Water Ways Technologies (WWT.V) is the parent company of Irri-Al-Tal Ltd. ("IAT"), an Israeli based agriculture technology company that specializes in providing water irrigation solutions to agricultural producers.
IAT competes in the global irrigation water systems market with a focus on developing solutions with commercial applications in the micro and precision irrigation segments of the overall market.
Coverage was initiated in December 2019. Below is an update.
News Releases
Jan. 7 - Receives Third Commercial CANNAWAYS Order. For approximately CAD$200,000 for its new CANNAWAYS system from an Israeli Licensed Producer currently building a 30,000 Square meters (approximately 310,000 Sqft) Medical Cannabis Cultivation facility in a Kibbutz in the north of Israel.
Feb. 19 -Receives Orders for Five Water and Irrigation Projects in Ethiopia Totalling CAD$1.2 Million. Water Ways expects to recognize revenue from the projects in the first half of 2020, with all projects backed by letters of credits.
Apr. 16 -Announces Extension of Warrants Expiry Date. Due to the economic effect of COVID-19, it will be extending the expiry date of 3,976,502 warrants that were to expire today for a period of one year to April 16, 2021.
Apr. 30 -Reports Year End 2019 Financial Results. Revenues of $12M, Net Loss $3.1M and Cash of $0.309M. Outlook:
North America: (Heartnut Grove WWT), expand the availability of irrigation and fertilization systems for greenhouses, farms and associated food production entities in both Canada and the United States
China: An additional sales subsidiary is being finalized with direct operations expected in China in Q2 2020.
South America -Columbia: The MOU with Colombian medical cannabis entity EBC is anticipated that a definitive agreement will be signed in 2020 assuming EBC obtains licensing, permits and required financing. Peru: Shipments of irrigation products were temporarily delayed due to the Covid-19 pandemic and resumed in April.
Africa: As of April 2020, Water Ways has completed 2 projects and initiated 5 additional projects which includes advanced irrigation technology for sugar cane fields, sprinkler systems, and irrigation systems.
Canabis: The successful development of the IOT Control of Cannabis irrigation and fertilization system is being used in multiple cannabis operations in Israel and actively marketed to Canadian cannabis cultivation entities.
Corporate: The recent Covid-19 pandemic has impacted Water Ways in delaying delivery of certain products outside of Israel. In recognition of these delays and in order to position WWT.V for future global business related to smart irrigation systems, as of May 1, 2020 CEO Ohad Haber has taken a 40% reduction in his salary and staff 15% .
May 14 - Announces Correction to April 16, 2020 Press Release and Other Corporate Matters.
Warrant Extension: Intends to amend the exercise price of 6.2M common share purchase warrants, exercisable into an equal amount of common shares in the capital of the Company at an exercise price of $0.40 and 5.0M common share purchase warrants, exercisable at an exercise price of $0.25 to an exercise price of $0.06 cents.
Option Issuance: Granted 200,000 stock options to each of its directors as well as its Chief Financial Officer, for an aggregate of 1,200,000 Options. The Options shall have an exercise price of $0.06 and shall vest in two equal installments, with one-half of the Options vesting immediately and one-half vesting on the 12-month anniversary.
Option Repricing: Intends to reprice a total of 2.9M stock options, previously issued in accordance with the terms of the SOP. The May 2019 Options previously had an exercise price of $0.25 which will be adjusted to the New Exercise Price.
Share of debt: Lastly, the Company wishes to advise that in order to conserve cash it has agreed to issue 150,000 Common Shares at a deemed price of $0.05 per Common Share to settle a debt to an arms length service provider.
May 26 - Announces Update on First Quarter Filings. Intends to postpone the filing of its consolidated financial statements and accompanying management's discussion and analysis and related CEO and CFO certifications for the three months ended March 31, 2020 (collectively, the "Quarterly Filings"), which are required to be filed by May 30, 2020, under Sections 4.4 and 5.1(2) of National Instrument 51-102 - Continuous Disclosure Obligations.
The Company will rely on this exemption with respect to the Quarterly Filings. The Company is continuing to work diligently and expeditiously to file the Quarterly Filings and currently expects them to be filed on June 15, 2020.
June 15 - Reports Q1 2020 Financial Results with Record Sales for the First Quarter. Revenue of C$3.21 M (C$2.08 M Product), Total comprehensive loss was (C$0.035M), Cash and cash equivalents were C$0.349M.
Increase in revenue was mainly due to the increase in service projects initiated in Ethiopia and the continuation of the second cotton irrigation project in Uzbekistan. Overall the Covid-19 crisis delayed the launch of our Chinese business unit which we hope will be operational in the coming months resulting in direct sales to the Chinese market.
The Company believes that there will be a growing demand for smart irrigation in countries that experienced shortages in food supplied during the Coronavirus crisis as they will seek to grow crops domestically.
Summary
WWT.V is off to a good start in 2020. It announced its third order for its recently introduced CANNAWAYS System ($0.2M) and received orders for five different irrigation systems in Ethiopia ($1.2M). In early March, Covid-19 hit.
By Mid-March, WWT.V sent a note to its shareholders. At the time, the CEO reported that: "presently do not expect a material impact on our fiscal 2020 results". These sentiments were reiterated in both FY 2019 and Q1 2020 Earnings.
Compared to FY 2018, FY 2019 experienced a significant decline for the top and bottom line. The large bulk of the loss for FY 2019 was attributed to the TSXV listing ($2.29M). However, Q1 2020 earnings indicates a shift in the trend.
Q1 2020 record earnings (surpassed Q1 2019 and 2018) suggests that WWT.V may be returning to FY 2018 earning levels.
The company did not provide guidance or whether Q1 Earnings bucked seasonality, but this much was mentioned :
The Company believes that the Event (Covid-19) is an opportunity for the worldwide smart irrigation business. The Event has proved that countries need to be self-sustainable for their food supplies in times of world crisis.
The Company believes that there will be a growing demand for smart irrigation in countries that experienced shortages in food supplied during the Coronavirus crisis as they will seek to grow crops domestically.
In Q1 2020, WWT.V also provided a specific country update:
Canada - The Canadian subsidiary was not significantly impacted by the Coronavirus. Impacts were the inability to send technical staff from Israel to support sales of new projects and therefor local Canadian staff was hired to assist.
China - Due to spread of the Coronavirus, WWT.V had no business in China in January and February. In early March, this restriction was lifted, and the Company resumed administrative operations. WWT.V received late payments. The Company is continuing its plans to commence its sales operations through its newly established local Chinese subsidiary.
Ethiopia - After a year of financial and political uncertainty, the Company was able to re-focus on growing business. The Company has received substantial orders from Ethiopia for both irrigation projects and components and the Company is currently bidding for additional irrigation projects.
Uzbekistan - Business in Uzbekistan continuous to be solid. The Company is deploying two cotton irrigation projects. Covid affected the Company's ability to ship components and send technical staff to install the projects.
Israel - Business in Israel remained solid. The Company has deployed two medical cannabis irrigation projects and has not experienced any delays in installations or payments.Â
Peru - Business in Peru came to a standstill in March. The Peruvian government closed its borders in March. The borders were opened again in April and as a result the Company commenced its shipment to Peru.
As evidenced by the update, WWT.V has project in the many parts of the world with promising outlook. Nonetheless, in May 2020, the company reported that warrants (11.2M), outstanding options (4.1M) would be reduced to $0.06 cents! This is a major re-structuring of incentives as previously issued prices were as high as $0.40 cents and $0.25 cents.
Though it impact optics, it is important to note that WWT.V insiders owns 68% (61M of 89M) of the total numbers of shares outstanding. Hence, WWT.V still trades at a discount with a significant potential upside.
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