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Hemp Adobe Corporation BUSINESS PLAN
CONFIDENTIAL
Kevin Hodge, Founder Aberdeen, WA. USA
(360) 533 -5282 [email protected]
http://hempadobehomes.com
Statement of Confidentiality & Non-Disclosure
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This document contains proprietary and confidential information. All data submitted to ____________________ [RECIPIENT] is provided in reliance upon its consent not to use or disclose any information contained herein except in the context of its business dealings with Hemp Adobe Corporation. The recipient of this Business Plan document agrees to inform its present and future employees and partners who view or have access to the document's content of its confidential nature. The recipient agrees to instruct each employee that they must not disclose any information concerning this document to others except to the extent that such matters are generally known to, and are available for use by, the public. The recipient also agrees not to duplicate or distribute or permit others to duplicate or distribute any material contained herein without Hemp Adobe Corporation express written consent. Recipient acknowledges that any unauthorized disclosure or use of document by Recipient, may cause serious harm or damage to Hemp Adobe Corporation. Hemp Adobe Corporation retains all title, ownership and intellectual property rights to the material and trademarks contained herein, including all supporting documentation, files, marketing material, and multimedia. BY ACCEPTANCE OF THIS DOCUMENT, THE RECIPIENT AGREES TO BE BOUND BY THE AFOREMENTIONED STATEMENT. __________________ Signature ___________________ Name (typed or printed) ___________________ Date NOTE: This is a business plan. It does not imply an offering of securities.
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Table of Contents
1.0 Executive Summary
2.0 Company Summary
2.1 Founders Vision
2.2 Mission Statement
2.3 Business Model
2.4 Management Team
3.0 Start-Up Investment Summary
4.0 Products
4.1 Product Chemistries
4.2 Product Line
4.3 Intellectual Property
5.0 Market
5.1 Market analysis
5.2 Health and Environmental Drivers
5.3 Market Segments
5.4 Market Outlook
5.5 Five Forces Analysis
5.6 SWOT Analysis
6.0 Strategy and Implementation
6.1 Manufacturing Plan
6.2 Marketing Plan
6.3 Sales Forecast
6.4 Milestones
7.0 Financial Plan
7.1 Start-Up Funding
7.2 Projected Profit and Loss
8.0 Appendixes
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1.0 Executive Summary
Hemp Adobe Corporation was founded on the principles of R. Buckminster Fuller, and aviation composite
products. The dominant concept is “lighter and stronger” utilizing natural materials, combined with
innovative low carbon footprint cements as the basis for bio-composites utilized in the creation of complex
and harmonious structures and buildings.
Hemp Adobe Corporation is committed to the manufacture of new green and sustainable construction
products embodying Corporate Social Responsibility (CSR), and low to no carbon footprint designs for
residential, commercial, and low income housing markets.
Hemp Adobe Corporation has developed an innovative approach to building utilizing bio-composites
materials in panels. These panels are manufactured from a proprietary mix of minerals, refractories,
natural fibers, sand, magnesium oxide and water. No toxic off-gassing occurs during the casting process.
Hemp Adobe panels can be custom engineered or precast/prefabricated into any size or shape desired.
Where reinforcement is necessary, basalt rebar is utilized, as it is less corrosive than regular steel rebar.
The Hemp Adobe final products use 60% less construction material relative to conventional concrete
structures, are 60% lighter in weight compared to conventional concrete structures, are highly energy
efficient acting as a natural insulator, are strong and durable, and allow for natural thermal, and moisture
exchange to occur (i.e. the structures are “breathable”).
The Hemp Adobe structures are designed to be assembled from interlocking panels built in a factory that
include all necessary utilities. These panels are shipped on site and assembled into a structure on site
with minimal effort and manpower, allowing for full construction to take less than 7 days. The unique
designs lessen the environmental footprint caused by conventional construction methods and means.
They supply within the home an autonomic function of a healthy living environment combined with food
growing capabilities, which in turn will supply clean air, heating, and cooling by thermal convection.
Supplementation of electricity is achieved by built in solar panels and the high insulting factors of the
panels, making these buildings self-sustainable, free standing structures with low environmental impact
and maintenance costs. They are true “living structures”. Our designs meet the most stringent LEED
standards at costs that are very competitive to alternative, traditional building techniques.
The concepts, chemistries involved, the self-sustainable model, and the economic viability have
generated considerable interest worldwide from a number of prospective clients. These clients have
expressed their interest by providing Letters of Intent worth several million dollars.
In order to fulfill these LOI’s, Hemp Adobe Corporation is seeking the necessary funding to be able to
take the concepts and models to the start-up phase of manufacturing and product delivery. The
investment sought is minimal and economics as shown predict a fast rate of return, and establishment of
Hemp Adobe as a financially self-sustaining, profitable company.
This document provides a business plan for use by a prospective investor to make financial decisions
regarding investment in this start-up phase, and to join Hemp Adobe in creating the future of construction
in an environmentally sustainable manner while achieving a fast return on the investment.
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2.0 Company Summary
Hemp Adobe Corporation was founded in Aberdeen, Washington in September of 2015 by Mr. Kevin
Hodge. Hemp Adobe Corporation/Lionza Group, LLC is a Limited Liability Corporation registered in
Florida with principal offices located in Orlando. The company was formed to pursue the manufacturing
of innovative green technologies for the construction market, and adopt these technologies in the design
of innovative building structures and methods. The initial phases of the project were funded by their own
personal finances, and through small investments by individuals that believed in the future of Hemp
Adobe. A team of experts in fields that are crucial to Hemp Adobe success have contributed know how
and their time and dedication that have brought the developments through concept to demonstration
through models generating extensive interest in the target markets and commitments by significant
prospective customers. The company is now ready to take the next steps and identify a location, secure
financing, and initiate the start-up manufacturing phase of the project turning the developments into
products for a number of identified large market segments.
2.1 Vision
Hemp Adobe was created in response to the 2008 market crash. The solution came by way of using an ancient building material, and using advanced aviation composite methodologies. The result is a structure that outperforms current standards in all areas of efficiencies, cost of goods to produce, and longevity of product. This was truly an answer to our buildings and infrastructure issues arising from age, environmental damage, use, and product life cycles. It is a way to use collaborative business models, and current technologies for a sustainable future. The cost of the finished products is 65% less than conventional building materials and techniques used, which in turn saves the financially strapped buyers to a high performance home at a significantly lower pricing index. The advantages are less operating and maintenance costs with the health benefits of no mold growth, pest resistant, and a fire and water proof structure to live and work in. By matching the design to the areas of operation, our structures will excel in providing a safe building in areas of hurricanes, earthquakes and floods. When offering a greenhouse to the structure, it becomes a living structure with passive heating and cooling, as well as food production for the occupants. This saves an estimated 40% in related costs, which in turn can affect whole community based economies. This is the true vision of Hemp Adobe. To save our natural resources, our society, and our economy. Kevin Hodge
2.2 Mission Statement
Hemp Adobe Corporation will become the World Wide Leader of Sustainable Bio-composite products.
2.3 Business Model
The company intends to relocate to Northeastern Florida, or Colorado to set up a manufacturing
facility to start scale up, and production of Hemp Adobe Homes. The concept is to set up an
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Innovation Hub and partner with companies on the site that operate in the same fields of
chemistries, have similar Missions and goals, and are complementary to the business of Hemp
Adobe. The hub concept will provide synergies between the hub partners,
The location will be selected using the following parameters: 1) The area is distressed and has
experienced significant job losses over the past few years and is eager to bring new businesses
into the area, offering significant incentives including taxes and start-up assistance, 2) No, to low
state income tax 3) Since a crucial portion of the products to be manufactured are agricultural
products, these states provide prime agricultural land that would provide material through two
plantings a year with minimal cost, 4) Proximity to ports and rail availability for shipment of
products both within North America and for foreign markets, 5) Proximity to significant population
centers that could benefits from special properties of products produced, 6) Availability of
personnel skilled in the arts needed for successful operation, right to work area, 7) Very
competitive costs of living, 8) Proximity to University of Florida that has a top Agricultural Center,
9) Desirable area for relocation of present Management Team, 10) Desirable area for potential
hub partners.
One example of a suitable facility has been identified and consists of approx. 141 acres with
warehouse/manufacturing existing facility of 260,000sf and office/lab space of 8,000sf plus a
separate building with 2,000sf of office space. Facility is zoned commercial, is fenced and
comprises approx. 23 acres of concrete pad 16 in thick with two operational scales, and has an
indoor rail loading facility and spur. Utilities are already in place for electric, water, gas and
telephone. Facility was in operation for mass production of construction products and sale price
includes significant equipment and vehicles that are operational that could be immediately utilized
by Hemp Adobe and other Hub tenants. The property has been tested for any environmental
issues and cleaned up as appropriate. Present owner will indemnify new buyer from any
environmental liability that can be traced to their use of the property or prior owners. Sales price
is $ 2,500,000. Tax value is $ 5,500,000. Present cost per acre in the area is $ 5000, so land
value alone is $ 700,000, estimated value for the vehicles that are included with sale is $
300,000, estimated value of equipment that can be utilized for manufacturing is $ 250,000, the
estimated value of equipment and supplies that can be resold in the aftermarket is $ 200,000, and
estimated value of steel that can be resold as scrap on the facility is $ 250,000. All offices and
laboratory area are already set up for ready move in. Facility has a functioning machine shop
and closed system water reclamation/treatment process and operational baghouses for dust
control. Purchase contract can be finalized upon securing financing for Start-Up Phase.
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It is anticipated that Hemp Adobe will lease12,000sf of this facility.
ChemCognition as lease holder has already secured agreements to lease from the following
entities as Innovation Hub tenants, with lease rates being $ 3.00/sf for warehouse and $ 7.00/sf.
of office per year:
1) Desamanera US - subsidiary of an Italian company that has developed industrial strength 3D
printing equipment with capacities up to 30’ X 30’ X 30’ that utilizes binders based on the
same technologies. Need is 15,000sf of the facility plus 1,000sf of office space. Total $
52,000/yr.
2) Durable Concrete LLC, a technology based laboratory with expertise in cement technologies.
Requirements will be 2.00sf of laboratory/office space. Total $ 14,000/yr.
3) Advan Chimie – A chemical distributor that handles a variety of specialty chemicals including
raw materials that will be needed by Hemp Adobe. Need is 10,000 sq. ft. and 500sf of office
space. Total $ 33,500
In addition, ChemCognition LLC is in negotiations with, or discussions with, the following:
1) A magnesium Oxide Board manufacturing facility (dealing with 3 different groups interested in
setting this facility up) – Needs are 120,000 sq.ft. of warehouse facility (reduced to $ 2/sq.ft.)
and 2,500sf of office space. Total $ 257,500
2) A SIP board manufacturer utilizing magnesium boards – Needs are 15,000 sq.ft. of
warehouse and 500sf of office space. Total $ 48,500
3) A magnesium cement blending facility (TBD, presently have a toller in Pensacola, FL area
that will produce the binders) – Needs are 10,000 sq.ft. of warehouse and 500 sq.ft. of office
space. Total $ 33,500
4) A magnesium coatings manufacturer for fireproofing, corrosion inhibition and architectural
coatings. Needs are 5,000sf of warehouse and 25sf of office space. Total $ 16,750
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5) An architectural / artistic magnesium cement products manufacturer. Needs are 5,000sf of
warehouse and 250 sq. ft. of office space. Total $ 16,750
6) A trucking/freight company (In negotiations with 3 different companies) – Needs are the 23
acres of concrete pad, scale houses and 1,000sf of office space. $ 180,000
In total of the 260,000sf of warehouse Hemp Adobe will use 12,000, it is envisioned other hub
tenants will utilize 180,000sf leaving 58,000sf for other tenants, and of the 8,500sf of office/lab
space leaving 2,500sf for other tenants. Present plans for Innovative Hub are projected to yield a
total of $ 652,500/yr.
The benefits to the HUB are that the following services could be shared by most of the tenants
thus spreading out the costs till business moves into the next stage: warehousing, shipping,
environmental control, IT, bulk chemical storage, laboratory testing, maintenance and machine
shop services. In addition, the property has a security guard to screen all people entering the
facility that will be shared by all tenants.
2.4 Management Team
The management Team will be composed of the following
Kevin Hodge – CEO/R&D
Mr. Hodge is the creator of the Hemp Adobe bio composite formulations. Mr. Hodge has vast
experience in research and development of high performance bio product technology. During the
past two decades, Mr. Hodge has been contracted to design and manufacture a wide range of
composites products, such as, boats, yachts, experimental aircraft and greenhouses. Mr. Hodge
has a passion for sustainability, and his experience and extensive research brings forward this
sustainable and cost effective solution to provide a series of Hemp Adobe building products.
Patti Devine Beckwith – COO/Administration
Ms. Devine-Beckwith, a seasoned professional, has held several positions with various Fortune
500 companies. Ms. Devine-Beckwith is educated in Sustainable Enterprise Management, and
offers many years of diverse experience in leading and delivering cross-functional transformation
business solutions, to drive competitive growth. Ms. Devine Beckwith specializes in the areas of
Sales Operations, Project and Program Management, Human Resources, Business Analysis,
Marketing, and Event Management.
Eric Mowrey – CIO/Marketing
Mr. Mowrey is a 30 year Visual Communications Expert, with past successes in working with the
NFL, Time-Warner Cable, and PETCO, Inc., top brands have come to rely on Mr. Mowrey and his
abilities to lead a project from concept to delivery. Today, with the convergence of mobile,
broadband, and online video, Mr. Mowrey consults and produces video based products for many
top speakers and presenters, while also continuing to work with local San Diego businesses on
their video sales strategies. With nearly half of the his career in entrepreneurial environments,
Mr. Mowrey finds he adds value with his ability to catch a company’s vision and articulate it
visually, while concurrently creating marketing and sales systems to support the awareness and
client acquisition process.
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Walter Marrero, Esq. - Business and Legal Advisor
Mr. Marrero is a former judge, experienced litigator and seasoned full-service governmental,
international business opportunities and lobbyist practitioner. With more than twenty five years of
diverse legal and practical entrepreneurial business experience, he regularly counsels clients
regarding corporate organizational and governance issues, real estate development/transactions,
government/regulatory licensing, strategic acquisitions, agricultural and manufacturing projects,
agricultural incentive programs, low income housing development, disadvantaged and non-profit
projects, state and world-wide business opportunities (China, Cuba, Dominican Republic and
Colombia)
Claudio Manissero- Consultant/Technical and Business Advisor- ChemCognition
Mr. Manissero is an entrepreneurial-minded senior executive with significant experience in market
and product development in a variety of markets with emphasis on construction related products,
chemicals, environment, mining and oilfield products and technologies based on lithium,
peroxides and magnesium chemistries. He had consistent success in identifying, building,
growing and improving profitability, performance and value through value added, specialty
chemicals propositions. He has a combined 20+ years of experience in the environment, mining
and oilfield industries, and 22+ in the construction industry. He holds 11 patents related to these
technologies. Over the past 25 years he has worked on concrete durability through the industry
and with a number of US agencies including US Army Corps of Engineers, Federal Highway
Administration, US Bureau of Reclamation, DOD Military Tri-Services group on airfield
pavements, and FAA.
3.0 Start-Up Investment Summary
Hemp Adobe Corporation is seeking funding in order to move from the development and design stage to
a start-up phase for proof-of-concept, and to launch the company into a self-sustaining, profitable
production phase. Total amount of funding sought from investors is $ 3,500,000
Hemp Adobe Corporation is offering the following options for an investor:
1) Option 1 -Investment of $ 3,500,000 yielding dividends of 7% simple interest per annum
for a total of 5 years, at the end of which Hemp Adobe Corporation will return initial
investment to investor. Investor will hold 10% shares of Hemp Adobe Corp, as collateral
during the term of the investment. Dividends will be payable within 30 days after the
end of each fiscal year. Investor will receive updated profit and loss statements at the
end of each fiscal year. Hemp Adobe Corporation will be run exclusively by its
management team.
2) Option 2 – Investment of $ 3,500,000 secured by 10% ownership of company. At the end
of 5 years, company will be audited by an independent firm and an evaluation of the company’s
worth will be made at that time and Hemp Adobe Homes will purchase back the 10% ownership
of the company at the present net value. During the five-year period, investor will have voting
rights in proportion to % ownership of company.
In Section 7.0; Financials with regards to use of proceeds and return on investment. The investment is
not attached or required to do or buy any specific real estate, land, machinery, supply, services or
business from any specific company, individual or place.
The investors, through Hemp Adobe Corporation, could have future considerations and business
opportunities that will arrive from the investment sought above.
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4.0 Products
The basis for all hemp adobe products is a proprietary mix of minerals, refractories, natural fibers
(hemp/kenaf), sand, magnesium oxide cement and water. The materials are used as standalone castings
for certain application and for others as the basis for production of interlocking panels. The panels are
produced essentially using an inner honeycomb core filled with the natural fibers sandwiched between
two layers of denser magnesium cement shells. The panels can be produced by pre casting in a factory,
thus are produced in a variety of shapes and forms both linear and curvilinear. The panels themselves
are highly insulating. Thickness of the panels determines the insulation value obtained, for thicknesses of
12 inch, a typical R value is R-80, significantly outperforming any other construction material.
The magnesium cement combined with the inner honeycomb structure provides sufficient strength to
make the panels structural in nature, thus not requiring any framing or rebar. The incorporation of the
natural fibers provides flexural strength to provide protection from cracking against wind and rain. For
applications where higher strength values are required, such as for hurricane or earthquake protection,
basalt fibers or basalt rebar is used. Basalt is a naturally occurring mineral that can be processed in these
forms, and since it is not a metal does not corrode under any circumstance.
The panels are connected on site using a proprietary interlocking mechanism without any framing, and
seams are sealed using a proprietary monolithic “glue” derived from the same chemistries and dries
smoothly matching the finish of the panels thus seams are undetectable. Unlike assembly of traditional
gypsum boards, assembly requires no tape for the seams, application of “mud” and sanding once the
mud is dried making assembly significantly easier, requiring less man power than traditional methods,
and with fewer defects in installation.
Utilities such as water, wastewater, electricity and gas (if needed) are built into the panels so the systems
just have to be connected during assembly of the buildings. For flooring, homes can be built on slab of
concrete or a honeycomb structure built with magnesium cement, or built on piles and flooring is made of
similar panels with a structural frame. Solar panels can be embossed in Hemp Adobe panels thus
providing sufficient electricity for homeowner use.
Traditional finishes such as paint, stucco, textures, as well as adhesives can be applied directly to Hemp
Adobe™. Wall preparation for paint or texturing can be done easily with commonly used tools. Hemp
Adobe™ is waterproof, fireproof, insect repellent (termites) and mold resistant thus can eliminate many of
the material and contractor costs for providing similar performance with existing products, so time and
cost to finish can be significantly reduced. These unique properties are expected to provide insurance
savings for the homeowner.
All materials of construction are either natural mineral derived or grown, thus sustainable, making Hemp
Adobe™ totally recyclable, and there are no special requirements for waste disposal. Because it is cured
at room temperatures during manufacturing, its carbon footprint is significantly lower than cement board
or drywall. The material is eligible for the highest LEED standards. The life cycle performance of the
Hemp Adobe™ leaves forests intact; it reduces the amount of construction materials needed, and needs
no wood framing and other construction materials (thus protecting the forests) make Hemp Adobe™ good
for the builder, good for the customer, and good for the environment.
4.1 Product Chemistries
The binder system used for all Hemp Adobe™ construction is proprietary magnesium phosphate
cement (MPC), one of several cements based on magnesium chemistries. This cement is formed
by reaction of appropriate grades of magnesium oxide with the appropriate phosphate salt in the
appropriate ratios. The mix is modified to provide both wet and hardened properties to allow its
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use for panel manufacturing and to provide the desired properties. The cement is mixed with an
amount of natural fibers (hemp or kenaf) to provide the workability, flexural strength and
insulating properties that are unique to the Hemp Adobe design. The technology has a low
carbon footprint for its’ production, and over time it absorbs carbon dioxide from air reverting
unreacted magnesium oxide to natural magnesite rock making the material stronger and more
impervious to moisture and fire. In addition, this material does not allow growth of mildew and
mold, and does not provide any food for insect pests such as termites thus is a deterrent to them.
Variations of magnesia cements predate the invention of Portland cement. Magnesium cement
has been used for millennia in Germany, Italy, France, Switzerland, India, China, Mexico, Latin
America, and New Zealand, among other countries. Examples are the Great Wall of China, and
the Roman Pantheon.
One of the best known magnesium cement (magnesium oxychloride cement or MOC) was
rediscovered and patented by Stanislas Sorel in 1867. Terrazzo floors of the 18th and 19th
century was mainly MOC based and this type of cement was in wide use for flooring and marine
decking applications in the 20th century. However, MOC had some issues in manufacturing due
to its slow set times, and in water resistance. The newer formulas based on MPC utilized by
Hemp Adobe avoided these problems and in the process were developed to provide higher
strengths, quick turnaround and improved hardened properties.
Hemp is a distinct variety of the plant species cannabis sativa L. Due to the similar leaf shape,
hemp is frequently confused with marijuana, and its growth is controlled in many states due to the
confusion. Hemp is characterized by long, strong fibers that grow the length of the hemp stalk
and are considered bast fibers. Hemp fiber possesses properties similar to other bast fibers (flax,
kenaf, jute and ramie) and excels in fiber length, strength, durability, absorbency, anti-mildew,
insulating and antimicrobial properties. Kenaf, structurally similar and whose production is not
limited can be used in place of hemp for certain Hemp Adobe™ products although it tends to be
stiffer thus provide less flexural strength. These fibers are also characterized by the fact that they
are rich in silica content, thus provide excellent bonding characteristics with the magnesium
cement used. Their properties are complementary, and additive to the desirable properties of
MPC thus making them the ideal complement for construction purposes.
4.2 Product Line
The company has focused its development to providing manufactured products that are both
high-tech and in high market demand. All products are based on the Hemp Adobe™ chemistries
modified for the particular expected use. It is the intent of the company to provide fully engineered
and constructible kits, as well as a variety of construction products that can be incorporated by
the builders into their own designs.
These products are presently in various phases of development and will include but not are
limited to:
Hemp Adobe Homes - Hemp Adobe Panel Homes for meeting residential construction
needs (in final phases)
BIOCOMP HP – High performance exterior cladding sheet
BIOCOMP D – High performance drywall sheet
The first product the company will offer is the Hemp Adobe Home™. These Hemp Adobe™
structures are designed to be assembled from interlocking panels built in a factory that include all
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necessary utilities. These panels are shipped on site and assembled into a structure on site with
minimal effort and manpower, allowing for full construction to take less than 7 days. These units
can be customized with optional solar, wind, geo-thermal heating, grey water bio filtration, LEDs
and custom accessories and with the other subsequent Hemp Adobe products.
Hemp Adobe Construction Products are under various phases of development and will include
products used in the manufacture of above products as well as line extension. These products
will include but not be limited to the following
In addition, development is being conducted in collaboration with Desamanera of Italy, a
company that specializes in large size 3D manufacturing technologies to develop 3D printed
products for both home (interior and exterior living spaces) and architectural applications.
4.3 Intellectual Property
Hemp Adobe™ holds all intellectual property license and proprietary knowhow covering all areas
of Hemp Adobe design, panel design and construction and applications herein listed.
It is the intention of Hemp Adobe to manufacture for other entities interested in pursuing
development of the technology in order to grow its’ implementation in a wider geographical area
and globally at a faster pace than could be expected from internal growth.
5.0 Market
5.1 Market Analysis
According to the U.S. Census Bureau Feb. 2016 economic forecast data, the seasonally adjusted
annual value of Residential construction is $ 454 B, and Nonresidential construction is $ 690 B.
The most significant segments in Nonresidential that Hemp Adobe can provide products in are: 1)
Lodging $ 24 B, 2) Office $ 62 B, 3) Healthcare $ 40 B, 4) Educational $ 82 B, 5) Conservation $
7 B. The construction industry employs in the US 6.7 M people divided approximately 50:50
between residential and nonresidential.
It has been estimated that global building products market is $ 890 B. The basic materials that
comprise the bulk of this market are gypsum, plywood, wood, steel, cement, glass and plastics.
Hemp Adobe products can substitute for most of these materials in a sustainable manner.
According to AGC; (Association of General Contractors) of America, construction is a major
contributor to the U.S. economy. The industry has more than 650,000 employers with over 6
million employees and creates nearly $1 trillion worth of structures each year. Construction is one
of the largest customers for manufacturing, mining and a variety of services. A study performed
for AGC by Professor Stephen Fuller of George Mason University found that an extra $1 billion in
nonresidential construction spending adds about $3.4 billion to Gross Domestic Product (GDP),
about $1.1 billion to personal earnings, and creates or sustains 28,500 jobs: 9,700 jobs direct
construction jobs located in the state of investment; 4,600 jobs indirect jobs from supplying
Hemp Adobe™ bag mix Structural sheathing
Tile underlayment Wet walls
Fire walls Decking
Countertops Acoustics
Fenestrations
Greenhouses
Composite Yurts
Fire-Proof coatings
Growth mediums
Aquaponics
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construction materials and services, mainly within the state where the investment occurs, but
some from other states; 14,300 jobs induced when workers and owners in construction and
supplier businesses spend their additional wages and profits, locally and nationwide. Their 2016-
2017 economic forecast predicts that residential construction spending will increase 5-9% in 2016
and up to 10% in 2017 with multifamily housing outgrowing single family housing. The following
is a snapshot of the residential sector:
The building materials market is fueled in large part by “green” building trend and requests for
LEED accreditation. Green building has become particularly popular in the residential market as
the population is becoming more socially conscious, and a younger generation has grown up in a
more environmentally aware society reaching maturity, and is now seeking alternatives to present
construction products.
The future for the green industry is projected to see positive growth for years to come, with its
influence reaching across the U.S. economy with significant environmental and social benefits
being generated to protect the people and the planet and it natural resources. Our findings show
that green building construction growth currently outpaces general construction and will continue
to do so through 2018. Annual green construction spending is expected to grow 15.1% year over
year (YoY) for 2015-2018, with annual spending projected to increase from $150.6 billion in 2015
to $224.4 billion in 2018. LEED construction spending is forecast to have a year-over-year growth
rate of 12.3%, increasing from $ 61.8 billion spending in 2015, to $78.6 billion in 2018. LEED
residential construction is forecasted at a high yearly growth rate of 31.1% during the period of
2015 to 2018, reflecting its potential given the historically small market penetration. The LEED
commercial forecast demonstrates a steady yearly growth rate of 8.5% for 2015-2018. Estimates
of the economic impact of green building construction for 2015-18 show a significant increase in
impact on GDP, jobs, and labor earnings as compared to 2011-14.
The following are key facts regarding green construction:
National Green Construction Cumulative Direct Economic Impact
From 2011-2014, the green construction market has:
Generated $167.4 billion in GDP
Supported over 2.1 million jobs
Provided $147.7 billion in labor earnings
From 2015-2018, the Green Building Council predicts that green construction will:
Generate an additional $303.4 billion in GDP
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Support 3.9 million jobs
Provide $268.4 billion in labor earnings
National LEED Construction Cumulative Direct Economic Impact
From 2011-2014, LEED-related construction spending has:
Generated $80.6 billion in GDP
Supported 1 million jobs
Provided $70.9 billion in labor earnings
From 2015-2018, this study forecasts that LEED-related construction spending will:
Generate an additional $108.8 billion in GDP
Support 1.4 million jobs
Provide $95.7 billion in labor earnings
5.2 Health, Social and Environmental Drivers
Factors driving the relatively higher growth of green building vs. alternatives in the residential
market are the falling costs of green building materials (Hemp Adobe is estimated to cost 60%
less than the traditional residential construction) decreasing energy costs, and increasing
environmental legislation, and general environmental awareness of the public. Due to the
increasing scarcity of energy resources, and a switch to more sustainable energy production.
Even though the EU area is the leader in the green construction market, the US is second and
catching up fast. In addition, the US is undergoing economic growth whereas the EU has
reached a point close to stagnation helping to drive this trend. Emerging markets are slower to
embrace this movement, but the Asia-Pacific area is quickly coming up to par due to the
significant environmental issues that are developing in China.
In nonresidential markets, the drive has been to obtain LEED certifications that are not easily
reachable with present construction materials.
In addition, costs of alternative construction products are increasing driven by more stringent
legislation, fast depletion of the nonrenewable resources, higher energy costs that have impacted
both manufacturing costs and transportation costs, while costs of green materials is decreasing
due to increasing availability, increasing volumes and lower impact of environmental legislation.
Hemp Adobe products further differentiates themselves from its competitors because they are
healthier, non-toxic and contain no suspected allergens or carcinogens. The materials utilized
are stronger and lighter than alternatives, are free of any Volatile Organic Compounds (VOC) or
other allergenic emissions such as sulfur or nitrogen oxides, and in addition do not allow growth
of mold (such as black mold, a material that has received increasing press due to its’ known
significant health effects), are insect (termites) resistant, and fire and water proof. They also do
not provide any potential issues with crystalline silica dust for workers and residents during
construction and repairs like cement based materials. The National Toxicology Program has
identified respirable crystalline silica as “reasonably anticipated to be a carcinogen”.
The benefits provided by Hemp Adobe products address many of the costs associated with
insuring properties by the insurance industry such as fire, water and wind damage. In addition in
areas high in humidity black mold has become a very significant issue for insurance companies
resulting in lawsuits and abandonment of property resulting in cancellation of insurance coverage
for this issue in many areas of the country. It is expected that adoption of Hemp Adobe products
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will provide property owners the opportunity to significantly reduce risks, thus significantly
decreasing their insurance costs.
5.3 Market Segments
The initial main focus of Hemp Adobe will be on the residential market segment. Main products
developed for this market segment are Hemp Adobe Homes™, and Hemp Adobe Building
Products. While the main thrust of these products will be single family units, they provide the
basis and concept for their utilization to develop innovative products in multifamily buildings.
These products properties, durability and ease of construction provide excellent solutions for
niche markets under residential for hurricane resistant housing, fire resistant housing in areas that
are prone to wildfires, and construction in remote areas with little or no infrastructure and limited
availability of construction workers to erect the houses.
A combination of the Hemp Adobe products provides a platform to create new market segments
in creating true Living Homes that can become self-sufficient in terms of food, water and energy
needs in both single family residential units and multifamily “living villages” thus revolutionizing
present concepts of living and assisting in reestablishment of communities that were the seeds of
our present societies.
5.4 Market Outlook
The construction industry is under significant pressures to change the status quo and is investing
significant R & D funds to find plausible solutions to the changing market environment through
technology innovations and new concepts to address the societal, health and environmental
issues. Sectors of the industry have developed groups of industry leaders to identify the needs
and establish a roadmap for the future. An example is a document under development from 2008
about by ACI (American Concrete Institute) entitled “Concrete Sustainability, a vision for
sustainable construction with concrete in North America”. The industry embraced efforts by a
number of different groups and associations and formed a new association involved with concrete
construction that has struggled since then to find appropriate solutions. The goals of this effort
are:
Seek agreement on industry-wide targets and initiatives, and coordinate the contribution
of each industry segment to achieve the effort of the whole
Review of the vision document and plan framework by as many industry stakeholders as
Possible, with a view to making such adjustments as are necessary to help the industry
collectively, achieve it
Consult with other participants who have a stake in the sustainability of the built
environment
Develop action plans (tactics, work plans, change plans, measurable objectives, etc.) in
each goal area
Identify best sustainability practices and steps industry groups can incorporate into their
operations and culture
Coordinate an integrated industry information base
Start or continue to pursue and implement this vision wherever a related activity is
sufficiently well scoped and resourced
Create awareness and mobilization of industry efforts
Track and communicate industry progress
Embed systems, goals, and initiatives into an organizational culture.
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A matrix developed under this effort is shown below:
Similar efforts are being undertaken by the gypsum board industry, the wood industry and the
steel industry, all the key construction materials that are presently used.
The industry approach in general is to develop new materials to address these issues as it is
realizing that it will be very difficult to meet the goals with the existing materials, and in boosting
the energy efficiency through efforts such as limiting thermal and lighting losses which will require
new concepts in building design.
Hemp Adobe through its development has provided a solution to all these identified issues and is
ready to launch these solutions in the start-up phase. It has done so at a cost that is very
competitive to the alternatives and is very timely in light of the construction industry efforts, both
very conducive to the future and success of the company.
5.5 Five Forces Analysis
Porter's five forces analysis is a process developed that to analyze the level of competition within
an industry and guide business strategy development. The process is based on an industry
economics to analyze the five forces that determine the competitive intensity and therefore
attractiveness of an Industry as it pertains to the overall industry profitability. An "unattractive"
industry is one in which the combination of these five forces acts to drive down overall
profitability. This analysis was developed by Michael E. Porter of Harvard University.
In the context of this business plan, the methodology was adapted to analyzing the potential
profitability of Hemp Adobe as it relates to the industry. Construction industry overall fluctuates
from moderately attractive to unattractive depending on overall state of the economy. Results for
Hemp Adobe are reported below. The analysis shows that the company has an attractive degree
of profitability that is expected to be maintained over a long period of time.
5.6 SWOT Analysis
Hemp Adobe management has conducted a SWOT analysis of its business model in order to
identify the weaknesses, strengths, opportunities and threats to identify negative factors and
current gaps to insure a smooth start-up phase of the business and develop a plan to address
these to insure profitable growth of the enterprise. Below is a snapshot of the analysis
undertaken followed by comments and strategic initiatives planned to strengthen the company
position as start-up is implemented.
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The SWOT analysis was done on the Hemp Adobe Homes with the objective to determine
viability of the plan and identify any gaps that need immediate addressing.
6.0 Strategy and Implementation
6.1 Manufacturing Plan
Manufacturing in the start-up phase will be focused on manufacturing of the Hemp Adobe panels.
These require a series of steps and techniques that are mostly proprietary but approximate
manufacturing processes for fiber cement boards for flat panels, and flexible mold principles for
the curvilinear panels. Hemp Adobe Corp. has identified options for all equipment needed for the
fabrication of these panels and negotiated delivery and pricing. Contracts will be finalized during
start-up phase. Since this is the core of the Hemp Adobe Technology, the company considers
manufacturing technology to be secret and proprietary thus will address its nature only in general
terms.
First step in the process is to obtain the magnesium phosphate cement binder. This binder is a
multicomponent system that is dry blended using low shear dry blending equipment.
Second step is to blend this cement binder with the right proportion of hemp fibers (or kenaf
fibers). Type of equipment used to accomplish this will be a low shear horizontal paddle mixer.
The mixing is accomplished dry providing the raw material to be used for manufacturing the
panels. The appropriate piece of equipment has been identified and will be purchased and be set
up at Hemp Adobe manufacturing facility as funding for the start-up phase is obtained.
Equipment is standard off-the-shelf item thus with a short delivery time.
The honeycomb used in the core of the panels will be cast on site using a proprietary casting
technique which is based on flexible molding principles to obtain curvilinear structures. The
panels on both sides of the honeycomb structure will be cast in place utilizing the same concepts.
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Longer term the company is developing technology in partnership with Desamanera SRL for
casting the honeycomb cores utilizing 3D printing technology.
For flat panels developed which will include a significant proportion of the panels the equipment
process will be very similar to a fiber-cement board manufacturing process with elements of a SIP
manufacturing facility. Modifications to this had to take into account that the binder system is fast
setting, and no heating is necessary to cure the material as it self-heats and self-cures. For
illustrative purposes only, below is a schematic of the type of facility that has been engineered
(Ex. From DIT Equipment Co. in Quebec).
Typical Chinese Magnesium Oxide Wallboard Plant
Note that many of the conveyor systems, product handling, cutting equipment and stacking
equipment is available at the facility that Hemp Adobe Corp is strategizing to purchase and
included in the sales price, thus substantial reducing capital requirements to start operations.
6.2 Marketing Plan
Marketing of Hemp Adobe Company products will be conducted in steps to insure that proper
focus on product quality is achieved, create a cash flow to support the business, and develop a
sustainable base for the business that is fast for market entry while providing the funds for
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continued development of the newer innovative products. As such, initial focus will be in
developing its efforts in the next stage of product development and marketing for Hemp Adobe
Corp and implement developments achieved for niche markets with the other products.
The company's overall strategy is based on a continuous improvement process based on setting
of appropriate objectives, measuring results, and utilizing feedback from the marketplace to
facilitate further growth and progress. The company plans to rapidly develop marketing alliances
with industry leaders and pursue new sales of its services to residential and commercial builders.
The market strategy is to capitalize on Hemp Adobe alliances by securing city, parish, state, and
government contracts. Present market plans will follow a distribution channel for the flat panels
that focuses on the builders and distributors to the builders on a local basis, whereas for the
Hemp Adobe Homes the company will control all aspects from manufacturing and design to
erection of the homes. For products in niche markets the company is willing to develop the
specialized applications and license the technology and supply the raw materials with key players
in the market niche identified.
The company has identified a number of success factors important for launch of the flat panel
market that resulted in identification of milestones needed to commence sales. The success
factors for this market are as follows:
Development of New products that satisfy marketing needs – this includes fire resistance,
mold control, light weight, impact and wind resistance, easy to install and finish.
Environmental (green products) / health needs – products need to have a low
environmental impact (little or no water, a renewable resource, with a low carbon
footprint, and not contain any harmful components that could cause health risks in closed
environments or for the workers assembling the products.
Access and availability of raw materials – have a sustainable position for supply of the
raw materials needed at a competitive price.
Industry Acceptance – meet ICC, UL and ASTM standards established for approval of
products in construction
Channels to market – established product distribution channels, effective sales strategy.
Proximity to market – availability of products in localized fast growing markets to reduce
impact of transportation and ability to provide just-in-time inventories.
Hemp Adobe Company feels that their products fit all the success factors and location in FL
identified satisfies the proximity to market and ability to use rail for low cost transportation. The
company has developed products that meet the market needs and have proven through LOI’s
that the market will create a pull for its products. The manufacturing plans and properties of the
products are an excellent solution to satisfy the environmental and health needs for the industry
in a way that is not achievable with existing technologies. The company has negotiated contracts
with all material suppliers, with the key being the magnesium cement binder and the hemp/kenaf
fiber. These contracts provide competitive pricing and will be executed upon the company
obtaining funding for the start-up phase. In addition, the company is in negotiations with the local
farming community in FL for local supply of the natural fibers for the next growing season. The
weather and soil condition provides the means in the FL location, a two crops/year growing
season vs. current supply relationships.
Industry acceptance through approval of Hemp Adobe Products for construction is the key to the
success. Initial internal testing and field performance data have produced the company with high
levels of confidence that the products will meet presently established ICC, UL and ASTM
standards, but the testing from a Certified lab is needed for a successful market implementation.
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This testing is expensive thus will be conducted as a high priority once funding is obtained (see
milestones section below).
Hemp Adobe sales strategy and marketing communication plans is as follows:
Create contacts with residential and commercial contractors.
Contact developers of residential and commercial properties.
Contact and training for new "company approved license contractors” for Hemp
Adobe Products.
Advertising through the Internet through website and through Green/LEEDS groups.
Advertising for local and national programs.
Participation at worldwide, national and regional trade shows.
Employment of company sales representatives.
Establish contact with major architectural firms.
The business is expected to be highly profitable with an expected gross margin approximating
75%. This is based on pricing that was proposed and accepted by prospective customers. The
closest competition to the flat panels are, wallboards based on magnesium oxychloride cement.
Presently there are no US based manufacturers of these boards and all products sold in the US
and Canada are produced in China and imported. There is an existing market for these boards
worldwide. In China it is estimated that market is 8M square feet of board (approx. 250 k boards)
but market has been slow to develop in US due to issues with Chinese made board (est. 15 k
boards). Sales price of these magnesium boards in US is $ 24-28. Issues with present boards
are that they are not water resistant, have issues with corrosion, brittle and heavy (40% more
than gypsum boards) all problems that Hemp Adobe boards have overcome. Weight of a Hemp
Adobe board is close to gypsum and they are water resistant and no issues with corrosion. For
financial analysis Hemp Adobe established a price of $ 26/board for 4 ft X 8 ft. board. Cost is
estimated to be $ 8/board leaving a margin of $ 16/board. For the Hemp Adobe Home panels
sales price was established at $ 80/sf and cost is $ 20/sf for a margin of $ 60/sf. At this price, in-
place cost for builders of a home is estimated to be significantly less than present construction
with conventional masonry/stick frame structures.
6.3 Sales Forecast
Initial sales, Year 1, forecast for Hemp Adobe Corp is based on LOI obtained from current
customers as summarized below. A conservative growth rate of 25% was estimated for Year 2
and Year 3 of operations. The sales forecast assumes the following: 1) Boards are tested and
certifications obtained in 180 days from startup, 2) Board sales commence upon certification, 3)
Hemp Adobe Homes production starts by 180 days at a rate of 1 home per day, 4) Production of
homes is ramped up to 2-3 per day by 270 days.
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The following is a partial list of signed Letters of Intent to purchase from Hemp Adobe Corp. it has
secured, not all can be listed due to confidentiality agreements:
Sunrise Group – Number of homes – continuous business
BastCore LLC – Number of homes – continuous business
CorVel Corporation – 1 Home as evaluation, then establish program for more homes.
Lakota World Peace Hemp Project – Number of homes – continuous business
Steps Incorporated – 6-10 homes – continuous business
Hemp Technologies CPM – 1,200, Hemp Adobe flat panels/mo.
Hemp Dog Café – Chain restaurants
Evolve Hotels – Eco hotel chain
Projected sales for Year 1-5 after start-up funding received (12 month periods)
6.4 Milestones
Milestones for the project cover the first 270 days at the end of which full Start-Up Phase
production is established. Milestones are broken down into 3 X 90 day increments after receipt of
$ 3.5 M start-up funding is received from investors.
A. First 90 Days
Purchase or lease land/property
Execute contracts with raw material suppliers and place material orders
Hire short term consultants for engineering, manufacturing, marketing and
maintenance as needed
Complete engineering / production flow for manufacturing facility
Source and order additional equipment
Modify existing equipment as needed for inclusion in manufacturing facility
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Sign contract with producer/blender(s) for magnesium cement binder
Sign contracts for utilities
Sign contract with Site Management company to execute lease contracts
Obtain PO’s from companies that have signed LOI’s
Establish sales channels
Establish Accounting
Set-up Production Line
Hire and Train workforce
Build test models / samples for ASTM/ICC and engineered certifications and
send to testing labs.
Set up shipping and receiving.
Set-up QA/QC lab, hire and train inspectors
B. Second 90 Days
Initiate shipping of Hemp Adobe panel board products
Establish sales/marketing protocols
Negotiate Bank Credit Line/Financing
Sign insurance policies
Build Hemp Adobe Home prototype
Establish production of 1 home/day or equivalent
Evaluate results from certification testing and establish certifications.
Resubmit samples if necessary.
Implement QA/QC program
Develop and Implement Marketing Communications Plan
C. Third 90 Days
Open-House Rollout
Increase production levels to 2-3 homes per day or equivalent
Establish flow of minimum of 1,200 Hemp Adobe panel boards per month
Develop licensing package and initiate negotiations with potential licensees
Establish product development lab/program
Deploy marketing/sales program
Establish maintenance program
Hire sales personnel and additional workforce for all functions of the job.
7.0 Financial Plan
As stated in Section 3.0 separate financials have been developed based on the Options available to
Investors in the company.
7.2 Financials
Investment: $ 3,500,000 for five years at which time investment is returned to investor
Projected Return: $ 245,000 1/yr (Total for 5 years $ 1,225,000) – Dividends are accrued in financials
HEMP ADOBE CORP. - USE OF INVESTMENT PROCEEDS
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INVESTMENT PROCEEDS
Proceeds from Investor $ 3,500,000 Legal Fees for Investment $ (50,000)
Net Proceeds to Hemp Adobe $ 3,450,000
USE OF INVESTOR PROCEEDS
Land/Building Acquisition
Land $ 700,000 Buildings $ 1,500,000
Land/Property Purchase $ 2,200,000
Operations Equipment
Equipment $ 400,000 Leasehold Improvements $ 25,000
Furniture and Fixtures $ 5,000 Computers $ 5,000 Vehicles $ 35,000 Laboratory Testing Equip $ 25,000
Total Operations Equipment $ 495,000
Operating Expenses (Covers Months 1-4)
Total Wages and Benefits $ 128,154 Contract Labor $ 9,500
Legal & Acct Expenses $ 4,000 Consulting (Tech/Eng) $ 20,000 Business Insurance $ 874 Utilities $ 5,000 Raw Materials $ 97,200 Advertising $ 30,000 Supplies $ 15,000 Vehicle Expenses $ 4,000 Office Supplies $ 2,000 Maintenance $ 2,500 Travel/Meals/Ent. $ 18,500 Miscellaneous $ 10,000
TOTAL Operating Expenses $ 346,728
Raw Material Acquisition $ 200,000
Working Capital $ 208,272
TOTAL $ 3,450,000
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