Clean Seed Capital Group Ltd.(CSX.V) is known for their Clean Seed’s SMART Seeder™ technologies which they claim to be revolutionary seeding tools that utilize the unique synergy of sophisticated electronic metering and intuitive software control putting row-by-row variable rate technology in agricultural innovation.
CSX.V own a software platform, has a number of patents in precision seeding. The value proposition is relatively simple, reduce waste, promote control, and improve yields while reducing cost.
Coverage was initiated February 2019 with additional notes on September 2019, May 2020, February 2021,
October 2021. and July 2022.
News Releases
July 12 - Agriculture Minister of Haryana, India, Visits Clean Seed Facilities in Saskatchewan: This high-profile visit follows last weeks’ very successful introduction and initial demonstrations of the company’s SMART Seeder technology “MINI-MAX™” at Chandigarh University in India with the Clean Seed team.
Minister Dalal and his delegation are in Saskatchewan as part of a larger mandate focused on agricultural innovation and technology that can benefit the farmers of Haryana. Clean Seed is pleased to advance the discussions with Minister Dalal for the introduction and integration of the SMART Seeder technology into Indian farming.
July 18 - Farm Credit Canada Provides Production Financing for SMART Seeder MAX: Entered into a loan agreement with Farm Credit Canada (“FCC”) to provide financing for the 2023 production run of the SMART Seeder MAX.
Under the loan agreement, Clean Seed may borrow $1,000,000 to fund production of the SMART Seeder MAX. Amounts borrowed bear interest of 8.45%, will be repayable from the proceeds of the sales of the 2023 SMART Seeder units and if not otherwise repaid prior, will be due September 1, 2023.
Aug. 24 - Unveil its Flagship Smart Seeder Max-S at US Farm Progress Show and Update:
Our four campaign pillars for SMART Seeder™ MAX in the United States are:
1) US Dealer recruitment for the SMART Seeder™ MAX 48/15 – (US configuration – 48 row/ 15” spacing),
2) End consumer lead generation and pre-order campaign.
3) Strategic partnerships with US based Agronomic and Ag Tech Companies
4) Educate ‘4R Nutrient Stewardship’ provided by the SMART Seeder MAX™
Further to the July 18, 2022 release, whereby the Company secured initial production financing of $1,000,000, the Company has now also finalized a non-brokered private placement of $630,000 for working capital purposes. The private placement includes a $300,000 investment by Ag-West Bio, Saskatchewan’s bioscience industry association, whose mandate is to strengthen the bioeconomy industry in Saskatchewan.
Pursuant to the private placement, the Company will issue two debentures convertible into common shares for gross proceeds of $630,000 at $0.25 per share, The debentures are not convertible by the holders until August 1, 2023.
The Company has granted a consultant 500,000 stock options at $0.20 per share until December 31, 2023. The consultant will be working on business development purposes and to expand market awareness.
Sep. 9 - Clean Seed's documentary, "Earth on the Edge - Save Our Soils", selected a finalist for the 48th Annual Alberta Film & Television Awards( aka the “Rosie’s”). The Rosie’s celebrate excellence and outstanding achievement.
Sep. 12 - Teams with Northern Farmers Producer Mega FPO to Launch 1,000 SMART Seeder Machines in India: Entered into a Letter of Intent (“LOI”) with the Northern Farmers Producer Company Limited Mega Farmer Cooperative (“Northern Farmers Mega FPO” or “FPO”) to launch the SMART Seeder MINI-MAX™ in India.
Upon successful completion of the activities within the LOI, FPO will market and distribute 1,000 SMART Seeder MINI-MAX™ machines from 2023-2025 in the Punjab and Haryana regions of India.
Northern Farmers Mega FPO is a leading organization of 43 Farmer Cooperatives (FPOs) involving more than 12,000 farmer members from 4 States in North India. Under the LOI, the parties will work together to 1) conduct field trials in the fall compared to local seeding equipment alternatives, 2) obtain subsidy approvals from local governments for FPO members to purchase MINI-MAX™ units and, 3) conduct value proposition and marketplace analyses.
Upon successful completion of these activities, the parties anticipate entering into a definitive agreement whereby FPO will become a distributor of the SMART Seeder MINI-MAX™ in the Punjab and Haryana regions of India.
Oct. 6 -Brazil and United States Approves Further Patents: Received allowances for the grant of patents in each of Brazil and the United States. The Company expects the patents to be issued in the coming months
United States - Expansion of its Variable Rate Metering Patent: The Company’s Variable Rate Metering patent secures Clean Seed’s ability to micromanage precision seeding and planting operations of multiple product inputs on every square foot of a farmer’s field. The Company’s original variable ratio metering US patent was issued in February 2018 and the Company has two sets of divisional applications in the US to expand its patent claims, the first of which was granted in 2020. This new second application has now been accepted for grant, further expanding coverage.
Brazil - Flow Control Patent: Flow control is one of the core innovations in the Company’s on-demand air system for the SMART Seeder™ technology. The flow control patent dovetails the innovations and processes between the Company’s staged air transfer system and its variable ratio metering system. The on-demand air system is a key piece to the SMART Seeder™ technology portfolio and a cornerstone to the Variable Rate Metering technology in seeding and planting equipment. This flow control patent family was filed subsequently and therefore, strengthens our Variable Rate Metering patent family, which effectively extends the overall life of that patent portfolio. We expect to receive additional similar approvals from other countries applied to in the coming months.
Nov. 22 - Completes Final Phase of Mini-Max(TM) Technology Demonstrations In India: Completed the final stages of the MINI-MAX™ winter wheat seeding technology demonstrations in Punjab and Haryana, in collaboration with Northern Farmers Mega FPO and Chandigarh University.
The Company has amended a promissory note totaling $510,500 whereby the lender agreed to advance the Company an additional $400,000 to increase the principal amount under the note to $910,500. The promissory note will continue to bear interest of 8% per annum and will now mature on March 31, 2023.
Funds will be used for general working capital purposes. As consideration for amending the promissory note, the Company will issue the creditor 2,000,000 bonus warrants (the “Bonus Warrants”). Each Bonus Warrant will entitle the holder to purchase one common share of the Company at a price of $0.20 per share until March 31, 2023.
Feb. 13 - Signs MOU with Mahindra and Mahindra Limited: To bring the SMART Seeder™ technology to India and to collaborate on other related opportunities to benefit each other’s business interests.
Part of the Mahindra Group, Mahindra’s Farm Equipment Sector (FES) is the world’s largest tractor company by volume and owns India’s two largest selling tractor brands. With a presence in over 50 countries, Mahindra FES has technology centers in Japan, Turkey, Finland and India, with a wide range of tractors and a growing farm machinery.
Clean Seed and M&M will work towards developing a collaborative mechanism to manufacture and deliver the SMART Seeder MINI-MAX™ and related technologies to Indian Farmers and other jurisdictions agreed by both parties.
Founded in 1945, the Mahindra Group is one of the largest and most admired multinational federation of companies with 260,000 employees in over 100 countries. It enjoys a leadership position in farm equipment, utility vehicles, information technology and financial services in India and is the world’s largest tractor company by volume.
Feb. 23 -Australia Approves Patent - Clean Seed Back on the Ground with Partners in India:
Australia Patent Approval: The Company has received allowance for the grant of patent in Australia for its flow control technology and has submitted the necessary filings to have the patent formally granted. India - After the successful completion of these 2 phases our team is scheduled to demonstrate corn planting with MINI_MAX™ this coming week with our partners, Northern Mega farmers FPO, Mahindra Group, Mahindra’s Farm Equipment Sector (FES) and CU.
Mar 1 - Clean Seed Hosts Canadian Delegation In India and MINI-MAX™ Specialized Corn Planting Demonstrations.
Mar. 31 - Shareholder Update:
Advancing Mahindra MOU: Under the terms of the MOU with Mahindra, the company is advancing toward the completion of the first of two Alpha preproduction MINI-MAX™ units. Mahindra is currently manufacturing the frames and hoppers, while Clean Seed is finalizing the software adaptations and metering systems for the field-ready machines. These MINI-MAX™ units are expected to be completed in May 2023.
Further to the Sept. 12, 2022 release, the company reports that Northern Mega Farmers FPO have confirmed its initial order of 1,000 MINI-MAX™ machines with Mahindra laying the groundwork for the first production run in India.
Private placement bridge financing: finalized a non-brokered private placement of promissory notes for gross proceeds of $1,203,000 for working capital purposes and to finance the company's objectives for the spring.
The notes will mature 12 months from the date of issue. The company may elect to satisfy the interest payments due under the notes by the issuance of common shares subject to acceptance of the TSX-V at each such instance. In connection with the notes, the company will issue an aggregate of 1,415,293 bonus shares at 17 cents per share.
Clean Seed will also issue 376,470 shares to Cormark Securities Inc. as a finder's fee for subscribers that Cormark introduced to the company. Insiders of the company purchased a note of $203,000 in the offering.
Clean Seed restructures promissory notes: The company has amended two promissory notes aggregating $1,410,500 of principal, whereby the lenders have agreed to defer the maturity date of the promissory notes from March 31, 2023, to Sept. 30, 2023. As consideration for amending the promissory notes, the company will extend the expiry date of three million outstanding bonus warrants from March 31, 2023, to Sept. 30, 2023. Each bonus warrant will entitle the holder to purchase one common share of the company at a price of 20 cents per share until Sept. 30, 2023.
Apr. 18 - MINI-MAX Precision Seeding Program Nets 26% Yield Increase in India: The results from utilizing the SMART Seeder MINI-MAX™ in a side-by-side comparison to the most current and most utilized seeding equipment available in India shows an overall increase to farm cash flows of 36% using SMART Seeder MINI-MAX™ comprised of a:
i) 19% reduction in cost per acre;
ii) 26% increase in per acre crop yield;
iii) 67% reduction of chemical fertilizer use
iv) 67% reduction of diesel consumption.
May 3 - Extends Warrants: further to its news release of May 5, 2022 (re: private placement of 6,035,000 units), the Company is proposing to extend the expiry date of 3,017,500 (at $0.35 per share), from May 6, 2023 to May 6, 2024.
Summary
Earnings
Clean Seed Capital Group Ltd. is still considered a venture and in essence "pre-revenue". However, in last year, the company did show over $1.2M in license and royalty revenues, This year, no such income has been reported to date.
As of December 2022, Income loss was higher than FY 2021 with only $0.23M in cash.
Financing
A number of activities took place in the last period.
First, a Loan Agreement with Farm Credit Canada (“FCC”) of $1M was reached for the financing the 2023 production run of the SMART Seeder MAX (July 2022). Subsequently, a non-brokered private placement of $0.63M ($0.25 cents) which includes $0.3M investment from Ag-West Bio was finalized (August 2022).
Thereafter, a promissory note* was amended twice; i) initially from $510,500 to $910,500 (8% interest per annum) maturing on March 31, 2023. (Nov. 2022); ii) Aggregating $1,410,500 of principal, deferring the maturity date from March 31 2023, to Sept. 30 2023 (March 2023). As part of the deal, 3M Bonus Warrants were issued at $0.20 cents.
Finally, a non-brokered private placement of promissory notes for gross proceeds of $1,203,000 was also completed in March 2023 with 1,41M bonus shares issued at $0.17 cents.
Warrants
Overall, a total of 6M warrants are outstanding with 3M recently added as of March 31, 2023.
Stock Options
500,000 stock options were issued at $0.20 cents until December 31, 2023 to a consultant working on business development purposes and to expand market awareness. (August 2022).
Mini-MAX
January 2022, Clean Seed Capital Group introduced the Mini-MAX™, a scaled-down model of its North American SMART Seeder MAX™ with the intent to market internationally starting with India, USA and Australia.
CSX.V completed initial demonstrations in India (June 2022) in conjunction a Farmer Owned Cooperative, CII Business Group, Chandigarh University and with the support from the Agriculture division of multiple governmental jurisdictions (Haryana and Punjab). CSX.V personnel also toured the CLAAS India Moringa factory.
In July 2022, the Agriculture Minister of Haryana visited Clean Seed Facilities in Saskatchewan. In November 2022,
Clean Seed reported having completed the Final Phase of Mini Max Demonstration in India. This time in Northern Farmers Mega FPO and Chandigarh University. The company reportedly demonstrated with Northern Farmers Mega FPO and Mahindra Group, Mahindra’s Farm Equipment Sector (FES). In March 2023, a Canadian Delegation was hosted in India and MINI-MAX™ Specialized Corn Planting Demonstrations ensued. In April 2023. Clean Seed reported that the Mini Max Precision Seeding Program delivered 26% in Yield Increase (April 2023)
Max-S
Back in May 2022 Clean Seed reported that Canada West Harvest Centre Places Initial Orders for SMART Seeder MAX Units:; an initial order for three (3) 2023 SMART Seeder MAX-5 Series-60 units for a demonstration programs.
Unfortunately there has not been any updates on this report. However, the Smart Seeder Max-S was introduced at the US Farm Progress Show (August 2022). Otherwise, there was little mention of the Saskatoon facility.
Patents
Two activities this period: i) A grant of patent in US ( Variable Rate Metering) and Brazil (Flow Control) in October 2022, as well as, ii) A grant of patent in Australia (Flow Control) along with a submission for India; February 2023.
In short
Despite having received orders for three 2023 SMART Seeder MAX-5 Series-60 units, the company has yet to begun manufacturing them. Hence the previously reported commercialization efforts have come up shorts. In fact, no sales activity from all the previous demonstrations in North America have been reported to date.
Based on their activities, Clean Seed appears to focus their monetization efforts towards the Mini-Max in India.
Advancing Mahindra MOU: Under the terms of the MOU with Mahindra, the company is advancing toward the completion of the first of two Alpha preproduction MINI-MAX™ units. Mahindra is currently manufacturing the frames and hoppers, while Clean Seed is finalizing the software adaptations and metering systems for the field-ready machines. These MINI-MAX™ units are expected to be completed in May 2023
Results for the recent trials in India (April 2023) has been positive and may lead to a definitive agreement.
“Our mandate with MINI-MAX™ in India was to demonstrate the scalability of our technology portfolio, from our North American SMART Seeder MAX™ Series 60, into a compact design for additional international markets. We are proud to have confirmed with our partners in India that MINI-MAX™ produced benefits consistent with those of the SMART Seeder MAX™ here in North America as we move closer to a definitive agreement to mass produce the MINI-MAX™ for the Indian market and other international opportunities." - Graeme Lempriere, Chairman & CEO of Clean Seed.
The investor presentation (which is now a year old) still does a good job of outlining the current opportunity. The total addressable market is large; $6.5B (US and Canada) and $18.5B for the rest of the world. In addition, it articulates a few paths for the company namely: License the smart seeder Max Technology to Major OEMs with Global Reach.
Should Clean Seed succeeds in India, it will be finally off to generate revenue using a scalable business model that can be replicated worldwide. In the event of a positive catalyst, investors can expect resistance at $0.17 cents (Convertible Debenture Interest payments ;1.4M), $0.20 cents (stock options; 0.5M, warrants; 3M) and $0.25 cents (Convertible Debentures strike price). Hence, the current valuation is reflective of those financing decisions.
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