Clean Seed Capital: The IPhone Of Agriculture?

TM Editors' Note: This article discusses a penny stock/microcap. Such stocks are easily manipulated; do your own careful due diligence.

In 2009 Abbott Laboratories (ABT) bought out Advanced Medical Optics for $22. AMO was trading at $8.85 before the announcement. This deal represented an acquisition premium of over 200%.

If you were presented with a company that had an extremely high possibility of being bought out in the not too distant future giving you a spectacular return, would you take the time to examine it?

If you would, this article is for you.

The Dilemma

Tilling the soil is an agricultural practice that has been done since time immemorial. Like many detrimental practices that have been carried down through the ages (government, welfare and warfare) it is not necessary, yet it is still conducted.

Why is tilling detrimental?

  • Tilling the soil removes any cover crop that is preventing the erosion of the top-soil by wind and water.
  • Tillage results in a down slope movement of soil (nutrient rich topsoil sinks further down being replaced by non nutrient rich sub layers).
  • Tillage moves soil to depressions/gully’s where it is washed away.
  • Tillage pulverizes the clumps of soil (aggregates) exposing the soil to eroding forces.

You’re probably well aware of the agricultural challenges facing the world today. To feed the world's growing population, we need to grow more food in the next 50 years than has been grown in the last 10,000 years combined.

When you consider that approximately 40% of the world's agricultural land is seriously degraded, this makes for a monumental task.

When plants don’t have the nutrients they require, they simply don’t grow. Crop yields decline, nutritional content is reduced and food quality is affected.

What are the implications?

Farmers simply cannot sell crops that are not visually appealing and nutritious, thus they must rely on the use of fertilizers to ensure the nutrient content of soil is maintained.

Fertilizer is often the greatest input cost for a farming operation. Increasing nutrient loss through topsoil erosion results in the need for increasing quantities of fertilizer to be applied to achieve the desired yields.

The soil has a fertilizer saturation point that, when reached, results in no additional crop yield. A poor quality soil full of fertilizer will not yield the same quantity and grade of crop as an excellent soil with appropriate fertilizer application.

The loss of topsoil is one of the biggest problems that farmers and farming companies face. As more and more farmers sell their farms to big companies, there will be a huge emphasis on cost cutting to preserve profit margins.

The current generation of agricultural equipment is advanced…isn’t it?

The air seeders that are used in commercial agricultural production are based on technology that was developed 30 years ago.

Where there is a dilemma, there is an opportunity to profit by presenting a solution.

The Solution

Farmers are notorious for doing things how they’ve always been done. They’re also notorious for being penny-pinchers, and that's a good thing because you don’t get rich writing checks. However, agriculture is now at a collision point between these two ideas: On one side, an aversion to change; on the other, a need to modernize to save money, time and increase productivity.

The big farming companies that will lead the way within the agricultural space are of the new generation. They understand what a bottom line is and they’re constantly looking for new technologies that will enable them to produce more with less.

A solution to the problems that are faced by today’s farmers has been developed and is just about to go into production.

The Company – Clean Seed Capital 

 

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History

The company was incorporated on January 28, 2010.  In 2011 Clean Seed Capital burst onto the public stage after a successful IPO. The IPO consisted of 6,700,000 common shares at a price of $0.30. The proceeds from the IPO were used to purchase Vesco’s Terra-Glide technology, a patented non-tillage agricultural precision planting system.

The People

The most important factor in determining the success of a company will be the ability of a management team to get the job done. Testaments to the efforts of Clean Seeds team have come in the form of multiple awards including the 2014 New Equipment Innovations Award.

Lets have a look at the team:

Graeme Lempriere President/CEO

  • Over 20 years’ of experience in company restructuring, marketing and corporate finance.
  • Secured worldwide exclusive rights to Clean Seed’s unique patented seeding technology.
  • Since going public in 2011 has led Clean Seed Capital to a TSX Venture 50 Company.

Colin Rosengren VP, Agronomic Protocols & Practices

  • Third generation Canadian large scale commercial farmer.
  • Specializes in Zero-Tillage and Intercropping Techniques.
  • Instrumental in the development of the CX-6 SMART Seeder.

Noel Lempriere VP, Marketing

  • Over 18 years’ of experience in marketing and personnel/project management.
  • Marketing and distribution to commercial projects across Western Canada and the US.
  • Advisory Board member for the 2010 World Masters Athletics Championships.
  • Has worked directly with CEO and the Clean Seed Technology since its inception.

Steven Brassard Chief Financial Officer

  • Chartered Accountant with a Master Degree in Professional Accounting.
  • Accounting and financial consulting services to public and private enterprises.
  • International Financial Reporting Standards Consulting to public companies.
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Disclosure: I'm a shareholder of Clean Seed.

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