| AgriFORCE (NASDAQ: AGRI) Smart Advanced AgTech IP, Accretive Acquisition Pending, Tiny Share Structure, and Catalysts Lining Up, Recent Contract Awards, Fast Growing Revenue Pipeline for 2022
AGRI Charts are Pointing Skyward, Let’s Go!
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According to Markets and Markets, the smart agriculture market is expected to grow from $12.9 billion in 2021 to $20.8 billion by 2026; it is expected to grow at a CAGR of 10.1% during that period. I want to talk about a small-cap player in the sector, AgriFORCE Growing Systems, Ltd. (NASDAQ: AGRI) that seems like it could be moving into a period of big near-term growth.
AGRI acquires intellectual property, patents and know how, building a portfolio to exploit by developing products. Current verticals in development are grow facilities, food/medicine products, and agricultural consulting. Visit the company’s investor deck for details on these developing verticals.
These are the potential near-term catalysts I see for AGRI:
Pending accretive acquisition set to close within sixty days
Deployment of an AgriFORCE GrowHouse under a five-year contract
Introduction of a new food product for H2 production
A newly published patent
Licensing of an environmental pathogen control device
AGRI shares spiked in October on news they intended to make an accretive acquisition in the European AgTech market. Two weeks ago, AGRI advised it has signed a definitive agreement to acquire Delphy Groep BV (Delphy), a Netherlands-based AgTech consultancy firm, with 2020 annual revenues of US $26 million and EBITDA of US $3 million. Delphy has two hundred employees and consultants, operating its AgTech consulting business in Europe, Asia, and Africa. Delphy anticipates 2021 revenue of US$28M.
I believe that the current struggle in the NASDAQ markets has kept investors from giving a proper look and response to AGRI based on the pending, transformative and accretive acquisition expected to close in April. The current market value of AGRI is $22M creating a potential price to sales ratio less than 1.0X after the acquisition. It is anticipated that Delphy will become a subsidiary of AgriFORCE.
AGRI statistics:
FYE is December 31st
Last 10-Q filed was for Q3 21
Shares outstanding 15M
Shares in float 11.2M
Insiders hold 19.5% of the outstanding shares
52-week high $8.45/share, (hit $7.15/share on 10-27-21)
Current PPS $1.67
FYE22 looks like it may be the breakout year for AGRI as the acquisition of Delphy has the potential to generate immediate annual revenues of $26M and the deployment of the Barbados AgriFORCE GrowHouse (see below) is projected to generate $12.7M in EBITDA in year one of a five-year contract.
The product at the foundation of AGRI verticals is a precision ecosystem called the AgriFORCE GrowHouse, created using multiple AgriFORCE patents developed to make farm-fresh, pure, pesticide-free vegetables, fruits, and plant-based vaccine products.
Some features of the AgriFORCE GrowHouse:
- Integrated solution that harnesses the power of the sun
- Sealed positive pressure provides optimal temperature, humidity
- Automated grow technology and integrated artificial intelligence
- Design eliminates structural poles and beams, increasing the usable grow surface by up to 30%
- Precise and consistent growth cycles
- Reduced contamination and pest risk
- Allows higher crop yields with less space and efficient use of water
- Can be built and efficiently operated in virtually any climate or location
- Creates convenience due to proximity to markets, eliminating significant logistics costs
- Modular and scalable to meet demand drivers
In December AGRI signed a definitive contract with Humboldt Bliss, Ltd., an agriculture, and aquaculture business based in Barbados. The contract is for the deployment of the AgriFORCE foundational IP – which includes a proprietary facility design, production and operation technologies and methods, and an automated AgriFORCE Grow House. The initial contract is for a five-year-term, and the company believes this contract represents more than $63M in EBITDA over the initial term.
I’ve included this link to an informative video presentation with company CEO Ingo Mueller.
Recent events at AGRI:
Last week AGRI advised it entered into an exclusive worldwide licensing agreement with Radical Clean Solutions Ltd. (RCS), to commercialize their new proprietary hydroxyl generating devices within the controlled environment agriculture (CEA) and food manufacturing industries. The proprietary system seeks out and destroys airborne and surface-based mold, bacteria, viruses as well as Coronavirus and other pathogens in real-time. Hydroxyl technology is capable of destroying E. coli, Salmonella, as well as other bacteria and other pathogens that present risk to consumers.
On February 18th, AGRI advised their U.S. patent application entitled “Structures for Growing Plants” has been published by the U.S. Patent and Trademark Office. Upon publication of a patent application, entities are liable to the patent holder to pay “reasonable compensation” for activities that would have infringed the patent if it had been granted on the publication day.
The published patent application highlights innovative design elements of the GrowHouse structure and operational systems, which can allow for trans-missive panels that maximize the full light spectrum; Internet-of-Things (IoT) technologies, automation and use of artificial intelligence; enhanced insulation for maximizing energy efficiency; foam generators for temperature and ultraviolet light control; and a sealed positive pressure environment that provides optimal temperature, humidity, velocity, filtration, and sanitation of airflow.
After acquiring agriculture IP in September from Manna Nutritional Group LLC (MNG), AGRI advised on February 10th that they are on track to pilot test their first branded product in the specialty flour category under the brand un(Think) Foods with businesses and consumers later this year. Secondary tests on nutritional values of the food processing technology have shown strong results, with the flour providing over 30 times the fiber, 3 times the protein, and more than 80% less starch than conventional flour, without compromising taste, texture, and quality. Product production is scheduled to begin in H2 this year.
FYE22 looks like it may be the breakout year for AGRI with the potential catalysts above lining up and the accretive acquisition of Delphy set to immediately add to the company’s top and bottom line. AGRI is still trading considerably lower than their late October level of $7.15/share but that will no doubt change in the near-term.
Stay tuned I will have more on AGRI in a follow-up analysis very soon,
The Traders News Group |
