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#Heliospectra: Benefitting from growing pot market

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Swedish Heliospectra (listed on NASDAQ OMX First North) was founded in 2006 and specializes in intelligent lighting technology for plant research and greenhouse cultivation. Heliospectra products are based on in-depth knowledge of plant physiology and photosynthesis together with a unique method of assimilating modern LED technology. After six years of development in Sweden, the company has now begun to expand on the international market.

Yesterday, the company released its H1 2015 report, which showed revenues of SEK 3,977m and an operating loss of SEK 14,1m. CEO Staffan Hillberg comments as follows: “The first six months of 2015 have been Heliospectra’s most intense period ever. The focus has remained at all times on the continued launch of the LX60 series. We have participated at no fewer than fifteen different trade fairs and conferences in the US, Europe and South America, where we have presented ourselves to customers, partners and investors. Our staff is more and more frequently hired to speak at these different events. It’s great to see that all our efforts are now also starting to show in terms of sales. Heliospectra is also very active in social media and with press releases. This in combination with our other marketing activities, has resulted in increased traffic to our website and equally, an increase in sales via our web shop.

Our main markets are the greenhouse markets, growers of medical plants and researchers and product developers at universities, institutions and so-called agrotech businesses.

The greenhouse market today consists of 51 million HPS lights which gradually will be replaced by more energy efficient solutions with an improved spectrum, at the same time as it is growing with new applications within “Controlled Environment Agriculture”. Examples of this are “Vertical Farming”, greenhouses connected to supermarkets and cultivation in hot climates where there is a need to reduce water consumption.

The US market for growers of medical plants is currently the fastest growing market in North America and is estimated to reach some USD 10.2 billion by 2017, which is a growth of 700% since 2013. Today, 23 states have approved cultivation for medical purposes and further states are expected to follow suit. We can also see plans for approvals in other countries such as Germany, the United Kingdom and Australia and expansions in Israel among others.

The first products sold by Heliospectra were sold to universities, institutions and agrotech companies. Today, we have customers in this segment around the world. A prominent customer is the German space agency DLR, where we also co-operate on a large EU project. Other examples of customers are the two largest universities in Australia, MIT Media Lab, SLU in Sweden and Kyoto University. This remains an interesting market because it helps us run our product development and many of these customers have a significant impact on our other customer segments. The requirements are similar to those of the greenhouse industry, for example the plant laboratory at Cambridge University is the largest consumer of electricity at the university and naturally has clear incentives to reduce its electricity consumption and use the same type of modern lights as used by its customers and partners in the greenhouse industry. In other words the size of this segment should not be underestimated, where we also have our RX30 model based on the same technical platform as the LX60 series.

We have a carefully chosen strategy offering our customers the opportunity to evaluate our systems. We are seeing the results from this now, as the orders are starting to come in. We usually have approx. 10 systems of different sizes being evaluated and as we gain more and more reference installations, we expect sales to grow further.

Recently, Heliospectra and American Cannabis Company, Inc. (OTCQB: AMMJ), a full-service cannabis industry consultant and provider of proprietary and preferred products, have successfully sold one of the largest LED cultivation installations in the world to a Las Vegas, NV cannabis licensee.

Phase I of this contract represents over 672K USD (5.7 million SEK) in revenue for Heliospectra’s LX601C lamps and is to be installed during Q4 2015. American Cannabis, Heliospectra and the operator have designed a cutting edge facility that will deliver high quality end product at lower cost, with a substantially lower carbon footprint, than the current HID or HPS lamps used in similar operations.

Not only is this our largest deal to date, it is one of the largest indoor, horticultural LED installations in the world. This operator represents the culmination of hard work – from our product engineering to American Cannabis’s facility design. Like so many of the lamp trials that we currently have underway, this operator did their due diligence – they spent the time needed to learn about Heliospectra and our product. Light choice and smart facility design takes time, but smart partners understand that their decisions will have a sustainable, lasting impact,” says Staffan Hillberg, CEO, Heliospectra AB. “The operator asked the right questions, visited our facilities in Sweden, toured our current installations and gained a strong grasp for the direction we are headed as a company – they’re an excellent customer / partner – we couldn’t be more thrilled and this is just the beginning. We expect other customers that are looking at us, and trialing our lamp, to follow the same route. ”

Further, American Cannabis Company’s CEO Corey Hollister praised the sustainable approach taken by the operator. “With the rapid advancement in the scale and complexity of indoor horticultural facility design, the adoption of new technologies is critical. Our client looked at the long-term viability of their business and made an informed decision to ensure they have a sustainable model for now and for the future.

With traditional agriculture and archaic lighting technology taking a back seat to in-door, greenhouse and vertical operations, deals of this magnitude can be expected to happen more frequently. Growers and operators are beginning to recognize lost revenue when technology is not employed to leverage expertise. The cannabis industry is a frontrunner for agriculture right now in that higher revenue margins are allowing growers to invest in technology that results in lower costs of goods sold. American Cannabis, Heliospectra and smart operators are becoming more and more visible as growers seek alternatives to archaic HID / HPS lighting and wasteful HVAC systems.

We love working with smart growers and this operator has demonstrated a pragmatic, effective approach to choosing the right technology for their grow. With the operation in an environmentally sensitive location – we can demonstrate how Las Vegas will save electricity and conserve water. Equally as important – the Heliospectra LX601C delivers the yield the market demands – our superior engineering ensures that. The goal here is net revenue and that involves many factors beyond intensity and spectrum. This operator did the math – they see that our unique heat dissipation solution, dynamic software and ability to collect data will have a substantial impact on their bottom line,” says Chris Walker, General Manager USA, Heliospectra AB

He continued: “The cannabis industry is maturing fast and smart growers see the writing on the wall – its time for cultivation facilities to evolve. Growing a high-grade product and unique branding will fetch a premium, but ultimately, this is a commodity and commercial facilities can gain a serious competitive edge by employing our technology. We plan to market our results with this operator through Case Studies and videos, further promoting all three companies and Las Vegas as a forward thinking city, but most importantly the sustainable impact this approach has on the operator’s business model.”

Nordic Investor

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