Dear Shareholders,
We have had an incredibly busy quarter here at CubicFarms.
We have installed a system each month this quarter and are working on some of our largest deals yet. We’ve added to our team, and developed new growing abilities utilizing our technology. Suffice to say, things are going well, but we are very busy.
Some of you have asked for an update on our public listing timeline. While we were shooting to list for the end of March, we just aren’t going to hit that with all that is going on. Our executive committee has met, and we can commit to being prepared for a public listing date of Friday, May 31st, 2019, subject to TSX approval of course. We remain focused and optimistic of achieving this goal.
I realize this date represents a couple month delay from our earlier guidance, however, let me share a few of the things we are doing and focused on, and I trust you will agree it is the right decision to delay slightly.
Firstly, we are pleased to announce the name of our strategic investor, namely, Nu Skin Enterprises.
Trading under the symbol NUS on the NYSE, Nu Skin is a premier provider of personal skin care product and dietary supplements.
Nu Skin is a multinational company operating in 54 markets.
Nu Skin invested $10 million CDN into CubicFarms at a $100 million pre-money valuation.
The connection between CubicFarms and Nu Skin is multi-faceted. One of Nu Skin’s goals is to ultimately have complete control over as many of the ingredients used in their products as possible, which will give them a significant advantage in their markets.
Nu Skin has experimented and invested in the controlled environment agriculture space over the past few years for just that reason.
Additionally, they see other opportunities in the CEA space that can be exploited over time.
Immediately however, in addition to the investment, Nu Skin has ordered a 7 machine CubicFarm system, that has been delivered and installed at their Vineyard, UT site to commence growing and testing various ingredients. This represents our first installation into the USA, and our first system sale for the purposes of growing ingredients for the nutraceutical space. We believe this the nutraceutical space represent a significant new vertical an opportunity for CubicFarms going forward.
CubicFarms has also raised an additional $2.7 million at the same $100 million pre-money valuation from private investors. Over the next month, we will also seek to raise an additional $6 million so that we can be well capitalized before we list.
Other quick updates:
CubicFarms Pitt Meadows location has entered into an agreement to grow significant amounts of nutraceutical ingredients for a customer. We are excited about continuing to grow this vertical.
The CubicFarm joint venture in Edmonton, Swiss Leaf Farms, is in week 7 of growing and selling produce and it is going well, growing lettuces and herbs. They expect to commence microgreen growing in the coming weeks to round out their production.
Ontario CubicFarm customer, Del Fresco Pure, is now being installed after severe cold delayed their install this winter. (Too cold to pour concrete) The goal is an initial harvest by the end of April. In the meantime, we have been supplying Del Fresco with Cubic grown produce for them to seed their market and it is going well. We are also attending our 3rd trade show together next week, the Produce Marketer’s association show in Montreal, PQ.
As we evolve, it is becoming clearer that there are several more verticals that CubicFarms’ growing technology can exploit beyond food/ produce. Similar to our recent expansion into growing nutraceutical ingredients, we have been approached to grow animal feed and are working on our first deal to install for that purpose.
We are also negotiating our first “Mega farms” – 100 machine or larger installations. We have several in our pipeline and hope to secure at least one of them in the coming months. As you can imagine, they are significant sales cycles, but the demand for large scale infrastructure is clearly there, and on a global basis.
We have also built out our team in the past month. We have also hired our first full time CFO, project manager, IT / Data manager, operations manager for produce operations, and an operations manager for manufacturing and engineering. Next week we are bringing on a full-time manager of installations.
Our team is busy, but we are excited, focused, and executing well. We are adding to our excellent team, are well capitalized, and enjoying sales and revenue. We appreciate the support of our investors and shareholders, and I look forward to bringing you another update within a few weeks.
Please don’t hesitate to reach out to me should you have any questions.
Sincerely,
Dave Dinesen
CEO CubicFarm Systems Corp.
“Our family is dedicated to protecting the prairie. We strive to work smarter on our ranch by applying our business and consulting expertise and focusing on ranch innovation and sustainability. With climate change, technology advances and decreasing natural resources, we know we must operate our ranch differently. With the HydroGreen system, we can now produce better, faster, and stronger for ourselves and the planet.”
“My family is originally from Holland, I grew up on a dairy farm, and I’ve been in the industry all my life. Talking with my parent’s friends who are immersed in the veggie industry, they recommended Iinvestigateoptions to produce lettuce in a sustainable way. I looked into the greenhouse and indoor vertical warehouse systems, but they could not meet my needs. I needed to minimize my risk, space and lower my labor costs.
“After a significant drought and taking over my family ranch, I was looking for a more cost-effective way to produce our fodder. I knew there were better producer options out there, but most of the systems had too much manual labour and seed obligations that were not cost-effective. The HydroGreen system’s value proposition was compelling. The fodder’s nutritive value is exceptional for our herd and the system is time-efficient. I run one piece of machinery for 35 mins a day when in the past, it would have taken me a few hours a day and three machines using traditional equipment. In our neck of the woods, one six-rack HydroGreen system is the equivalent to 320 acres of South Dakota prairie sitting inside a 60 x 40 building. It is essentially drought resistant ‘Land on a Stand’ which produces grass every day, in any weather, in less than an hour.”