04:00:15 EDT Thu 24 Sep 2020
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Cubicfarm Systems Corp
Symbol CUB
Shares Issued 84,179,714
Close 2020-02-21 C$ 0.35
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Cubicfarm Systems loses $1.98-million in fiscal Q2 2020

2020-02-24 19:00 ET - News Release

Mr. Dave Dinesen reports


CubicFarm Systems Corp. has released its financial and operating results for the three months ended Dec. 31, 2019.

Key financial highlights in fiscal second quarter 2020:

  • Revenue for the three months ended Dec. 31, 2019, was $320,140, and gross margin was 35 per cent.
  • Total operating and general administrative expenses were $1,604,165, compared with $641,895 for the same period in the previous year.
  • The company incurred research expenses in the amount of $421,192 for further automation of its fresh produce systems, ability to grow new crops in the systems and further transformation of these crops through juicing. These costs include salaries, materials, parts and consumables related to research activities. Research costs for the three months in the previous year were $1,489,480.
  • Net loss and comprehensive loss for the three months ended Dec. 31, 2019, came to $1,989,433, compared with $2,339,301 for the three months ended Dec. 31, 2018.
  • System sales orders that are pending installation are approximately $6.2-million (U.S.). Revenue from machines is dependent on the completion of the sales and delivery process -- consisting of the signing of the purchase agreement, deposit payments, manufacture of machines, customer's site preparation, and shipping and installation of the system.

Operational highlights in fiscal 2020:

  • On July 9, 2019, Cubicfarm's common shares commenced trading on the TSX Venture Exchange as a Tier 1 issuer under the symbol CUB.
  • On July 11, 2019, the company announced a signed agreement for a large-scale commercial Cubicfarm system in the Calgary, Alta., area and received $412,764 in June, 2019, from the customer as a deposit. The agreement and deposit cover the Calgary region, where this customer will be the exclusive Cubicfarm licensee. The system's plan includes 20 Cubicfarm patented growing machines, two patented germination machines and a proprietary supporting irrigation system. The total sales agreement is valued at approximately $3.2-million (U.S.) and the company expects to complete the installation of the system by the end of March, 2020.
  • On Sept. 24, 2019, the company appointed Rodrigo Santana as its interim chief financial officer. Supported by the Cubicfarm finance team, Mr. Santana will also continue performing his role as chief operating officer. Mr. Santana is very experienced in the dual role of COO and CFO, as he held both positions in his previous employment at Sacre-Davey Engineering.
  • On Oct. 8, 2019, the company announced that it finalized an agreement for the sale of a large-scale Cubicfarm system in Montana, United States, and received an initial deposit of $332,356 in October, 2019, from the customer. This was the company's second sale of a large-scale system in the United States. The system's plan includes 18 Cubicfarm patented growing machines, two patented germination machines and a proprietary supporting irrigation system. The total sales agreement is approximately $3-million (U.S.), representing the second-largest sale agreement to date. The company expects to complete the installation of the system by the end of March, 2020.
  • On Oct. 28, 2019, the company announced that ZenCube, its vertical farming machine for growing hemp and cannabis, is fully operational at a showcase and R&D (research and development) facility in Langley, Canada.
  • On Nov. 6, 2019, the company announced that it has entered into a global reseller agreement with Groviv, a leader in the science and technology of controlled-environment agriculture. Groviv, a division of Nu Skin Enterprises -- a minority investor in Cubicfarm -- will lead global sales for Cubicfarm and has appointed Joe Huston, its vice-president of business development, to direct the effort. Mr. Huston has extensive retail sales and distribution experience, working with brands such as Walmart, Kroger and Costco.
  • On Dec. 11, 2019, the company announced that it has entered into a binding purchase agreement effective Dec. 10, 2019, to acquire HydroGreen Inc. HydroGreen is a manufacturer of fully automated hydroponic growing systems that produce live, green livestock feed, prioritizing animal health and performance. HydroGreen's unique process sprouts grains, such as barley and wheat, in a controlled environment with minimal use of land, labour and water. The system performs all growing functions, including seeding, watering, lighting, harvesting and reseeding -- all with the push of a button -- to deliver nutritious livestock feed without the typical investment in fertilizer, chemicals, fuel, field equipment and transportation. Cubicfarm also signed an authorized reseller agreement with Artex Feed Solutions to market and sell the HydroGreen systems. Artex Feed Solutions is a joint venture company that is 25 per cent owned by Cubicfarm and 75 per cent owned by Artex Barn Solutions, a leader in agricultural supplies for over 40 years.
  • On Dec. 23, 2019, the company announced the appointment of Jeff Booth as a member of its board of directors. Mr. Booth has more than 25 years of experience as an entrepreneur, responsible for the BuildDirect website, a growing innovative on-line marketplace, to over $120-million in annual revenues.
  • On Jan. 3, 2020, the company announced that, further to its Dec. 11, 2019, announcement, it has completed the acquisition of HydroGreen.
  • On Jan. 8, 2020, the company announced the appointment of Dino Accili as its chief revenue officer to oversee all revenue generation aspects of the business. He has an extensive background in the hydroponic and horticulture supply industries, along with senior executive-level experience in manufacturing and distribution in various industrial environments.
  • On Jan. 13, 2020, the company announced the appointment of Sana Talebi as lead R&D (produce). Mr. Talebi will lead the company's produce R&D program to research new crops that will perform well in Cubicfarm's fresh produce system, and optimize current growing for continued incremental performance improvements.
  • On Jan. 22, 2020, the company announced that at the annual general meeting of shareholders of the company held in Vancouver, B.C., on Jan. 22, 2020, David Dinesen, Jeffrey D. Booth, John de Jonge, John Hoekstra, Leo Benne, Michael McCarthy, Christian Ericson and Daniel Burns were re-elected as directors of the company. The shareholders also reappointed MNP LLP as the company's auditor for the ensuing year and authorized the directors to fix its remuneration.
  • On Jan. 23, 2020, the company announced the appointment of Mr. Booth as chairman of its board of directors.
  • On Jan. 30, 2020, the company announced that it has increased its shareholding in Artex Feed Solutions from 25 per cent to 50 per cent.

Cubicfarm's chief executive officer, Mr. Dinesen, commented: "The events of the previous quarter will serve to set up Cubicfarm for continued growth. We closed our acquisition of HydroGreen Inc. and integration is well under way as we work diligently with our reseller Artex Feed Solutions to boost sales of our nutritious livestock feed systems.

"We have made strides in expanding the market for our fresh produce systems by commercializing our systems' propagation capabilities through a stand-alone propagation machine and high-density crop machine that can be marketed and sold to farmers, greenhouse growers, nurseries and the flower industry. Each propagation machine can germinate approximately 100,000 plants, taking them from seed to seeding at a nearly 100-per-cent success rate, with several other high-value features. Our high-density broadcast seeding crop machine is configured with nearly double the number of trays to accommodate high-value, low-light, broadcast-seeded crops such as microgreens, arugula, cilantro and radish. We expect that customer satisfaction from these relatively affordable machines will lead to sales of our larger systems."

Cubicfarm's second quarter financial statements and management's discussion and analysis will be issued and filed on SEDAR on Feb. 24, 2020, and will be available on the same day on Cubicfarm's website.

About Cubicfarm Systems Corp.

Cubicfarm is a technology company that is developing and deploying technology to feed a changing world. Its proprietary technologies enable farmers around the world to grow high-quality, predictable crop yields. Cubicfarm has two distinct technologies -- the patented Cubicfarm system and the Cubicfarm HydroGreen system -- that address two distinct markets.

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