Deveron UAS Corp. (DVR.CN) is an agriculture technology company focused on providing data acquisition services and data analytics to the farming sector in North America. Working via its on-demand network of drone pilots and soil sampling technicians, the Company provides scalable data acquisition solutions in the imagery and soil space.
Additionally, through its wholly owned subsidiary Veritas Farm Management, the company provides growers in North America with independent data analytics and insights on the massive amount of data being generated on farms today.
Coverage was initiated June 2017 and notes on December 2017, April 2018, September 2018 , March 2019. October 2019.
News Releases
Nov. 28 - Deveron Reports Q3 Revenue Growth of 493%: Q3 Earnings - Revenue of $0.64M in Q3 2019. Second quarter in a row that quarterly revenue surpassed 2018 total fiscal year revenue of $0.5M; Working capital of $2.06M and no debt.
Net Loss: $(0.41M) for the quarter and YTD Net Loss: $(1.39M)
Outlook: Q2 and Q3 are generally the busiest times for agriculture service companies as harvest data is aggregated, Q4 will also see an increased opportunity to provide insights as our customers prepare for the 2020 crop season.
Jan. 8 - Veritas and Huron Tractor Enhance Agriculture Data Collaboration. Announce a continuation of the collaborative initiative which provides full access to the entire suite of data analytical products developed by Veritas and bundled with data collection services from Deveron.
These products are designed to create insights for farmers from various sources: existing farm generated production data, high-resolution in-season imagery data collected by UAV ("Drone"), or soil data. Veritas uses science, data and analytics to uncover correlations and interactions between the land, weather and management practices, and then develops practical farm applications from these findings.
Huron Tractor Ltd is a John Deere dealer that has proudly served Southern Ontario for over 55 years.
Mar. 4 - Promotes Mike Wilson to Head of Data Collection; Norm Lamothe steps down.
Apr. 7 - Announces Closing of Private Placement with Strategic Leading Investors. Non-brokered private placement with a group of strategic investors led by Bill Linton. The Offering was completed at a price of $0.10 per Unit (Warrant 0.20 cents) for gross proceeds of $0.65M and a total of 6,55M Units issued.
Bill Linton has been appointed as a Director and non-executive Chairman of the Board of Directors, with the goal of helping accelerate the Company’s vision and strategy in digital agriculture.
Apr. 17 - Closing of Second Tranche of Private Placement. Completed for a gross proceeds of $0.70M and a total of 7.0M Units issued. Combined with the first tranche, a total of 13.5M units were issued for aggregate gross proceeds of $1.35M.
Each Unit consists of one common share of the Company and, one half of one Common Share purchase warrant, with each whole warrant being exercisable at $0.20, for a period of 18 months from the date of issuance.
Apr. 23 - Reports 2019 Year End and Fourth Quarter Financial Results: Reports Annual Revenue Growth of 311%; Q4 Revenue Growth of 151%. Annual: Revenue grew to $2.05M; Net Loss of $1.93M: Cash of $1.2M.
In the past year, shifted from being a single product service company to a multi-product digital insights company.
May 11 - Further Expands US Footprint with Acquisition of Texas Agronomy Solutions Firm. Acquired all of the operating assets of Better Harvest Inc., (“Better Harvest”) a Texas, United States based agronomy solutions business.
Better Harvest provides unbiased agronomic advice, nitrogen management solutions and optimization of irrigation programs for over 100,000 acres of long-standing customers with unaudited reported revenue of $0.47M USD in 2019.
This acquisition increases Deveron’s acres under management by ~100,000 acres or 34%.
The cost of the acquisition are $0.26M USD: (i) $0.16M USD paid in cash upon the closing of the transaction; and (ii) a time-based earn out of $0.10M USD payable in equal annual payments over a the following two years.
May 28 - Reports Q1 Revenue Growth of 181%: Revenue $283,420, Net Loss $(568,783). “Our first quarter results are highlighted by continued growth in acres serviced for our data collection group,” - Deveron’s President and CEO.
June 18 -Launch National Plant Tissue Testing Service with A & L. The service is for agriculture advisors and producers looking for a reliable, turn-key solution. The aim is to provide crop tissue sampling and insights from the field to test results. A&L provides for 24-hour turn around of results to clients for implementation of in-season fertility programs.
Summary
Earnings
Growth in top line revenue in the last four quarters combined with a declining net loss in the last two quarters is noted.
Specifically, Deveron grew revenues significantly from $0.5M in fiscal 2018 to $2.05M in 2019. However, the Net Loss were on the rise from $1.47M to $1.93M but within the last two quarters (Q4 2019 and Q1 2020), revenue growth was also reported with a reduction in net loss. In both quarters, the net loss reported were smaller than those from prior year.
Despite Q1 being typically slow (Seasonality), Deveron reported increasing demand. As per MD&A: "Finally, as was the case in 2019, we have already seen net bookings in April and May outpace all of Q1.”. The decline in net loss in Q1 2020 is attributed mostly by the decline in share based compensation. Again, per MD&A: "Share-based payments decreased by $222,317 for the three months ended March 31, 2020 compared to the three months ended March 31, 2019. The decrease is due to the timing of expensing the estimated fair value of stock options granted in prior and current periods".
Acquisition
Building on Veritas and Atlas Team, in May 2020 Deveron acquired Better Harvest Inc.; an agronomy solution business. Better Harvest provides agronomic advice, nitrogen management solution, and irrigation optimization. The acquisition is notable because Better Harvest represent a 34% increase (100,000 acres) of acres under management for Deveron.
Deveron's M&A strategy of acquiring organizations with strong direct end customer relationships continues to enable it to grow its business and integrate services across its network.In the process, Deveron aims to grow the individual business reach and leverage complementary services from other organization within its network.
The buy out of Better Harvest came roughly two months after the appointment of Mike Wilson as Head of Data Collection. Mr. Wilson is an agronomist by trade and has more than 20 years of experience in the agriculture industry.
Partnerships
In January 2020, it reported continuing the partnership between Deveron, Veritas and Huron Tractor. Again, the ability to deliver added services and solutions in addition to equipment is key. Deveron will continue to provide data collection services while Veritas provide data and analytics service to optimize crops and yields.
In May 2020, in conjunction with A&L Laboratories, the company launched a National Plant tissue service. Plant tissue testing enables one to assess nutritional content of a plant. This can assist to fine tune fertilizers and monitor nitrogen.
Financing
In April 2020, Deveron completed a non-brokered private placement at $0.10 cents (warrant at $0.20) for $1.3M.
This represents 13.5M units that were issued. In addition, The investor which led the raise (Bill Linton) has also been appointed as Director and non-executive Chairman of the Board of Directors.
In Short
Deveron continues to advance and grow the business. This is reflected in the earnings, as well as, in the execution of its strategy of acquisitions, partnerships, and product developments. While the company is in growth mode, it is not reflected in its trading activity. Volume tend to be low averaging 20,000 shares/daily for the past 90 days.
Moreover, the last round of financing was offered at a significant discount ($0.10 cents) given its trading history. This means that a number of warrants (6.75M) are present at $0.20 cents. Nonetheless, based on the Q1 narrative, the earnings for the upcoming quarters (Q2, Q3) are to be eagerly expected. Deveron may be entering a new phase of growth.
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