Deveron Corp. (FARM.V) is an agriculture technology company that uses data and insights to help farmers and large agriculture enterprises increase yields, reduce costs and improve farm outcomes. FARM.V uses a digital process that leverages data collected on farms across North America to drive unbiased interpretation of production decisions, ultimately recommending how to optimize input use.
FARM.V has a team of agronomists and data scientists that build products that recommend ways to better manage fertilizer, seed, fungicide, and other farm inputs. Additionally, Deveron has a national network of data technicians that are deployed to collect various types of farm data, from soil to drone, that build a basis of our best in class data layers.
Coverage was initiated on June 2017 with additional notes issued on December 2017, April 2018, September 2018 , March 2019. October 2019. July 2020, March 2021 and December 2021,
News Releases
Jan. 18 - Signs New Enterprise Client For Carbon Services Platform with Focus to Create Carbon Credits: A $750,000 enterprise contract with a carbon credit-focused investment company, Generic Carbon Credit Corp. (“Generic”).
The Company also announces that it has granted 1.6M options at $0.75 per common share and expiring on January 18, 2028 to officers and employees of the Company. The options vest equally over a three year period.
Feb. 15 - Announces Overnight Marketed Public Offering of Units: commenced an overnight marketed public offering (the “Offering”) of Units seeking to raise aggregate gross proceeds of approximately $8 million.
Feb. 16 - Announces Upsize and Pricing of Overnight Marketed Public Offering: Upsized its overnight marketed public offering of units from $8 million to $10 million.Each Unit will be comprised of one common share and one-half of one Common Share purchase warrant and will be offered at $0.70 per unit (Warrant $0.90 cents).
Feb. 25 - Announces Closing of Overnight Marketed Public Offering: Issued an aggregate of 16,428,573 units in the capital of the Company at $0.70 per Unit for total gross proceeds of $11,500,000. Each Unit consists of one common share of the Company and one-half of one Common Share purchase warrant ($0.90).
The Company intends to use the net proceeds of the Offering to support continued organic growth and product development, and to pursue future acquisition opportunities.
Mar. 11 - Acquires Agri-Labs, Inc. and Continues to Execute on Vertical Integration: i) Deveron increases soil lab capacity by 45,000 samples annually, executing on vertical integration strategy ii) Adds 2021 unaudited revenue of US $664k. Agri-Labs, Inc is a soil lab and agronomy company servicing Indiana, Michigan, and Ohio.
The Acquisition drives the mission to vertically integrate the soil collection and analysis process. Agri-Labs offers a single chain of data custody, providing clients a truly digital soil health experience, from the field to the cloud.
Mar. 23 - Signs New Enterprise Client to End-to-End Carbon Services Platform: Signed a $750,000 enterprise contract with an agricultural carbon provider. The contract, focused on 85,000 acres in the Mississippi Delta, provides the client access to Deveron’s platform for collecting, analyzing, and sharing in-field soil carbon data.
To date Deveron has signed $7M in enterprise contracts to use the Company’s carbon services platform since its launch in Q3/2021. This is the first enterprise contract to exclusively leverage our field to cloud solution, where Deveron monetizes the collection, lab analysis and digital workflow.
Mar. 31 - Reports Growth in Q4/2021:
May 2 - Acquire Controlling Interest in A&L Canada Laboratories: i) A&L is a leading Canadian soil health and plant tissue testing laboratory, serving over 20,000 customers annually. ii) The Acquisition increases Deveron’s revenue to $35.3 million with EBITDA of $8.3 million on a pro forma basis for 2021. iii) The $50.3 million acquisition for a 67% equity interest in A&L is expected to be financed through a marketed public equity offering led by TD Securities Inc. of approximately $20 million in subscription receipts and a $24 million credit facility.
A&L is the one of the largest soil and tissue laboratories in Canada.operates a 54,500 square foot laboratory with significant growth capacity and 106 employees, including a large R&D group that has produced patented, crop specific yield and disease solutions. A&L processes over 435,000 soil samples per year.
May 10 - Deveron Announces Amendment to Share Purchase Agreement, Private Placement of Convertible Debentures and Withdrawal of Public Offering of Subscription Receipts: Pursuant to the amended terms in the Purchase Agreement Amendment, the aggregate consideration payable by the Company to the vendor shareholders for the 67% equity interest in A&L shall remain $50.3 million but the cash consideration payable on the closing of the Acquisition shall be reduced by $8 million and, instead, the Company shall issue $8 million in promissory notes.
May 24 - Completes Transformative Acquisition of Controlling Interest in A&L Canada Laboratories:Completed its previously-announced acquisition of a 67% equity interestin A&L Canada Laboratories East, Inc. (“A&L”).
Under the terms of the Acquisition, the total consideration paid to the vendor shareholders was comprised of: (i) $37.8M in cash; (b) $4.9M in promissory notes; and (c) 13,688,182 common shares at $0.55 per Common Share.
May 31 - Achieves 111% Revenue Growth in Q1 2022:
June 29 - Announces Option Grant: Granted an aggregate of 388,637 options at a price of $0.55 per common share and expiring on June 29, 2027, to certain officers, directors and employees of the Company.
July 29 - Announces Debt Settlement: Stealth has exceeded gross revenues of US$1,000,000 during the fiscal year ending December 31, 2021. As a result of achieving this milestone, a one-time payment of US$140,000 was made hrough the issuance of an aggregate of 330,909 common shares at $0.55 per Common Share.
Aug. 22 - Reports $5.2 Million in Revenue in Q2 2022: The Company’s revenue improved over the previous year’s quarter, driven by strong organic growth of our collection, insight, and carbon products, as well as the launch of new features within Farm Dog, the Company’s data platform. Q2 2022 saw the Company begin to bundle its lab testing and collection products for enterprise level clients. Only 1 month of data reported from the A&L Laboratories.
Aug. 26 - Announces Option Grant: An aggregate of 2M stock options at $0.56 per Common Share and expiring on August 26., 2028, to an officer of the Company. The common shares issuable upon exercise of the options are subject to a four-month hold period from the original date of grant.
Summary
Earnings
Deveron continues to deliver record breaking revenue in FY 2022. At the current pace its likely that the company will outperform FY2021. As stated by the company, only one month of revenue from A&L Canada is included in Q2 2022.
However, Net Loss(es) are growing twice as fast as the revenue growth.
Most of the Net Loss(es) are the results of the number of acquisition mades by the company.
Overall, FARM.V is in a good cash position; As of June 30, 2022. the company reported $9.0M.
Orders
Two commitment were released in the past nine months. A $0.75M engagement with Generic Carbon Credit Corp. (a carbon credit-focused investment company) to access Deveron's platform.(January 2022). Another $0.75M engagement was penned with a agricultural carbon provider (March. 2022). At the time, the company reported "$7M in enterprise contracts to use the carbon services platform since its launch in Q3/2021". At the Q2 2022 earnings:
Since the launch of the carbon services platform in Q3 2021, the Company has continued to see strong growth and engagement with the product. At the end of Q2 2022 Deveron had surpassed 500,000 acres, in the United States, utilizing the Company"s streamlined and scalable digital soil ecosystem for measuring agricultural carbon.
Acquisitions
March 2022, Agri-Labs, Inc. a soil lab and agronomy company servicing Indiana, Michigan, and Ohio was acquired.
The Acquisition drives the mission to vertically integrate the soil collection and analysis process. Agri-Labs offers a single chain of data custody, providing clients a truly digital soil health experience, from the field to the cloud.
May 2022, a controlling Interest in A&L Canada Laboratories was acquired. A&L Canada is a soil health and plant tissue testing laboratory, serving over 20,000 customers annually. This deal is meaninful as it increase revenues: "to $35.3 million on a pro forma basis". Overall, spending $50.3M will results in a 67% equty interest in A&L Canada.
The last two acquisitions are incremental to the latest in 2021; i) Wood End Laboratories (which was purchased with A&L Canada) to form a JV; ii) Tana Ag Solutions Group LLC;, iii) Stealth Ag Inc;.and iv) Agronomic Solutions LLC.
Financing
A number of financing activities took place in the last nine months. February 2022, an Overnight Marketed Public Offering for 8$M (upsized to $10M) closed oversubscribed at $11.5M. A total of 16.4M shares were issued at $0.70 cents (Warrants: $0.90 cents). In additon, additional funding for acquistions of Agri-labs and A&L Canada occured.
For the Agri-Lab purcchase: cash payment of $0.42M + 0.21M on each of the first two anniversaries. In addition, $0.18M in shares were issued at $0.61 cents + 0.09M shares at the same prices on each of the first two anniversaries.
A&L Canada acquisition funding was initially a public equity offering of $20M and a $24M credit facility. However, the terms evolved to: (i) $37.8M in cash; (b) $4.9M in promissory notes; and (c) 13.6M shares at $0.55 cents.
Also in June 2022 0.3M shares were issued at $0.55 cents to Stealth Ag as a performance bonus and settling debt.
Options
A total of 3.98M options were issued in the past nine months, specifically:1.6M at $0.75 cents (January 2022); 0.38M at $0.55 cents (June 2022); and 2M at 0.56 cents (August 2022).
In Short
Deveron's valuation fluctuated between $0.87 cents and $0.375 cents for the period. Clearly, the A&L Canada acquisition was the most salient event of the period: FARM.V spent $50M to acquiire 67% ownership stake!
It is material. as it will accelarate the consolidation of "soil collection and analysis process" and provide signifcant incremental market share of the vertical. Coupled with its other assets, it will also provide additional synergies.
Despite only one month A&L Canada revenue included in Q2 2022 Earnings, Deveron continued to deliver record earnings. Most of this growth is attributed to the previous numerous the M&A in 2021. However, net loss(es) are currently growing at a much faster pace than revenues. Although it is anticipated that the horizontal integration of assets will increase efficiency over time, the market will undoubtely be monitoring this going forward.
We are beginning to see our investments in a technology empowered, vertically integrated soil ecosystem yield higher revenues in typically slower seasons. As we enter our busier season, we feel well positioned to see strong results and positive EBITDA in the second half of the year. - Deveron's CEO
As Deveron's business firms up, consideration into providing revenue guidance might be in order. Earnings of Q2 2022 was the first time that Deveron held a earning call, revenue guidance is a natural evolution.
As of June 30, 2022, 26M warrants were outstanding. Of that amount 8.42M are set to expire in December 2022. Hence, a certain amount of resistance is expected given that FARM.V is currently trading about the exercise price.
Otherwise, the majority of the warrants (16.7M) are between $0.70 (1.1M), $0.85 (6.2M) and $0.90 cents (9.4M), As such, the current profile suggests significant upside for investors given the current revenue outlook.
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