Roots closed its third sales of RZTO; expands into NA cannabis space

  • May 02, 2019 AEST
  • Team Kalkine
Roots closed its third sales of RZTO; expands into NA cannabis space

Roots Sustainable Agricultural Technologies Ltd (ASX: ROO) is in the business of agricultural technologies. It develops modular and cutting-edge technologies to offer solutions for the issues faced by the agriculture sector, like plant climate management and the shortage of water for irrigation. The company has developed proprietary expertise and patents to optimise performance. It will also result in the reduction of installation costs to provide maximum benefit to the farmers

Root Zone Temperature Optimisation (RZTO) sales

On 1st May 2019, the company announced that it had closed the third sale of its Root Zone Temperature Optimisation (RZTO). RZTO is a heating and cooling system which alters the plant physiology, by stabilising the plant’s root zone temperature resulting in its increased productivity, quality and growth. The previous two sales of RZTO were made to Tim Blake who is an industry leader and Mendocino Natural Farms which is an independent grower of cannabis.

The third sale has been made to Canndescent, a producer of medical cannabis for A$28,000. Canndescent will install and utilise RZTO technology in its greenhouse at growing facilities situated in Southern California.

Canndescent customises the plant growing environment by stage and strain, along with trimming of the flowers by hand. It has also been voted as number one selling flower brand in 2017 and number one selling luxury flower brand in 2018.

CEO’s Statement

Sharon Devir, CEO of Roots stated that the third sale its RZTO technology to a luxury cannabis brand has further endorsed the technology from another industry leader. Also, it will be the first time when the RZTO would be installed and used in greenhouse growbags in the US.

The current sale would demonstrate RTZO to be used for cooling purpose, which would be complementing the previous sales, where it was being used to heat open field cannabis plants. It had generated an enormous increase in the un-trimmed dry bud and leaf weight plants to 283%.

RZTO increased 40% yield of Yardlong Beans

Recently on 24th April 2019, the company announced that RZTO had increased the yield of Yardlong Beans ( a staple crop in most of the Asian cuisines) by 40%, compared to unheated control crop, which was reported by the Southern Israel based grower.

March 2019 quarterly report highlights

The company released the quarterly report for the March 2019 quarter, in which it discussed the operational updates, with the cash flow numbers as mentioned below:

  • During the period, the company secured a sale of A$278,000 from Dagan for second China project.
  • A Second RZTO cannabis sale was closed in the North American region, during the March quarter.
  • To fund the commercialisation process, the company secured A$1.62 million through the issuance of convertible notes, out of which A$810,000 has been received (as per the first tranche).
  • The total net cash used in the operating activities during the quarter stood at A$538,000. A$7,000 was used in the investing activities. While the net cash from financing activities stood at A$496,000.
  • The net cash at the March quarter end was reported at A$563,000, with estimated cash outflow of A$649,000 for the next quarter.

Stock Performance: The market capitalisation of the company is A$5.08 million. The 52-week high and low of the stock are A$0.465 and A$0.066 respectively. Currently, the shares of the company are trading flat at A$0.075 (as on 2 May 2019, 12:55 PM AEST). The YTD return of the stock stands at negative 28%.


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