesser extent of the accompanying services within the established infrastructure.
• The quantified market value of Future Farming is based on the demand for the technologies and services we offer.

Against the backdrop of normal operations, the situation is being resolved

We are therefore currently looking for a strong investment partner. This move was not planned until 2025, but it is necessary to repair the damage done, consolidate investment resources, reduce the company’s debt and bring in additional funding to develop the production infrastructure.

• We are planning 3 stages of financing, totalling up to €40 million 
  • Since the beginning of the year, we have been in negotiations with a total of 12 entities, of which we have successfully advanced to the next rounds of negotiations with 9.
    • Funds (Canadian, Austrian, American, Dutch)
    • private equity investors (2 in the Czech Republic, 1 from Asia)
    • large investment networks (2 from Poland)
  • At the end of May and beginning of June, we will start the second wave of negotiations, when we will approach 60 – 80 funders that focus on the exact situation Future Farming is in. 
  • The entities are mostly from abroad, where they perceive the need for our technology and its benefits much more intensely. This increased interest stems from the growing demand for the innovative and efficient solutions that our technologies provide, specifically in the areas of sustainable agriculture and resource efficiency.
• We continue to focus on our core business of supplying technology and building farms
  • Clients: Hungary, Spain, Poland, Slovakia Austria etc.
• We are establishing business contracts for the sale of our technologies abroad (franchise licenses) in order to generate sufficient profit to cover liabilities, consolidate investment resources and generate additional profit.
  • Advanced negotiations are underway in the following countries:
    • Austria – the partner is interested in representing technology sales in German speaking countries.
    • Romania – the partner is interested in representing technology sales in Romania, Spain and Morocco
    • Spain – the partner is interested in representing technology sales and investments in Spain and Mexico
    • Poland – the partner is interested in representing technology sales and investments
    • Egypt – government contract for 5000 Community Farm units (5 year contract)
  • The first negotiations took place in the following countries:
    • Hungary – interest in farms and technology
    • Morocco – partner interested in representing technology sales
    • Romania
  • First meetings scheduled in countries:
    • India – interest in technology sales license

Advantage of activity redirection:

Another advantage of shifting activities and operations is that 90% of the administrative and bureaucratic burden will be eliminated and all the acquired capacity will be devoted exclusively to expansion and foreign development.

THERE IS A DEMAND FOR OUR COMPANY’S TECHNOLOGY AND KNOW-HOW ABROAD AND WE ARE NEGOTIATING WITH PRIVATE ENTITIES AND THE PUBLIC SECTOR.

IF YOU STILL BELIEVE IN THE IDEA OF FUTURE FARMING, YOU CAN HELP US IN TWO WAYS AT THE MOMENT:

• GIVE US THE TIME WE NEED TO SIGN CONTRACTS AND AGREEMENTS WITH LARGER PARTNERS AND FUNDS

• YOU CAN STILL GET ACTIVELY INVOLVED AS INVESTORS WHO WILL HAVE A DIRECT STAKE IN OUR EXPANSION ABROAD.

IF YOU ARE CONSIDERING THE SECOND OPTION, JUST EMAIL US AT [email protected] AND WE WILL GET BACK TO YOU.