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November 27, 2022

Equity.Guru

Investment information for the new generation

Agriculture sector roundup: Headlines that made agriculture stocks move this week.

Instead of me talking about more mainstream financial media headlines about fertilizer prices, manure shortages, rising food prices and potential food shortages, I am just going to cover the many headlines from agriculture companies and go over their charts.

Before we take a look at the headlines, I want to plug my article on Bee Vectoring, and why it is one of the most innovative and coolest agtech companies out there. Fresh off the press from this week,  and the company is one of my readers favorites. I go over recent news, the chart (which is at a major support level) and the financials.

Headlines covered this week:

  • CubicFarms (CUB.TO) announces Q4 and full year 2021 financial results.
  • Verde Agritech (NPK.TO) provides details on construction of Plant 3
  • Earth Alive (EAC.V) announces closing of private placement
  • CO2 Gro (GROW.V) announces technology trials
  • Water Ways (WWT.V) receives 6 figure order and provides updates.
  • Farmers Edge (FDGE.TO) partnership with Gevo
  • Deveron (FARM.V) reports Q4 and full year 2021 financial results
  • Agrify (AGFY) announces partnership with Greenlight Cannabis
  • TristBIX (TBIX.V) announces final exchange acceptance and completion of private placement
  • Green Rise Foods (GRF.V) announces acquisition and forward guidance

CubicFarms (CUB.TO)

CubicFarms is a leading local chain agricultural technology company developing and deploying technology to feed a changing world. Its proprietary ag-tech solutions enable growers to produce high quality, predictable produce and fresh livestock feed with HydroGreen Nutrition Technology, a division of CubicFarm Systems Corp. The CubicFarms™ system contains patented technology for growing leafy greens and other crops onsite, indoors, all year round.

The company released financials for Q4 and year ended 2021. Here are some highlights:

  • The Company currently has a total of 203 modules pending installation. System sales pending manufacturing and installation are valued at approximately USD $27.4 million.
  • In addition, the Company announced receiving its first deposit and signed FreshHub customer contract, valued at approximately $20 million.
  • HydroGreen Certified Dealer commitments representing more than 100 machines for 2022.
  • Revenue for the three months ended December 31, 2021, was $819,195. Revenue was $5,273,166 for the 12 months ended December 31, 2021.
  • Net loss for the three months ended December 31, 2021, was $11,243,309 a 77% increase from the same period ending December 31, 2020. For the 12 months ended December 31, 2021, the net loss was $29,357,383.
  • Research and development expenses of $3,232,038 were incurred in the three months ended December 31, 2021, a 91% increase from the same period of the previous fiscal year.

“CubicFarms has a strong cash position at the end of this fiscal year as a result of a capital raise of $21.4 million. In addition, we have a strong pipeline of sales commitments and pending installations,” said Tim Fernback, Chief Financial Officer, CubicFarms. “In Q4, the Company announced the HydroGreen Certified Dealer Network to meet growing demand across North America, with dealer commitments for 2022 valued at $23 million for over 100 Automated Vertical Pastures™ (“AVPs”). Despite installation delays due to the impact of the global pandemic and related supply chain delays realized in 2021 and an equipment upgrade in early 2022, CubicFarm System installations in AbbotsfordNew South Wales, and Indiana are expected to be substantially completed by the end of the second quarter of calendar 2022.”

TradingView Chart

Not much change on the charts. The last time I spoke about CubicFarms, we were looking for the continuation of the breakout above $1.25. It didn’t happen. We created a false breakout or fakeout, and the price closed back below our breakout zone.

It means we have to remain patient for another run to test resistance above. For now, we must see if our major support zone at the psychological $1.00 zone holds. We have bounced here many times in the past, and could provide a good entry for buyers. I would like to see a green daily candle close. Preferably a large engulfing candle to indicate buyers are holding the line!

 

Verde Agritech (NPK.TO)

One of the most popular and “to the moon!” fertilizer companies on the Canadian market!

Verde announced that it has commenced studies required for permitting and the construction of its third production facility.  Plant 3 is projected to have a production capacity of up to 10,000,000 tonnes per year of Verde’s multi-nutrient potassium products, BAKS® and K Forte® sold internationally as Super Greensand®, raising the Company’s overall production capacity to 13,000,000 tpy, which represents 16.41% of the current Brazilian potash market in K2O.

Plant 3’s engineering studies have started and are expected to be concluded in the second half of 2022. Construction of Plant 3 is expected in the second half of 2023, with operations projected to start in the first half of 2024.

Verde’s current Plant 1 production capacity is 600,000 tpy. Plant 2 is on track to start production in Q3 2022 initially with a 1,200,000 tpy production capacity. The final Plant 2 capacity of 2,400,000 tpy is expected to be reached in early Q4 2022. Therefore, by Q4 2022, with Plant 2’s expansion, overall production capacity is expected to be 3,000,000 tpy, establishing Verde as Brazil’s largest potash producer.

Many headlines on the current Russia-Ukraine war affecting food and fertilizers. I have written about this in previous roundups. Verde Agritech is definitely a company you should have on your watchlist to play the upcoming fertilizer shortage.

TradingView Chart

After hitting new record highs at $9.44 before pulling back, I labeled the $9.15 zone as our resistance. We then broke above it with a strong green candle. In any market environment, this would have continued with momentum. But with geopolitical and Fed headlines causing more uncertainty and fear, the overall stock markets have been falling.

The breakout turned out to be a fake out or false breakout. It does look like we are heading lower towards support. What level is better than previous highs now acting as major support at the $6.10 zone? I will be watching for a green candle there if stock markets continue to feel the burn.

 

Earth Alive Clean Technologies (EAC.V)

Earth Alive is a soil health company and an industry leader in microbial technologies. Earth Alive’s innovative products contribute to regenerative agriculture, natural dust suppression with minimal water use and industrial cleaning that is ecological and human friendly.

Earth Alive announced the closing of a non-brokered private placement raising gross proceeds of $6,112,000. Under the terms of the Offering, a total of 101 866 666 Units are issued at a price of $0.06 per Unit. Each Warrant entitles the holder thereof to purchase one additional Common Share upon payment of the exercise price of $0.09 per share until April 6, 2024.

“This investment not only strengthens Earth Alive’s balance sheet, but it enables us to accelerate our accretive growth strategy,” said Nikolaos Sofronis, Chief Executive Officer, Earth Alive.“In the near-term we plan to add several new innovative products to our current portfolio in response to the urgent needs of today’s ecological transition. We are also actively considering various acquisitions or joint venture opportunities and, with a view to access new markets, we intend to strengthen our sales and technical teams.”

TradingView Chart

Earth Alive actually has one of the best market structure setups. In other words, it meets many of my reversal criteria. I like the long downtrend and the range. We are now looking for a strong breakout close above $0.065. We want to see this breakout with big volume.

 

CO2 Gro Inc (GROW.V)

CO2 GRO’s proprietary CO2 Delivery Solutions™ technology is revolutionizing the global estimated 800 billion square foot protected grower market. This comprises 600 billion square feet of fruits & vegetables, an estimated 100 billion square feet of floriculture and another estimated 100 billion square feet of crops such as medicinal plants, citrus tree seedlings and other non-food varieties.

The company announced two trials for their CO2 delivery solutions. The first is an Ecuadorian based rose greenhouse. The second is a technology trial for a new greenhouse in Mexico. The Bresca greenhouse was built in 2019 for growing specialty cherry tomatoes. Of particular interest to Bresca in this trial is assessing yield improvement as the climate is too hot for gassing CO2 and assessing the suppression of powdery mildew. The trial will last for at least six months on a 600M2 portion of the high tech greenhouse.

TradingView Chart

Another stock that has been hit hard but now tests an important level. For buyers and bulls, we are now testing a huge support level at the $0.16 zone. If we were to close below this, then we would be looking for a move possibly to $0.10. At time of writing, the stock is up 9% with above average volume. Others see this major support level.

 

Water Ways Technologies (WWT.V)

Water Ways is a global provider of Israeli-based agriculture technology, providing water irrigation solutions to agricultural producers. WWT competes in the global irrigation water systems market with a focus on developing solutions with commercial applications in the micro and precision irrigation segments of the overall market. Main revenue streams are derived from the following business units: (i) Projects Business Unit; and (ii) Component and Equipment Sales Unit.

The company received an order to install a 250,900 square meters turnkey blueberries irrigation project in China through its Chinese subsidiary IAT Shanghai. The total value of the project is approximately C$730,000 and is expected to be delivered and installed during Q3 2022. The order was received from a Chinese blueberries cultivator following the successful implementations of several blueberries irrigation projects in China and Mexico.

Water Ways also provided an update on their process to acquire Desarrollo De Sistemas Hidraulicos SA (Hidrotop), which is a smart irrigation provider that designs, sources and installs smart irrigation and fertigation projects in Chile and Argentina. Hidrotop has vast experience and knowledge in the South American market, a market that Water Ways wants to expand in.

The update states that the acquisition is progressing in a positive manner, and Water Ways expects to close it by mid May 2022 or a later date mutually agreed upon between both parties.

TradingView Chart

Not much has changed since my last coverage of the chart. We broke that trendline, and I was looking for a pullback to $0.25. We could bring that support zone up to $0.27. It seems like we have developed a mini range that could provide bulls with some excitement here. Personally, I would like to see a close above $0.35 to shift stance, or watch for a deeper support test at $0.25.

 

Farmers Edge (FDGE)

Farmers Edge is a global leader in digital agriculture, revolutionizing the industry with a broad portfolio of proprietary technological innovations, spanning hardware, software, and services. Powered by a unique combination of connected field sensors, artificial intelligence, big data analytics, and agronomic expertise, the company’s digital platform turns data into actions and intelligent insights, delivering value to all stakeholders of the agricultural ecosystem.

The company announced a memorandum of understanding to work together to deliver a one-of-a-kind, carbon inset management program with Gevo, a company that transforms renewable energy and carbon into energy dense liquid hydrocarbons. This collaboration is expected to support the sustainable development & full carbon lifecycle tracking of a carbon intensity (CI) score from low-carbon grain through renewable fuels production. The potential combination of Farmers Edge highly precise and proprietary datasets with Gevo’s Verity Tracking platform and blockchain technology is expected to create value around agriculturally driven carbon impact.

The companies plan to launch a program with US growers to measure and track carbon intensity scores for corn and soy in the production of sustainable aviation fuel and other low-carbon hydrocarbon fuels.

TradingView Chart

Nothing much has changed. The stock still is within a range and we patiently wait for a breakout. For longer term bulls, it is worth noting that Prem Watsa and Fairfax are shareholders. I would want to see a close above $4.00 to trigger the breakout.

 

Deveron (FARM.V)

Deveron is an agriculture technology company that uses data and insights to help farmers and large agriculture enterprises increase yields, reduce costs and improve farm outcomes. The company employs a digital process that leverages data collected on farms across North America to drive unbiased interpretation of production decisions, ultimately recommending how to optimize input use.

The company released Q4 and year end 2021 results. Here are some highlights:

  • Deveron achieved record revenue growth in Q4/2021. This was due to the launch of the Company’s carbon data platform, record results from acquired farm advisory companies and higher Q4 seasonal demand. The fourth quarter highlighted the impact of Deveron’s strategy and its ability to execute, which led to the Company’s highest quarterly sales to date.
  • In Q4/2021, gross profit grew 421% year over year to $3,178,638, up from $610,042 in Q4/2020. The Company had adjusted EBITDA* of $(593,096) versus $(643,073) in the prior year. Adjusted EBITDA* was significantly impacted by the Company’s investment in technology related to its carbon platform and the costs to integrate acquisitions.
  • For the year, gross profit grew 160% year-over-year to $5,828,950 in 2021 from $2,238,447 in 2020. The Company had adjusted EBITDA* of $(3,328,280) versus $(1,447,680) in the prior year. The adjusted EBITDA* loss reflects investment in the development of Deveron’s technology platform (Farm Dog), its proprietary carbon measurement platform and its acquisition and integration team.

“At the beginning of 2021, we believed our strategy could successfully deliver record growth while transitioning the business from a service company to a data company,” said David MacMillan, Deveron’s President, and CEO. “North American farmers are digitizing their decision making, battling record high input prices, and beginning to monetize the carbon they sequester, leading to increased demand for our core offerings. This has led to our collection services growing strongly in the fourth quarter, slightly dampening margins. As we continue to integrate our collection offerings into our broader soil analytical and laboratory ecosystem, we see a direct path to significantly higher gross margins and profitability. With increased demand, $50 million in our M&A pipeline and a fresh $11.5 million round of growth capital, I believe 2022 will be another strong year for Deveron.”

TradingView Chart

Deveron has bounced at a major support zone at around $0.55. Positive, and there is a chance the stock sees a breakout above $0.70. I see a mini cup and handle reversal pattern developing.

 

Agrify (AGFY)

Agrify is one the most innovative providers of advanced cultivation and extraction solutions for the cannabis industry, bringing data, science, and technology to the forefront of the market. Recent news details a partnership with a cannabis company which I find very interesting given the potential bottoming on cannabis stocks.

Agrify announced an agreement with Greenlight Cannabis to provide premium grow solutions and related services for Greenlight’s cultivation facilities. With 28 locations and growing across 5 states, Greenlight is a prominent multi-state operator (“MSO”) in the United States. Agrify will install its latest generation Vertical Farming Units (“VFUs”) in Greenlight’s state-of-the-art cultivation center of excellence, to produce superior yields, consistency, and quality, in grow facilities across multiple States.

Following operational acceptance, the agreement is expected to be expanded to include a full facility build-out for Greenlight’s cultivation operations in strategic current locations followed by future locations as Greenlight expands geographically.

TradingView Chart

Unfortunately, the stock keeps getting beat up. At time of writing, we have created new all time record lows. We still wait for a reversal pattern. The downtrend will end one day, but we don’t have any technical basis for it yet. I will be watching my downtrend line which coincides with a resistance at $5.30.

 

TrustBIX (TBIX.V)

TrustBIX provides agri-food traceability and chain of custody value solutions. The Company’s goal is to create a world where we trust more, waste less and reward sustainable behaviour by addressing consumer and agri-food business demands. The proprietary platform, BIX (Business InfoXchange system), is designed to create trust without compromising privacy through innovative, blockchain-derived use of technology and data.

The company announced the closing of the final tranche of a private placement. 4,848,889 units at a price of $0.18 per unit for gross proceeds of $872,800. As announced on March 14, 2022, TrustBIX closed on the first tranche of 1,475,445 Units for gross proceeds of $265,580, resulting in a total of 6,324,334 units for gross proceeds of $1,138,380.

The net proceeds from the Private Placement will be used for the growth of newly acquired Insight Global Technology Inc. and general working capital.

Hubert Lau, CEO of TrustBIX, said, “With this funding, we are fueled to grow the Insight line of products.”

TradingView Chart

Our range still holds. It did appear as if we were going to get our breakout in early February 2022, but instead we rejected resistance. It is really about management creating a catalyst for the stock. With some money in the bank, this can happen. We will be watching the support test here to see how price reacts. But long term, the resistance at $0.21 is the real uptrend trigger.

 

Green Rise Foods (GRF.V)

Green Rise is a grower of fresh “Grown in Ontario” produce in 89 acres of greenhouse ranges located in Leamington and Kingsville, Ontario. The best-in-class, contract grower of fresh produce, takes pride in providing high-quality, consistent and dependable produce to meet ever growing consumer demand. Leveraging innovative growing solutions and embracing technology, Green Rise optimizes its operations to generate improved product quality, seek the highest yield, and provide investors with meaningful, growing and sustainable returns.

Recent news details Green Rise’s definitive asset purchase agreement with 2073834 Ontario Limited to acquire a 16-acre greenhouse range (dubbed Green Rise 3 or GR3) located on a 34-acre farm in Kingsville, Ontario for cash consideration of approximately CDN$15 million. The company intends to finance the acquisition with conventional mortgage financing and intends to close it in the second half of May 2022.

GR3 is currently producing and packing high demand, high quality mini peppers with all production committed under contract pricing. GR3’s fixed contract raises Green Rise’s total fixed contract pricing to 70% of the total 2022 production, a 125% increase over fiscal 2021. These contracts add certainty of supply to our marketing partners and allow Green Rise stability with its cash flow in a high input cost environment.

TradingView Chart

On the charts, Green Rise is contained between two zones here. We did bounce nicely at the psychologically important $1.00 zone. A positive sign, and there are lot’s of buyers there as evident by the large wick we got on the test. However, to begin a new uptrend, $1.60 is the resistance we need to break. I’ll be watching this as the technicals look good. We just need to see if we can get accompanying large volume on the break.

 

 

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