Clean Seed Capital (CSX.V) is a designer of precision farming products. They are known for their Clean Seed’s SMART Seeder™ technologies which are 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 a recent note in September 2019. Below is an update on its recent activities.
Norwood is a respected agricultural equipment manufacturer located in Horace North Dakota USA, with a strong history of OEM equipment production for major mainline agricultural equipment manufacturers.
The Joint Venture (a Canadian entity) will provide Clean Seed a clear path to commercializing its SMART technologies without the financial requirements of a manufacturing plant, thus dramatically reducing its capital requirements.
Each of Clean Seed and Norwood will hold a 50% interest in the ownership of the newly formed entity. Clean Seed will license its SMART Seeder™ technologies to the Joint Venture for a renewable seven-year term. Norwood will license its front folding frame rights, cart, hydraulics and other related technologies to the Joint Venture on the same terms as Clean Seed. Norwood will undertake mechanical modifications, mechanical integration, hydraulic integration, related prototyping and mechanical engineering, all of which will be the property of the Joint Venture. Both Clean Seed and Norwood will contribute their respective components for production units to the Joint Venture.
Nov. 26 - Brazil Approves Patent Grant for SMART Seeder Technology. The patent covers Clean Seed’s individual point, high resolution and variable rate seeding innovations. CSX.V expects to receive formal grant of the patent in early 2020.
CSX.V now been granted patents encompassing its SMART Seeder technology innovations in Canada, United States of America, Australia, France, United Kingdom, Germany, Poland, Italy, Hungary, Spain, Turkey, Romania, China, Russia, Kazakhstan, Belarus and Ukraine. CSX.V expect to receive patent approvals in additional countries in future.
Dec. 10 - USA Patent Office Approves Smart Seeder Technology Patent Expansion. This patent will broaden the coverage of the patent for the Company’s individual point, high resolution, multiple product variable rate metering patent in the United States of America which we announced on February 8, 2018. CSX.V has submitted its grant fee which is the final step to the patent being granted and expects to receive formal grant of the patent in early 2020.
Options: Amend 3,36M outstanding incentive stock options granted between September 2011 and April 2018 from exercise price ranging from $0.35 to $0.60 per share to $0.20 per share, and extend the expiry date of 3,2M of these options to December 31, 2023. Also granted 1,35M incentive stock options to directors, officers, consultants and employees of the Company. Each option permits acquisition of one common share at $0.20 until December 31, 2023.
Jan. 13 - Harvest International's Unfounded Claim Against Clean Seed Dismissed. successfully addressed the complaint filed against it by Harvest International Inc. in the US District Court for the Northern District of Iowa on July 16, 2019.
In response to the lawsuit, CSX.V filed a Motion to Dismiss the key claims asserted. Before the court ruled on the motion, Harvest agreed to dismiss the lawsuit in its entirety with prejudice, ensuring that this matter is over and cannot be brought back to court in any form.
Feb. 11 - Closes Strategic North American Joint Venture Agreement with Norwood. The Joint Venture provides Clean Seed a clear path to commercializing its SMART technologies without the financial requirements of a manufacturing plant, thus dramatically reducing its capital needs going forward.
The newly formed partnership is committed to commercializing a whole new class of seeding and integrated planting equipment for the North American market. Our teams are also collaborating on several additional opportunities that will further differentiate our offerings from the current markets in a variety of applications.
Feb. 20 - Introduces Seed Singulation Technology for SMART Seeder MAX-S(TM) with Partner J.Assy. CSX.V has entered into a long-term license, distribution and collaboration agreement with CISA Ind. e Com. Eireli (“J.Assy”) for the global supply of its J.Assy Singulation Meter and related technologies.
Under the OEM supply portion of the agreement, J.Assy will manufacture and supply adapted Clean Seed branded singulation meters, seed disks and related components. This arrangement will provide Clean Seed with singulation solutions for all major crops in North America including canola, corn and soybean.
In addition to our current roll out plans, Clean Seed will be working closely with J.Assy to bring our SMART Technologies to Brazil as our collaboration and partnership progresses.
JV Norwood Financing
Related to closing the Company’s joint venture with Norwood and to finance its contributions for introducing the SMART Seeder MAX-S™ this spring, the Company has raised $1,27M through a non-brokered private placement of 5,11M units of the Company (the "Units") at a price of $0.25; Warrant 0.50 cents.
The Company initiated the Offering in December 2019, but only recently closed the Offering upon the Norwood transaction being finalized and disclosed. Intends to use the proceeds of the Offering for its contribution in introducing the SMART Seeder MAX-S™, its related development activities and general working capital. Certain participants in the Offering, who are investing a total of $1,04M, may be considered “related parties” for the purposes of Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions (“MI 61- 101”).
Apr. 2 - Closes US$5M Strategic Agreement with US based AMVAC, an American Vanguard Company. Strategic Agreement with US based AMVAC, an American Vanguard Company. AMVAC delivers unique solutions for the broad array of challenges to enhance agricultural productivity and safeguard public health. AMVAC is also recognized as an industry leader in closed delivery systems, like its SmartBox® closed delivery application system, which serves to reduce risk of exposure to users and applicators. Building on that expertise, AMVAC has developed a more advanced system called SIMPAS™ (Smart Integrated Multiproduct Prescriptive Application System). AMVAC’s patented SIMPAS system enables simultaneous variable precision rate application of multiple crop protection and nutritional inputs to maximize harvest yield, minimize grower costs, optimize soil health and benefit environmental sustainability.
As part of this relationship Clean Seed will license AMVAC certain intellectual property rights for a US$2,50M upfront fee and an ongoing royalty of certain delivery systems. AMVAC will also be investing an additional US$2,50M through the purchase of 6,25M common shares of the Company at a price of US$0.40 per share (the “Offering”), bringing the total up-front investment to US$5,000,000. AMVAC's Dr. Ulrich (Bob) Trogele, PhD CEO to join CSX's Board.
Apr. 28 - to Electrify the Ag Industry with EXRO Technologies. Under this Collaboration Agreement, CSX.V and Exro to develop and implement sustainable, energy supportive solutions for key platforms targeting the agricultural market.
Exro has designed, patented and implemented its proprietary Electronic Transmission (ETR) system and related software that controls electric motor coils through individual coil switching.
This innovative technology expands speed and torque capability and improves machine efficiency across a wider operating range. The introduction of advanced control algorithms into energy conversion at the level of individual coils and cells opens up a new realm of opportunities and benefits for the agricultural sector.
May 6 - Retains Renmark Financial Communications Inc. Up to $12,000 per month, starting May 1, 2020 for six months.
May 12 -Finalizes US$5M Transaction With AMVAC With TSX Venture Exchange. Approval Of US$2.5M Private Placement. AMVAC invested US$2,50M through the purchase of 6,2M shares at a price of US$0.40 per share.
As part of this relationship Clean Seed has also licensed AMVAC certain intellectual property rights for a US$2,50M upfront fee and an ongoing royalty of certain delivery systems.
The Company also announces that Mr. Antony Edwards has stepped down from its board of directors due to a conflict of interest. Mr. Edwards will continue to serve as the Company’s intellectual property legal counsel as Partner and Practice Group Leader at Field Law LLP.
Further to the August 7, 2019 releases, the Company has extended the expiry date of 1,98M warrants exercisable at $0.50, and the expiry date of the related promissory note, to October 31, 2020.
May 25 - Corporate Update. The Corporation expects to file its Interim Filings on or about July 10, 2020.
Also granted 25,000 stock options to a director, exercisable at a price of $0.30 per share until December 31, 2023.
The Corporation confirms that there have been no material developments, other than those disclosed through news releases, since the filing of its interim financial statements for the period ended December 31, 2019.
Summary
Strategic Joint Ventures, Agreements, and Partnerships,
Upon deciding not to proceed with Harvest International, (April 2019) and being served with a complaint, (August 2019),
CSX.V announced a Strategic Joint Venture with Norwood in November 2019. The aim is still to produce and distribute agricultural technologies in North America. In January 2020, Harvest International's agreed to dismiss the lawsuit.
In February 2019, the Norwood JV deal closed and CSX.V re-iterated its intent to commercializing a new class of seeding and integrated planting equipment with Norwood in North America. This is very much inline with the prior objective CSX.V set for itself and is alignment with the diverse product line offered by Norwood, (i.e. Yieldtrack).
Also in February 2020, CSX.V announced that it was partnering with J.Assy to introduces Seed Singulation Technology for SMART Seeder MAX-S(TM). The agreement includes a long-term license, distribution and collaboration agreement for the global supply of its J.Assy Singulation Meter and related technologies.
Under the OEM supply portion of the agreement, J.Assy will manufacture and supply adapted Clean Seed branded singulation meters, seed disks and related components. This arrangement will provide Clean Seed with singulation solutions for all major crops in North America including canola, corn and soybean. CSX.V also indicated that it will work closely with J.Assy to bring our SMART Technologies to Brazil in the near future. Here's a primer on J Assy's seed meters.
In early April 2020, CSX.V announced a $5M Strategic Agreement AMVAC, an American Vanguard Company.
The intent is for Clean Seed to license AMVAC certain intellectual property rights for a US$2.50M upfront fee and an ongoing royalty of certain delivery systems. The other $2.5M was under a form of immediate financing (See below).
Under these terms, AMVAC's CEO (Dr. Ulrich (Bob) Trogele, PhD) will join CSX's Board of Directors.
This agreement has major implications for CSX.V not only because it licensed it IP but also because AMVAC directly invested in the company. Again, AMVAC is in the crop protection business with products like SmartBox and SIMPAS™ (Smart Integrated Multiproduct Prescriptive Application System) which are synergistic and complementary to CSX.V.
In late April, CSX.V disclosed that it plan to work with EXRO Technologies. Under the agreement, CSX.V and Exro are to develop and implement sustainable, energy supportive solutions for key platforms targeting the agricultural market. CSX.V aim is not only to electrify the Agriculture industry but also expand the capacity and utilization of its engines. This deal makes sense becauseit directly CSX.V's intention with Norwood, J Assy, and AMVAC.
Patents
In late November 2019, CSX.V was granted a Patent for its SMART Seeder Technology (Brazil) joining a long list of countries it has patents from: Canada, United States of America, Australia, France, United Kingdom, Germany, Poland, Italy, Hungary, Spain, Turkey, Romania, China, Russia, Kazakhstan, Belarus and Ukraine.
In early December, it received an approval for it Smart Seeder Technology Patent Expansion by the US Patent Office.
As noted in the release, the original patent dates from February 2018. This is also very important given that CSX.V is moving to expand the reach of its capabilities with its new partners.
Financing
In early December, (same date as US Patent announcement) CSX.V proposed to amend 3.36M outstanding incentive stock options from exercise prices ranging from $0.35 to $0.60 per share to $0.20 per share, and also extend the expiry date of 3.2M of these options to December 31, 2023.
In addition, CSX.V granted 1.35M incentive stock options to directors, officers, consultants and employees. Each option permits acquisition of one common share at $0.20 until December 31, 2023.
In late February (same date as J.Assy partnership announcement), CSX.V disclosed having raised $1.27M through a non-brokered private placement of 5.11M units of the Company at a price of $0.25; Warrant $0.50 cent. CSX.V reported that it intends to use the proceeds for its contribution in introducing the SMART Seeder MAX-S™ with Norwood, along with its related development activities and general working capital. Note that 82% (1.04M) of the funds came from insiders.
Also in April, as part of the agreement, AMVAC invested US$2.50M; purchasing of 6.25M CSX.V shares at US$0.40.
In short
In the last eight months, CVX.V announced four major engagements, one of which one included a direct investment. These alliances occurred with leading and innovative organizations in agro-tech and ancillary verticals. CSX.V also continues to accumulate patents in numerous countries and obtained a patent expansion from the US Patent Office.
There were numerous insider purchase in the period. Note that the private placement in support to the Norwood initiative was at $0.25 cents (82% from insiders) while the investment from AMVAC at $0.40 cents (at a 25% premium).
In addition, CSX continues to work on the CX-6 Smart Seeder which is set to go in the field (Beta) in June or July and is anticipated to be available for purchase in Spring 2021. Despite a recent late filling notice, CSX.V is moving forward.
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