INDOOR NB-IoT MUSHROOM CULVATION SYSTEM

PROJECT PROPOSAL
THE INDOOR IOT BASED MONITORING AND CONTROLLED
ENVIRONMENT SYSTEM FOR

MUSHROOM CULTIVATION

By
Lew Chee Yee
Chang Yik Sen

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INDOOR NB-IoT MUSHROOM CULVATION SYSTEM

Contents

Contents ............................................................................................................................................ 2
1.0 Introduction .......................................................................................................................... 4
2.0 Background ........................................................................................................................... 5
3.0 Market Attractiveness ........................................................................................................... 5
4.0 Market Trends and Targets ................................................................................................... 6
5.0 Marketing Objectives ............................................................................................................ 7
6.0 Government policies and incentives for agriculture ............................................................... 7
7.0 Segmentation & Positioning .................................................................................................. 8
8.0 Competitive advantage ......................................................................................................... 9
9.0 M-Commerce & Future Big Data.......................................................................................... 10
10.0 Flow Chart........................................................................................................................... 11
11.0 Initial Investment ................................................................................................................ 12
12.0 Cash Flow Projection ........................................................................................................... 13
13.0 Large scale Investment Planning.......................................................................................... 13
14.0 Initial Start-Up Investment (Mushroom Packs Production Line) ........................................... 14
15.0 Conclusion .......................................................................................................................... 14
16.0 Appendix............................................................................................................................. 15
17.0 Johor Mushroom Farm Reference - ARGIVO ........................................................................ 17

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Confidentiality Clause
Please note that all the content and information in this Publication (“Confidential
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(“MOMOKU”) and is being supplied in confidence solely for the recipient’s internal
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MOMOKU is the copyright owner of this Publication. Any reproduction, dissemination, use,
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Copyright 2019 © MOMOKU. All rights reserved.

___________________
LEW CHEE YEE & ERIC CHANG

Date: 18TH AUGUST, 2019

*** This is a PROJECT PROPOSAL. It does not imply an offering of securities.

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INDOOR NB-IoT MUSHROOM CULVATION SYSTEM

1.0 Introduction

The modern/urban agriculture plays an important role in resolving future food supply chain
over fast increasing human population. The limitation of agriculture land space, extreme
weather and air pollution has greatly affecting the harvest.

Mushroom cultivation has been evaluated by researchers as effective means for poverty
alleviation in developing countries due to its low production cost, high profit and quick
return. Researches on mushroom cultivation have shown positive results especially under
controlled environment. In additional, the control factor for mushroom cultivation is simple
compare to other cultivation. Mushroom required control on three (3) factors which are
temperature, air flow and humidity.

Leveraging on IoT devices and well-designed infrastructure, we are providing a smart

solution to monitor the environment control, our system required less maintenance &
manpower but high efficient in return. Hence, we strongly believe that our system can
improve the conventional plantation system and our system play an important role to
resolve the future food issues. The development in IoT shall provide better and higher
precision in data collection to improve our system continuously.

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2.0 Background

Mushrooms have been identified as one of the high-value commodities under Malaysia's
National Agro-Food Policy (2011-2020). The mushroom industry development in Malaysia is
still in its infancy stage. The global agriculture transformation program which focuses on
area expansion, increased productivity. Supported by IoT, cloud solution and big data
precise analysis, this can improve the quality of cultivation.

The stable climatic conditions in Malaysia are suitable for cultivation of mushrooms
throughout the year. Thus, Malaysia has the potential to be a large mushroom producer and
we can compete in the global market. Nevertheless, there are many issues and challenges
faced, but we believe the problems can be effectively reduced with our system.
Reference: http://ap.fftc.agnet.org/ap_db.php?id=481&print=1

3.0 Market Attractiveness

Global mushroom trade has shown a significant upward trend over the last three decade
especially fresh and dried mushrooms. The global mushroom market is conservative
estimating USD38.13 Billion in year 2017, target expanding at 7.9% in average from 2018 to
2026. The rising of consumer awareness regarding the health benefits offered by
mushrooms has influenced the growth of the mushroom market. Increasing demand for
meat substitutes followed by growing consumer preference towards vegan food are other
factors that are expected to augment the market demand for global mushroom market.
Distribution channel such as hypermarket, supermarket & wet market is the most
prominent segment in the global mushroom market.

Meanwhile, Malaysia Agricultural Research and Development Institute (MARDI) study shows
that the demand for mushroom in Malaysia estimated about 50t/day, however the current
production is only 24t/day. The import value had increased from RM9.71 Million in 2005 to
RM18.18 Million in 2012, study shows the demand is still increasing yearly.
Reference: http://etmr.mardi.gov.my/Content/ETMR%20Vol.9b%20(2014)/Vol9b_2_.pdf

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4.0 Market Trends and Targets

There is a need of converting traditional farming into a smart farming in order to provide
sufficient food for increasing population. Thus, we are targeting to provide our solution to
existing farmers and new comer into this industry. Current farmers are facing intensive
labour force issue and uncontrolled environment problems that cost them a bomb. For
example, when virus is spread in existing mushroom farm, it could have killed all the
mushroom pack in a day or two. This will cost the farmers hundreds of thousands. A well
designed system and analysis of the farm’s data play an important role to minimize the
losses.

Besides farmers, we are targeting to deploy system into property owners who wishes
convert their properties into a small scale farms. This system can help to fully utilize the
vacant properties and eventually generate incomes for property owners. There is a
significant overhang commercial property reported in year 1st of May 2019 “The Star”
Newspaper. The shop overhang situation recorded an increase of 11.2% to 5,055 units
valued at RM4.08bil. The unsold under-construction segment recorded a similar upward
trend to 7,233 units compared with 5,889 units in 2017, an increase of 22.8%. Those
property owners have zero income in their investment; meanwhile they might be paying the
bank loan, interest, taxes every month. In such circumstances, they can consider converting
the shop lots into our indoor mushroom farm and generate RM20,000 income rather than
paying all the expenses.
Reference: https://www.thestar.com.my/business/business-news/2019/05/01/unsold-and-unconstructed-
units-16-less-yearonyear

The vegan population has drastically increased from year to year. We strongly believe that
the supply of fresh vegetable will become challenging. Malaysia has been ranked the 3rd
most vegetarian-friendly country in the whole world. Come after Seychelles and Thailand.
Numbers shows that Malaysia has more than one thousand vegetarian restaurants and
these people could be your customers! Studied from Environment Reports Food Matters
shows that human are facing food insufficient due to the continuous growing population.

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INDOOR NB-IoT MUSHROOM CULVATION SYSTEM

We have enough food for 70 billion people today but supply need to be doubled in year
2050. Thus, modern agriculture that can generate higher yield is playing irreplaceable role in
future food supply.

Reference:
https://www.worldofbuzz.com/malaysia-ranked-3rd-vegetarian-friendly-country-world/
http://www.environmentreports.com/enough-food-for-the-future/

5.0 Marketing Objectives

• Become a profitable company and achieve positive return.

• Become the leading supplier of modern agriculture i.e. oyster mushroom in Malaysia/
neighbouring region.
• Ensure the highest possible quality of service to our clients, develop a solid corporate
identity in our specified target market
• Ensuring the highest possible level of penetration into our targeted market by the
number of listings and closing of deals
• Become an aggressive marketing and service oriented company
• Become a profession in modern agriculture. Provide correct and profession advises to
raise awareness and increase efficiency of mushroom growing.

6.0 Government policies and incentives for agriculture

Below are Agromakanan policies and incensitves offer by Malaysia government for all
farmers.

• Status Perintis (PS)

• Elaun Cukai Pelaburan (ITA)
• Insentif untuk Projek-Projek Pengeluaran Makanan Baru
• Insentif untuk Syarikat yang Melabur Semula dalam Produk Makanan yang Sama
• Elaun Pelaburan Semula
• Elaun Modal Dipercepat
• Elaun Pertanian (Jadual 3. Akta Cukai Pendapatan)

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INDOOR NB-IoT MUSHROOM CULVATION SYSTEM

• Elaun Perkilangan Bangunan

• Elaun Infrastruktur
• 100% Elaun untuk Perbelanjaan Modal ke atas Projek-projek Pertanian yang Diluluskan
• Insentif unuk Projek-Projek Teknologi Tinggi
• Insentif untuk Penyelidikan dan Pembangunan (R&D)
• Insentif untuk Syarikat Berskala Kecil dan Sederhana
• Insentif untuk Syarikat yang Membekalkan Kemudahan Rangkaian Dingin dan Khidmat
Produk Makanan
• Insentif untuk Penghasilan Makanan Halal
• Pilihan kepada Syarikat-syarikat Pelopor pada Kualiti untuk Elaun Melabur Semula
• Pemotongan Berganda untuk Kos Perbelanjaan untuk Mendapat Sijil Halal dan Sijil
Kualiti dan Pentauliahan
• Insentif untuk Eksport
• Insentif untuk Latihan

Source from “Dasar Agromakanan Negara 2011 – 2020” page 39 by Ministry of Argriculture
http://www.doa.gov.my/index/resources/info_doa/dam_2011_2020.pdf

7.0 Segmentation & Positioning

Our system provide best environment for mushroom growing. Our test result shows that
our mushroom size is two (2) times bigger than conventional farms. Mushroom growing
period is shorter than conventional mushroom farms too.

We are positioning our company as a modern agriculture system provider. Indoor grown
mushroom is only a starting proposal with the lowest investment and quick return. Our
target is to deliver indoor farming to the city, not limiting agriculture at the suburb area only.

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INDOOR NB-IoT MUSHROOM CULVATION SYSTEM

existing
mushroom
farmers

agriculture
indoor
new
farmers
comers

MOMOKU

vacant
traditional
property
farmers
owners

8.0 Competitive advantage

8.1 Internal

• Simplified and user friendly design

• Low investment and operation cost
• Easy deployment and operation (SOP)
• Low maintenance cost
• Self Assemble Machine (DIY)
• Complete System Design
• Environment Treatment Control

8.2 External

• Stable and reliable upstream (Mushroom Pack supplier)

• M-Commerce Marketing
• Traditional Market Connection

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INDOOR NB-IoT MUSHROOM CULVATION SYSTEM

9.0 M-Commerce & Future Big Data

We shall leverage on digital marketing targeting market over social media to promote our
system to the younger generation as anyone can be an investor in our system. E-commerce
& M-commerce are great methods to share our solution to global market. M-Commerce
provide high degree of flexibility to promote and market our solution to the global.
Meanwhile, we shall participate in agriculture and food related exhibitions to promote our
system to the public. Furthermore, we shall introduce our system to farmers, government
agriculture sectors and education sectors to create the awareness in public.

For future development, we shall expand our system design to adopt variety mushrooms,
fungus or vegetables indoor farming. Vegetables have different farming environment, thus
we shall focus farming industry that can generate high yield and profitable vegetables. Our
next move is to integrate big data analysis into our system to predict market demands (eg:
peak and low peak season) and automate cultivation of mushroom to adopt market need.

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10.0 Flow Chart

Transfer
Isolation 1 day

Removed any spoil pack On Rack

3 days
Cold shock – No air flow
High CO2
Open Cap
Temperature 22
Humidity 75~95%
3 days
Kept
Temperature 25~30
Humidity 80~95% st
1 Harvest
Light on before fruiting
3 days

Off Fan
Off Humidifier st
1 Rest
Minimum dry air flow
4 days
Cold shock – No air flow
Temperature 22 nd
2 Harvest
Humidity 75~95%

3 days
Kept
Temperature 25~30
Humidity 80~95% nd
2 Rest
Off Fan
Off Humidifier
4 days

Cold shock – No air flow

Temperature 22 rd
3 Harvest
Humidity 75~95%

3 days
Kept
Temperature 25~30
Humidity 80~95% rd
3 Rest
Off Fan
Off Humidifier
4 days
Cold shock – No air flow
Temperature 22 th
4 Harvest
Humidity 75~95%

3 days 3 days

1 day
Disposal of packs Room Cleaning

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INDOOR NB-IoT MUSHROOM CULVATION SYSTEM

11.0 Initial Investment

Initial Start-Up Investment (Mushroom House)

DESCRIPTION BUDGETING
Renovation MYR 150,000
IoT Devices & Equipment MYR 30,000
Rental MYR 7,000
Mushroom pack MYR 40,000
Reserved Fund – Rental/ Utilities for 6 months MYR 73,000

Total MYR 300,000

Yet, the key points for successful strategy shall look into the few areas:

• High efficiency and stable yield

• Environment control
• Management and SOP
• Marketing Strategy

Estimated Income based on single shop lot 20’ x 80’

Based on 2 months harvesting (4 flush per mushroom pack)
REVENUE EXPENSES
Mushroom pack (no.) 20,000 Cost per packs MYR 2
Average Harvest Per Pack 150g Total 20,000 packs for 2 MYR 40,000
(gram) for 4 times Months
Production for 2 Months (kg) 12,000kg Rental + Utilities for 2 MYR 5,000
months
Wholesales @ MYR 8 MYR 96,000 Labour MYR 6,000
Other Expenses MYR 1,000
Revenue for 2 Months MYR 96,000 Expenses for 2 Months MYR 52,000

Estimate Profit/ Month MYR 22,000

ROI @ 12 months.

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12.0 Cash Flow Projection

13.0 Large scale Investment Planning

Total investment in 3 years (Mushroom house) : MYR 300,000 x 10 = MYR 3,000,000

Total investment in 3 years (Mushroom line) : MYR 450,000 = MYR 450,000
Total investment = MYR 3,450,000

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14.0 Initial Start-Up Investment (Mushroom Packs Production Line)

DESCRIPTION BUDGETING
Renovation MYR 100,000
Mixer/ Packaging MYR 40,000
Steam Room MYR 60,000
Plastic Tray (For 3 sets @ each Tray for 12 packs) MYR 115,000
Storage Rack (Each rack for 16 Trays) MYR 75,000
Total MYR 390,000
Buffer 10% Uncertain ~~ MYR 450,000

Estimated Saving
REVENUE
Mushroom Pack Cost Reduction MYR 1
No. of Mushroom Pack every 2 Months MYR 20,000
Per Month Cost Saving MYR 10,000
Return Period Required (Month) 45
ROI @ 45 months. (For one mushroom house)

ROI @ 12 months. (If we have four (4) mushroom house and above)
P/S: Mushroom Packs Production Line is able to support up to ten (10) mushroom houses.

15.0 Conclusion

We foresee the mushroom cultivation business will become more mature in coming 3 years’
time and have very high potential market in Malaysia. We have been planning for this
sustainable business in Malaysia. In order to achieve successful in our mushroom cultivation
system, we would highly appreciate investors who are keen to approach less-engagement
and automated farming not limited in our mushroom cultivation.

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16.0 Appendix

Control Piping Design Room Segmentation

IoT Devices Control Customize Humidifier & Sanitizer

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INDOOR NB-IoT MUSHROOM CULVATION SYSTEM

Healthy Grow ZERO Chemical

Bigger Size Better Quality

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17.0 Johor Mushroom Farm Reference - ARGIVO

ARGIVO MYCOSCIENCES – MUSHROOM KINGDOM

n Founded by Singaporean and Malaysian

n Invested RM 1.55million at Kulai, Johor in 2016 with 8 acre land

n Monthly gross production 5 tonne

n 10 workers

n 2nd phases Plentong, Johor with 24 acre land to increase production by 200%

New sources:

http://www.chinapress.com.my/20171021/%E6%94%BE%E6%A3%84%E9%AB%98%E8%96%AA%E7%A8%AE%
E8%98%91%E8%8F%87-
%E6%96%B0%E5%9C%8B%E9%9D%92%E5%B9%B4%E6%9F%94%E5%B7%9E%E5%BB%BA%E8%BE%B2%E5%A
0%B4/

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