CubicFarms Systems Corp. Announces First Quarter FY 2021 Results
VANCOUVER, B.C., NOVEMBER 30, 2020 – CubicFarm® Systems Corp. (TSXV:CUB) (“CubicFarms” or the “Company”), a technology company developing and deploying technology to feed a changing world, today reported its first quarter financial and operating results for the three months ended September 30, 2020.
“We strengthened our capital structure in our first quarter by raising aggregate net proceeds of approximately $1.16 million and we diversified our revenue base by signing two new customers,” said Tim Fernback, Chief Financial Officer of CubicFarms. “We also continued to increase the expertise of our board of directors and senior management team during the reporting period. We believe that these developments will help us to achieve our aspirations to become the global leader in automated, controlled-environment agriculture systems.”
First Quarter Fiscal 2021 Financial Results
- Gross revenue of $400,525 for the three-month period ended September 30, 2020, increased by 66% compared to $240,701 of gross revenue during the same period in the previous fiscal year. The Company is still in its early stage of operations, which has resulted in fluctuating sales on a quarter-by-quarter basis.
- Total operating and general administrative expenses of $2,914,187 for the three-month period ended September 30, 2020, increased by approximately 73.4% compared to $1,680,998 during the same period in the previous fiscal year. This increase is consistent with management’s expectations as the Company continues to expand its overall business, staff, product portfolio and capabilities.
- The Company’s gross margin percentage of 80% for the three-month period ended September 30, 2020, increased by 30% when compared to the same three-month period in the previous fiscal year. The increase in gross margin percentage for the three-month period ended September 30, 2020, was primarily a result of improved shipping costs, and improved gross margins on consumable sales.
- The Company’s research and development expenses of $667,395 for the three-month period ended September 30, 2020, increased by approximately 80%, compared to $370,820 during the same period in the previous fiscal year. The majority of the Company’s increased research and development expenses in the three-month fiscal period ended September 30, 2020, are attributable to the continued automation of the fresh produce growing machines, and research and development associated with growing new crops in the Company’s equipment.
- As of September 30, 2020, the Company had cash and cash equivalents of $3,853,660 compared to $3,604,412 as of June 30, 2020.
First Quarter Fiscal 2021 Operational Highlights
- On July 15, 2020, the Company announced a non-brokered private placement with Harry DeWit (a leading U.S. dairy farmer from Texas) and Company insiders, involving the issuance of 1,659,600 common shares of CubicFarms at a price of $0.70 per share for gross proceeds of up to $1,161,720.
- On August 4, 2020, the Company announced the appointment of Sandy Gerber as Head of Marketing. As Head of Marketing for CubicFarms, Ms. Gerber is responsible for creating and launching a global marketing strategy that successfully positions CubicFarms in the market and drives lead generations and sales.
- On August 7, 2020, the Company announced that Ospraie Ag Science, purchased 7,500,000 common shares of the Company pursuant to private share purchase agreements, with certain shareholders, some of whom were insiders, at a purchase price of $0.70 per common share for total consideration of $5,250,000.
- On September 17, 2020, the Company announced that it appointed Chris Papouras to its Board of Directors. Mr. Papouras currently serves as strategic advisor at leading ag-tech investor Ospraie Ag Science, LLC, which holds an approximate 25.4% interest in the Company.
- As at September 30, 2020, the Company has a total of 175 machines under contract and deposit. The amount of system sales orders that are pending manufacturing and installation is approximately $31 million.
Subsequent to the end of the First Quarter Fiscal 2021
- Subsequent to quarter end, on October 8, 2020, the Company announced the appointment of Dan Schmidt to the role of Senior Vice President of Global Sales, effective October 5, 2020. In this new role, Mr. Schmidt is responsible for growing and leading the Company’s global sales strategy as it enters its next phase of rapid growth.
- Subsequent to quarter end, the Company also announced three new sales to customers in California (USA), British Columbia (Canada) and Indiana (USA).
- On October 6, 2020, the Company announced the sale of its automated, controlled-environment system to a San Diego, U.S.-based ag-tech company developing novel biological pest protection for crops, utilizing live sterile male insects as a form of insect pest control. This is a first-of-its-kind sale and a new market for the Company.
- On November 23, 2020, the Company announced a $2.8 million sale of commercial scale systems to a customer in Abbotsford, B.C., and on November 25, 2020, the Company announced a $3.8 million sale of commercial scale systems to a farming customer in Indiana.
- Furthermore (and as announced on November 25, 2020), the Indiana-based ownership group agreed to purchase 225,000 common shares of the Company at a purchase price of $0.78 per common share for gross proceeds of $175,500 by way of a non-brokered private placement.
CubicFarms’ first quarter financial statements and management’s discussion and analysis will be issued and filed on SEDAR at www.sedar.com on November 30, 2020, and will be available on the same day on CubicFarms’ website at https://cubicfarms.com/investors/.
Investor Relations Services Agreement
The Company announced that it has entered into an investor relations services agreement (the “Services Agreement”) with LodeRock Advisors Inc. (“LodeRock”), pursuant to which LodeRock will provide CubicFarms with strategic investor relations and capital markets communications services.
LodeRock is a group of senior capital markets communications executives who develop and execute communications programs in order to help companies achieve their capital markets objectives, and capture the full potential of their public listing.
Pursuant to the terms of the Services Agreement, CubicFarms will pay LodeRock a monthly retainer fee of $12,000. CubicFarms has no prior professional relationship with LodeRock, and as of the date of this release, LodeRock does not own or control any securities of the Company.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
About CubicFarm® Systems Corp.
CubicFarm Systems Corp. (“CubicFarms”) is a technology company developing and deploying technology to feed a changing world. Its proprietary technologies enable growers around the world to produce high quality, predictable crop yields. CubicFarms has two distinct technologies that address two distinct markets. The first technology is its CubicFarms™ system, which contains patented technology for growing leafy greens and other crops indoors, all year round. Using its unique, undulating-path growing system, the Company addresses the main challenges within the indoor farming industry by significantly reducing the need for physical labour and energy, and maximizing yield per cubic foot. CubicFarms leverages its patented technology by operating its own R&D facility in Pitt Meadows, British Columbia, selling the system to growers, licensing its technology and providing vertical farming expertise to its customers.
The second technology is CubicFarms’ HydroGreen system for growing nutritious livestock feed. This system utilizes a unique process to sprout grains, such as barley and wheat, in a controlled environment with minimal use of land, labour and water. The HydroGreen system is fully automated and performs all growing functions including seeding, watering, lighting, harvesting, and re-seeding – all with the push of a button – to deliver nutritious livestock feed without the typical investment in fertilizer, chemicals, fuel, field equipment and transportation. The HydroGreen system not only provides superior nutritious feed to benefit the animal, but also enables significant environmental benefits to the farm.
For more information, please visit www.cubicfarms.com
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Cautionary Statement on Forward-looking Information
Certain statements in this release constitute “forward-looking statements” or “forward-looking information” within the meaning of applicable securities laws, including, without limitation, statements with respect to CubicFarms’ expected revenue recognition, and the completion of the sale and installation of the system by the customer. Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of CubicFarm Systems Corp., or industry results, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements or information including the Company obtaining the approval of the Offering from the TSX Venture Exchange. Such statements can be identified by the use of words such as “may”, “would”, “could”, “will”, “intend”, “expect”, “believe”, “plan”, “anticipate”, “estimate”, “scheduled”, “forecast”, “predict”, and other similar terminology, or state that certain actions, events, or results “may”, “could”, “would”, “might”, or “will” be taken, occur, or be achieved.
These statements reflect the Company’s current expectations regarding future events, performance, and results and speak only as of the date of this news release. Consequently, there can be no assurances that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Except as required by securities disclosure laws and regulations applicable to the Company, the Company undertakes no obligation to update these forward-looking statements if the Company’s expectations regarding future events, performance, or results change.