CSX.V - Sensible?

Updated: Oct 17


Clean Seed Capital (CSX.V) is 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 notes in September 2019 May 2020 and February 2021.


News Releases


Feb. 4 - Gaining Traction with SMART Seeder MAX-S(TM) Launch Activities: Commencing in April Clean Seed will have SMART Seeder MAX-S™ units operating on commercial farms in several regions in Western Canada.


Throughout spring the Company will host multiple demonstration events with key early adopter targets and prospective distributors. Clean Seed will also be conducting in-depth virtual sessions for the agricultural community to highlight the specifications, capabilities, and agronomic benefits of the SMART Seeder MAX-S™.


In parallel with these events Clean Seed will be aligning operations to open its order program post seeding and demonstration season. The Company anticipates reaching its sales targets for the 2021 season and to start production of its 2022 SMART Seeder MAX-S™ units in fall 2021.


Feb. 10 - Steve Sommerfeld Joins Clean Seed Capital’s Board of Directors: Granted Mr. Sommerfeld incentive stock options to acquire 200,000 shares of common stock at a price of $0.50 per share until December 31, 2023.


Further to the Company’s news release of January 29, 2021, the Company has received TSX Venture Exchange approval to extend the expiry date of 5,915,000 of the 7,895,000 warrants sought for extension to July 31, 2021. These warrants are exercisable at $0.50 per share. The Company has also submitted an application to extend the expiry date to July 31, 2021 of the other 1,980,000 warrants which were originally issued as a bonus, exercisable at $0.50 per share, to match the extended maturity date of a related promissory note.


Feb. 24 - Adds Key Commercialization Vice President Positions to Support Rapid Growth Cycle: appointment of Butch Sinclair as its VP, Sales and Customer Experience and Jeet Jheetey as its VP, Operations and Development.


Mar. 4 - Opens Distribution Recruitment on the SMART Seeder MAX/MAX-S for Dealers and Agronomy Partners. Initially Canada and the United States, the virtual “Call for Distribution” recruitment campaign is now available and leverages all major social media platforms, both organically and via sustained demographic targeting campaigns with online click through forms. The campaign is designed to accept information from prospective distributors based on their geographic region, capabilities and interest in contributing to the advancement of agriculture.


Mar. 24 - To Break Ground on New Operations and Assembly Facility in Saskatchewan: Entered into an agreement to lease a new custom build facility in Saskatoon, Saskatchewan. This 16,000 square foot facility and its surrounding grounds will be the cornerstone for the early commercialization plans of the SMART Seeder MAX/MAX-S™.

Centrally located in Western Canada, this flagship facility will be home to the assembly of the SMART Seeder MAX-S™ and related electronics systems, sales and customer experience infrastructure, dealer support and related research and development activities. Clean Seed will be hiring new skilled workers during the next twelve months for this facility to scale to customer demand for the new SMART Seeder MAX/MAX-S™


CSX.V also has become a member of the Saskatchewan Trade and Export Partnership (STEP). STEP champions Saskatchewan’s export industry and assists provincial businesses in realizing global marketing opportunities.


Clean Seed will have the ability to initiate its benefit under the Saskatchewan Commercial Innovation Incentive (SCII) program. CSX.V was the first Company approved for the patent box SCII program as approved by the Saskatchewan Ministry of the Economy. The incentive will allow the Company to reduce its provincial income tax rate from 12% to 6% per cent for 15 years commencing anytime at the Company’s discretion.


June 2 - SMART Seeder MAX(TM) Sales Program Opens Strong: The three SMART Seeder MAX™ product offerings, consisting of the SMART Seeder MAX-4™, MAX-5™, and MAX-S™ are now available to order through our “Build-a-MAX™” e-commerce site. Customers and SMART Seeder MAX™ dealers can leverage this platform to choose their model, select product options, pay a deposit and reserve a SMART Seeder MAX™ for delivery prior to spring 2022.

Since we launched our “Meet-a-MAX™” program in early May 2021 our demonstration calendar has been near capacity, showing strong consumer interest in the SMART Seeder MAX and its related technologies.


June 8 - To Launch SMART Seeder MAX in USA and Files Application to Trade on OTCQB Venture Market: Launch strategy for the U.S. by showcasing at two of the largest agricultural trade shows in the U.S., FARM PROGRESS SHOW in Decatur, IL from August 31 - September 2, and BIG IRON FARM SHOW in Fargo, ND from September 13 - 16.


Clean Seed will also be engaging with U.S. producers and dealers with winter canola and winter wheat seeding demonstrations under the “Meet MAX™ Field Viewing Program” scheduled for Montana, North Dakota and Nevada.


July 30 - Appoints Advisors:


Independent Trading Group Inc. (“ITG”) to provide services as a market maker, in accordance with TSX Venture Exchange Policy 3.4. An initial term of three months, at a fee of $5,000 per month. After the three-month period, and if both parties are in agreement, the contract will be on a month-to-month basis with 30 days written notice required to terminate. No stock options are being granted in connection with the engagement.


GRA Enterprises LLC (“GRA”) to provide: dissemination of news releases and newsworthy related events, communications and media services, the production and publication of investor bulletins on the National Inflation Association website, and distribution of e-mail alerts to the Consultant’s National Inflation e-mail list about the Company and its projects. These are considered investor relation services, in accordance with TSX Venture Exchange Policy 3.4. GRA has been engaged for a term of 12 months, for an aggregate fee of $100,000.


North Equities Corp. (“North Equities”) to provide social media consulting services.


Proactive Investors North America Inc. renewed the annual media package which provides the Company with executive interviews highlighting Company milestones and news and ongoing coverage.


The Company has made application to the TSX Venture Exchange to extend the expiry date of an aggregate of 3,175,000 share purchase warrants (the “Warrants”) exercisable at $0.50 per share from July 30, 2021 to January 31, 2022. The proposed extension of the Warrants is subject to the approval of the TSX Venture Exchange. All other terms and conditions of the Warrants will remain unchanged.


Aug. 11 - On Target for Growth – Momentum Update – Summer 2021:


1) SMART Seeder MAX™ Model Year 2022 Approaching Fully Committed: These orders are primarily for our flagship SMART Seeder MAX-S™ (with singulation) and our SMART Seeder MAX-5™ (5 product volumetric).

All orders are for dealers and customers in Western Canada.


2) Distribution Update: In April 2021 Clean Seed launched a campaign to become a SMART Seeder MAX™ dealer or Agronomy Partner in key geographic areas in Western Canada, USA, and in key future export markets. Clean Seed plans to formally announce dealers and agronomy partners later this summer in conjunction with Fall 2021 demonstrations.

3) Upcoming Trade Shows: a) Ag SMART – Olds College, Olds Alberta – August 10-11, 2021, b) Farm Progress Show – Decatur, IL – August 31 – September 2, 2021 and c) Big Iron Farm Show – Fargo, ND – September 14-16, 2021.

4) Fall and Winter Crop Demonstrations: The SMART Seeder MAX™ demonstration units are targeting several thousand demonstration acres for fall and winter crop seeding.


5) Saskatoon Assembly Facility and Supply Chain Update: The Saskatoon Assembly facility has started to break ground with the steel for the buildings on site to be erected shortly. Clean Seed expects to have access to the completed facility by November 1st to begin the assembly of the Model Year 2022 SMART Seeder MAX™ order commitments.


6) Expected Model Year 2022 Machine Deliveries: Clean Seed expects to begin model year 2022 machine deliveries of the SMART Seeder MAX from our Saskatoon facility at the end of the calendar year. On-site training for setup, pre-delivery, customer operation, and dealer support will be scheduled in January-February 2022.


7) Warrant Exercise: Received proceeds of $1,370,000 from the exercise of 2,740,000 share purchase warrants.


8) Stock Option Grant: Granted an employee 300,000 stock options ($0.50 cents) until February 28, 2025 and granted two consultants an aggregate of 252,000 stock options ranging from ($0.50 to $0.55 cents) until December 31, 2023.


Sep. 15 - Deerland Equipment takes on SMART Seeder™ MAX Distribution: Deerland is a multi-store agricultural equipment dealer in North Central Alberta representing key OEM agricultural brand John Deere.


Oct. 13 - CEO Corporate Update: Secured strong dealer distribution of the SMART Seeder MAX product line through tier one agricultural equipment outlets in Western Canada. In areas outside of these distribution arrangements, our team is working directly with prospective customers.


We are pleased to report we are in the process of finalizing sales of our flagship SMART Seeder MAX-S™ and our premium model SMART Seeder MAX-5™.


We have engaged National Bank Financial Inc. (“NBF”) to advise on forward-looking capitalization alternatives to support our growth. We look forward to a long strategic relationship with NBF.


Summary


Appointments

Steve Sommerfeld joined the Board of Directors, Butch Sinclair as VP, Sales and Customer Experience and Jeet Jheetey as its VP, Operations and Development (February 2021). In addition, a number of external advisors were retained i) Independent Trading Group Inc. as market maker, GRA Enterprises LLC, North Equities Corp. and Proactive Investors North America Inc. for marketing and communications services (July 2021).


In the most recent release Clean Seed's CEO stated: We are currently hiring new operations and production staff as well as additional technical resources to support the growth of our SMART Seeder MAX family of seeders.


Product Launch

As part of the launch activities, The SMART Seeder MAX-S™ was made available in Spring 2021 at selected commercial farms. A number of demonstration events along with in-depth virtual sessions were hosted.


March 2021, CSX.V open the distribution recruitment for dealers in Canada and the US. April 2021, CSX.V reported:


The Company anticipates reaching its sales targets for the 2021 season and to start production of its 2022 SMART Seeder MAX-S™ units in fall 2021.


June 2021, three products ( SMART Seeder MAX-4™, MAX-5™, and MAX-S™ ) were available for order with delivery in Spring 2022. August 2021, CSX.V mentioned that SMART Seeder MAX™ Model Year 2022 was approaching a fully committed status with all orders from Western Canada. Also announced was attendance to US trade shows along with Fall and Winter Crops demonstrations. CSX.V expects to begin deliveries by end of 2021 calendar year with On-site training for setup, pre-delivery, customer operation,and dealer support scheduled for January-February 2022.


Yesterday, CSX.V's CEO letter to shareholders re-stated much of those commitments.


Manufacturing Facility

March 2021, CSX.V entered an agreement to lease a new facility (16,000 sq ft) in Saskatoon, SK. August 2021, CSX.V communicated that it expected to have access to the completed facility on November 1st where it will begin assembly of Model Year 2022 SMART Seeder MAX™ order commitments. As a reminder, CSX.V choose Saskatchewan for its central location and became a member of the Saskatchewan Trade and Export Partnership (STEP). As a result, Clean Seed is eligible for the Saskatchewan Commercial Innovation Incentive (SCII) accessing incentives such as a reduction in provincial income tax rate from 12% to 6% per cent for 15 years commencing anytime at the Company’s discretion.


In the most recent release Clean Seed's CEO stated: Our brand-new facility in Saskatoon is on schedule for occupancy before calendar year-end. This facility will be the bedrock of our operations for both sales and operations in 2022.


Distribution Partners

September 2021, Deerland Equipment was announced as a partner for CSX.V's SMART Seeder MAX™ distribution.


Financing

February 2021, CSX.V received approval to extent the expiration of 5,915,000 of the 7,895,000 warrants (0.50 cents) sought for extension to July 31, 2021. Also submitted an application to extend the expiry date to July 31, 2021 of the other 1,980,000 warrants which were originally issued as a bonus.


July 2021, an application was made to extend the expiry date of an aggregate of 3,175,000 share purchase warrants (the

“Warrants”) exercisable at $0.50 per share from July 30, 2021 to January 31, 2022.


August 2021, CSX.V reported receiving $1,370,000 from the exercise of 2,740,000 share purchase warrants


Stock Options

August 2021, Granted an employee 300,000 stock options ($0.50 cents) until February 28, 2025 and has granted two consultants and aggregate of 252,000 stock options ranging from ($0.50 to $0.55 cents) until December 31, 2023


In short

Clean Seed Capital continues to make progress on the commercialization of the SMART Seeder MAX™. While a an update was recently provided on a number of key milestones that its pursuing, details on sales are still lacking.


The October 13, 2021 news releases specifically cites: We are pleased to report we are in the process of finalizing sales of our flagship SMART Seeder MAX-S™ and our premium model SMART Seeder MAX-5™.


Also noted in the recent releases: We have engaged National Bank Financial Inc. (“NBF”) to advise on forward-looking capitalization alternatives to support our growth. We look forward to a long strategic relationship with NBF.


On October 4, 2021 a sharp drop in valuation occurred. This is somewhat strange at this juncture given all the progress made in the last eight months. Is this financing related? Or does this reflect a softer occupancy date of the manufacturing facility? Our brand-new facility in Saskatoon is on schedule for occupancy before calendar year-end.


Indeed, CSX.V is currently oversold and valued below S2 ($0.43 cents) and the warrant price of $0.50 cents. Sensible?


DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The content of rally is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions - rally cannot take responsibility for your investment decisions.

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