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Independent Reviews for Venture Investors

WWT.V - Catalysts.


Water Ways Technologies Inc. (WWT.V) is a global provider of agriculture technology. Through it susbsidiary it provides water irrigation solutions to agricultural producers. WWT.V competes in the irrigation water systems market with a focus on developing solutions with commercial applications in the micro and precision irrigation segments.


Water Ways Technologies' main revenue streams are derived from the following business units: (i) Projects Business Unit; and (ii) Component and Equipment Sales Unit. WWT.V is capitalizing on the opportunities presented by micro and smart irrigation, while also making a positive mark on society by increasing availability in developing markets such as Africa and Latin America, as well as developed markets (China, Canada).


Water Ways Technologies' irrigation projects include vineyards, Cotton fields, Apple and Orange orchids, Blueberries, Medical Cannabis, fresh produce cooling rooms and more, in over 15 countries.


Coverage was initiated in December 2019. with notes on August 2020 , April 2021 and January 2022.


News Releases


Jan 21 - Launches New Website and Announces Shares for Debt Settlement: Iissue to an arms length service provider, up to 102,321 but no less than 88,837 common shares in lieu of payments totalling $28,650.


Jan. 31 - Signs Largest Smart Irrigation Projects in Company's History Totaling CAD$6,700,000: Effective January 29, 2022, of two cotton drip irrigation projects in Uzbekistan.The projects are repeat orders from a recurring customer who ordered a CAD$4,000,000 system in 2021, validating the quality of the Company’s products, and services.

The value of the first project in the Surkhandarya province of Uzbekistan is approximately CAD$2,860,000 and is to be completed in the third quarter of 2022. The value of the second project in the Tashkent province of Uzbekistan is approximately CAD$3,840,000 and is to be completed in the third quarter of 2022. Operation of the systems will start in the next cotton cultivation season with agronomic and technical assistance from WWT in order to help the local farm in utilizing the new system and implementing agro-technical practices to improve the yield and output.


Feb. 14 - Uzbekistan Project Backlog Increases to CAD$9,400,000 After Signing Third Project in Uzbekistan: Effective February 9, 2022, of a third cotton smart drip irrigation project in Uzbekistan increasing project backlog to be executed in 2022 to over CAD$9,400,000 (compared to $CAD6,700,000 previously disclosed).

The value of the third project in the Bukhara province of Uzbekistan is CAD$2,700,000 and is planned to be completed by the third quarter of 2022. The agreement includes CAD$100,000 in service and consulting services. The project irrigates using fully automated drip irrigation technology servicing a field of 886 hectares of cotton.


Mar. 9 - Receives Two Smart Irrigation Systems Orders in Canada With a Total Value of CAD$500,000: The first project will be deployed to a field of 34 Hectares (84 Acres) growing apples in southern Ontario.The second project was ordered by a recurring customer and will be deployed to a field of growing tomatoes.


The Projects with a total value of CAD$500,000 will use the latest Israeli technologies for smart irrigation & control systems and are designed by Water Ways' engineers. HGWWT to deliver and install the Projects in H2 2022.


Mar. 29 -Receives a C$730,000 Third Blueberries Irrigation System Order in China: WWT’s Chinese subsidiary (in which the Company hold 73% interest), IRRI-AL TAL (Shanghai) Agriculture Technology Company Ltd. ("IAT Shanghai"), has received an order to install a 250,900 Square Meters (2,700,000 Square Feet) turnkey blueberries irrigation project in the People's Republic of China. IAT Shanghai is expected to deliver and install the project during Q3 of 2022. The total value of the project is approximately C$730,000. The order was received from a Chinese blueberries cultivator following the successful implementations of several blueberries irrigation projects in China and Mexico.


The Company expects to recognize revenues from the project during Q2 and Q3 of 2022.


Apr. 5 - Update on the Acquisition of the Chilean Smart Irrigation Provider - Hidrotop: Due diligence on the acquisition of Desarrollo De Sistemas Hidraulicos SA ("Hidrotop") is progressing in a positive manner and Water Ways expects to close the acquisition mid May, 2022 or such later date as may be mutually agreed upon between the parties.


Apr. 21 - To Deliver a C$425,000 Second Smart Blueberries Irrigation Project in Mexico: Received a new purchase order to install a smart turnkey blueberries irrigation project in Mexico. The project is expected to be delivered and installed during Q3 of 2022. The total value of the order is approximately C$425,000.


The order followed the successful implementation of several blueberries irrigation projects in China and Mexico. The Company expects to recognize revenues from the project during Q3 of 2022.


Apr. 28 - Reports 2021 Financial Results: Record Sales of CAD$20.2 Million and a 59% Increase Year Over Year.


May 4 - Mexican Blueberries Project Increases to CAD$1M: The value of its previously announced (release dated April 21, 2022) order to install a smart turnkey blueberries irrigation project in Mexico increased to approximately CAD$1M from the original amount announced of CAD$425,000. The project is expected to be delivered and installed during Q3 of 2022. The Company expects to recognize revenues from the project during Q2 and Q3 of 2022.

May 27 - Reports Q1 2022 Financial Results Sales of CAD$4.6M and Net Profit of CAD$0.56M:


"The first quarter of 2022 was a challenging quarter for Water Ways Technologies. We started the year with a record backlog of orders exceeding CAD$13M, however, the war in the Ukraine and the lockdown in China delayed some of our business. I am very pleased with our Canadian business achieving record quarterly sales and I anticipate finalizing our important acquisition in Chile in the coming weeks". - President, CEO of Water Ways.


In 2020, The Company registered Share Issuance Liability to the CEO of the Company's Chinese subsidiary, IRRI-AL TAL (Shanghai) in the amount of US$700,000. The Company has agreed, subject to TSX Venture Exchange approval, to issue up to 3,594,360 common shares in lieu of payments owing to the Chinese CEO at CAD$0.25 cents.


June 9 - Provides Update on the Previously Announced Proposed Acquisition of the Chilean Provider - Hidrotop: acquisition (see press releases dated January 12, 2022 and April 5, 2022) of Desarrollo De Sistemas Hidraulicos SA ("Hidrotop") is progressing in a positive manner and the parties are in final stages of negotiating the definitive terms of the purchase and sale (the "SPA"). The parties expect to sign a definitive SPA on or prior to June 30, 2022.


June 14 - To Deliver a C$400,000 Smart Irrigation Project in Ethiopia: Received a new purchase order to install a 50 Hectares smart turnkey irrigation project of vegetables, mainly green peas, in Ethiopia. The project is expected to be delivered and installed during Q3 of 2022. The total value of the order is approximately C$400,000. The order is a repeat order from an existing Ethiopian client. The Company expects to recognize revenues in Q3 of 2022.


June 16 - Enters the Smart Irrigation Market in the Georgia: Signed a representation and distribution agreement in the Asian country of Georgia. According to the agreement the Georgian company will receive exclusive right to sell Water Ways' products and projects in Georgia and will promote the brand "WWT Georgia".


June 20 - To Deliver a C$200,000 Blueberries Smart Irrigation Project in Ethiopia: Purchase order to install a smart turnkey blueberries irrigation project in Ethiopia. This is the second phase of a project started in 2020 that was delayed due to the political turmoil in Ethiopia. The Order is expected to be delivered and installed during Q3 of 2022.


The total expected revenue is approximately C$200,000 which the Company expects to recognize during Q3 of 2022.


June 27 - Announces Private Placement of Convertible Debenture Units: of up to 1,000 units at a price of CAD$1,000 per CD Unit, for gross proceeds of up to CAD$1,000,000. Each CD Unit is comprised of one unsecured convertible debenture with a principal amount of $1,000 and 2,857 common share purchase warrant with each CD Warrant exercisable, upon payment of an additional $0.45, into one additional common share in the capital of the Company.


The Convertible Debentures are subject to conversion into Common Shares at a conversion price of $0.35 per Common Share, provided that if, following the date that is 4 months and 1 day following the closing.


July 7 - Water Ways' Business in Mexico Expands by Receiving Two Orders With a Value of C$320,000: to deliver a smart irrigation component to irrigate orchids and blueberries in México. The total value of the orders is C$320,000. Water Ways expects to recognize revenue and deliver these orders in Q3 of 2022.


July 22 - Announces $746,000 Private Placement of Convertible Debenture and Warrant Units:


"We are extremely pleased on the closing of this financing. For us, this is a non-dilutive structure to raise capital at this challenging climate. The funds raised will assist us in financing our imminent M&A strategy." -Water Ways' CEO


July 28 - Receives New Orders Totalling C$322,000 in Africa: Received three new purchase orders for water and irrigation projects in Africa. i) The first project is planning, supply and installation of an advanced net house, trellising and smart irrigation system for cultivation of Sorghum in Ethiopia. The value of the project is C$ 117,000, ii) The second project is a complete water system for intensive fish farming in Ghana with a total value of C$98,000. iii) The third project is a vegetable hydroponic smart irrigation system in South West Africa with a value of C$107,000.


Water Ways expects to recognize revenue from these projects by the end of 2022.


Aug. 23 - Announces the Execution of a Definitive Agreement for the Acquisition of a Majority Interest in Hidrotop, a Chilean Smart Irrigation Solution Provider: Board of Directors has today approved the execution of a definitive agreement for the acquisition of 51% of the shares of the Chilean smart irrigation provider, Desarrollo de Sistemas Hidraulicos S.A. ("Hidrotop"). In consideration for the Shares, Water Ways will pay an aggregate acquisition price of USD$3,500,000, upon closing of the Acquisition (the "Closing") consisting of: (i) a one-time cash payment equal to USD$2,000,000; and (ii) the issuance of 5,686,364 common shares in the capital of Water Ways (the "Subject Shares") at a deemed price per Subject Share of CDN$0.33, subject to a standard four month and one day hold period


Aug. 26 - Reports Q2 2022 Financial Results Sales of CAD$9.5M and Net Profit of CAD$3.9M: YTD Decrease in sales was mainly due to a delay in the commencement of the Uzbekistan projects and the Lockdown in China.

Sep. 21 - Delivers and Installs a New Water Purification System for Farmers in Ethiopia:


Announces that it has installed an innovative water purification system for the benefit of drinking water for farmers in remote areas in Ethiopia. The project amounted to CAD$130,000 and revenue was recognized in full.


The system is based on a filtration and purification system that received approval after being used in hospitals. Water Ways believes that the system is more economical and less expensive than competing systems and has many environmental benefits. The system can supply drinking water to over 5,000 people per day.


Oct. 4 - Receives Recurring Order From a Blueberry Grower in Mexico: Received an additional order to deliver smart irrigation equipment to a blueberry grower in Mexico (see press release dated May 4, 2022). The total value of the order is C$180,000. Water Ways expects to recognize revenue and deliver the order in Q4 of 2022.


Oct. 13 - Enters the Market in Angola With a First Smart Irrigation Project: with the delivery of its first smart irrigation project. The project, which irrigates various vegetables, includes the delivery of a drip irrigation system and smart irrigation control unit. The order, for an amount of CAD$113,000, is expected to be recognized n Q4 of 2022.



Summary

Water Ways Technologies (WWT.V) valuation fluctuated from a high of $0.42 cents to a 52 week low of $14.5 cents.


Earnings

Subsequently to record FY2021 earnings of $20.3M (59% YoY growth), H1 2022 has not been as stellar in revenue.


Both the invasion of Ukraine and zero-covid policy in China had an impact on business. As of Q2 2022, both these continue to be an issue with "delay in the commencement of the Uzbekistan projects and the Lockdown in China".


However, WWT still manage to pull a profit despite being behind in revenue YTD ($9M vs. $12M) on FY2021.


Orders

Twelve announcements were made in the period representing $12.8M. The majoritiy were for Blueberries but orders from Uzbekistan (Cotton) account 74% of the total awards. More than eight projects were to be delivered in Q3 2022!

However, it is unlikely that all the of the revenue from these will be recognized for Q3 2022. Since, late August no update have been provided on Uzbekistan and the lockdown in China are likely still be an issue.


While Water ways is reportedly "crop-agnostic", a specialization seems to be cementing around certain crops.. However, diversity is emerging, as well as, new market entries continue to be made. In addition to Angola, a representation aggreement was signed in in Georgia (WWT-Georgia).


Financing

June 2022, a Convertible Debenture Private Placement of 1000 units for up to $1M was offered with a conversion price of $0.35 cents and warrants $0.45 cents. The financing closed in July 2022 for a total of $0.74M. As a reminder, the prior financing was oversubscribed placement at $4.4M at $0.12 cents (warrants $0.18 cents) in July 2021.


Acquisition

The annoiunced Hidrotop acquisition in January is still in progress. After a few updates (April, June 2022), the execution of a definitive agreement was completed (August 2022).


Water Ways will pay an aggregate acquisition price of USD$3,500,000, upon closing of the Acquisition (the "Closing") consisting of: (i) a one-time cash payment equal to USD$2,000,000; and (ii) the issuance of 5,686,364 common shares in the capital of Water Ways (the "Subject Shares") at a deemed price per Subject Share of CDN$0.33, subject to a standard four month and one day hold period.


Hidrotop metrics were included in this release FY 2021 revenue of $7.8M with a $0.47M profit.

In Short

Water ways Technologies (WWT.V) has reported more than $12M in orders to the market to date in FY2022. The Uzbesktistan awards alone made up $9.4M ($6.7M + $2.8M) of the amount. While its possible that WWT.V comes close to FY2021 revenues, its unlikely to exceed them given the delays in Uzbekistan and lockdown in China. Also, timing of the Hidrotop acquisition closing means that these revenues are unlikely to be included in Q4 2021.


Nonetheless, Hidrotop should bring over $7M in revenue and an opportunity for growth in Latin America. As WWT.V looks to the future, there are more new markets to enter (i.e. US Market) and further acquiistions remain an option. In order to transition into the next phase ($30-$40M in revenue) customized agri-tech IoT products will need to be become part of the offering as they represent a recurring revenue stream long after a project is completed.


WWT.V is currently trading slighthly above the previous private placement warrant price of $0.18 cents (July 2021). And given the warrant numbers (32M), and the current market conditions, resistance is expected at these levels.

However, the recent debenture financing has a conversion price of $0.35 cents (warrants of $0.45 cents) and the Hidrotop shares (5,686,364) have an exercise price of $0.33 cents. This represents some leg room on the upside.


The closing of Hidrotop, progress in Uzbekistan, and new IoT agri-tech initiatives (or acquisitions) could be catalysts.


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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