Mon. Apr 12th, 2021
Roots Sustainable Agricultural Technologies seeks to expand commercial activity internationally with emphasis on cannabis sector

Roots Sustainable Agricultural Technologies Ltd (ASX:ROO) is working towards expanding its commercial activity internationally, with an emphasis on the cannabis sector. 

The company has raised funds via private placements during the year which will go towards, among others, the expansion of opportunities in the global cannabis sector. 

Roots has already secured deals with companies in the Czech Republic, Israel and California. 

The company’s heat exchange probe has been successfully tested at its research hub and among cannabis growers in Israel. 

Patent registration

The company successfully registered a design patent for its heat exchange probe in Australia.

Roots completed the registration on January 10, 2020 and was awarded the patent shortly.

On its patents in China and the EU, the registration is valid from the filing date (25 November 2019) for 45 years in the EU and ten years in China, unlocking a number of significant opportunities for Roots.

Second commercial sale of RZTO technology to Israeli cannabis grower

Roots secured a $36,000 purchase order from Barlev Agricultural Crops Ltd, for its Root Zone Temperature Optimisation (RZTO) technology.

The sale was a follow-up order and validates the company’s technology and its bid to push into the growing global cannabis sector.

Italy’s Cairo & Doutcher

To broaden its footprint throughout Europe, Roots secured an exclusive agreement with leading Italian ag-tech and distribution company Cairo & Doutcher, which commits Cairo & Doutcher to achieve clearly defined sales targets totalling €3.5 million between now and the end of 2023.

Based on the very positive demonstration results of the RZTO technology at the flower farm in Italy, Cairo & Doutcher extended an invitation to the Italian Minister of Agriculture to view the system and review its benefits.

An update will be provided following this proposed visit.

Okra & asparagus yield up

A proof of concept (POC) study conducted in Southern Israel, over four months, using RZTO technology, increased okra yield by 78% under cold weather conditions, further validating its technology and unlocks another large market opportunity.

Roots also completed a POC trial at its R&D facility in Israel, which showed a mean increase of 90% yield of all marketable asparagus parcels, compared to the control group.

FinePro Consulting Ltd deal

An agreement was secured with FinePro Consulting Ltd, an Israeli representative of Robur, to explore complementary sales opportunities within the agricultural technology sector, and ascertain the level of demand of off-grid technologies with respect to root zone heating and cooling and greenhouse climate control.

Roots has also received initial design from Robur for an off-grid Irrigation by condensation (IBC) set up that includes gas-operated chiller backed by small solar panel installation and batteries to lower the IBC overall price and facilitate the use of IBC where electricity is not available or solar panels are not fully functional due to heavy cloud cover.

Third RZTO technology order from existing customer in Israel

The company secured a $17,000 order for its RZTO technology for immediate installation from leading hydroponic vegetable grower HYDRO GROW, in Bnei Atarot in Israel.

Roots completed the installation during July.

Engagement with Talgil

Roots began a collaboration with global irrigation control system manufacturer Talgil, to increase its system reputability and redundancies, which also gives Roots access Talgil’s global dealer network.

Further, the company’s system is now integrated with Talgil’s SAPIR2 controller, an internet-enabled, medium to large scale, professional irrigation controller, supported 24/7 in multiple languages.

Ultraplast Industries Ltd engagement

Roots engaged with Ultraplast Industries Ltd, to upgrade and manufacture its proprietary and revolutionary vertical T-shaped Heat Exchange device (HED).

The company’s former manufacturer in China ceased operations due to COVID-19 for a few months and an alternative manufacturer was located in Israel to meet the growing demand for the HED-based heating and cooling of roots in any substrate.

Turkey expansion

Broadening its global footprint, it expanded into Turkey following the receipt of a Notice of Allowance for its design patent in the country, the seventh-largest agricultural sector in the world.

RZTO pilot trial commenced on grapevines

The company commenced an RZTO technology trial on grapevines at Calmor Grapes in North Central Israel, in collaboration with leading researcher Dr Netzer Yishai.

The pilot will test 220 plants over a 1,000 square metres patch and is expected to last up to 24 months, with early results within nine to 12 months.

‘Buy-now, Pay later’ deal with Amir Ltd

Its strategic agreement with retail and marketing company, Amir Marketing and Investing in Agriculture Ltd included a ‘Buy-now, Pay later’ component, lowering the barrier of entry for farmers.

Under the agreement, Amir will exclusively promote RZTO technology in its stores and offer a ‘Buy-now, Pay later’ plan, which will allow payments to be made over 24 months, with flexible structures.

Roots is confident that this will considerably expedite product uptake in Israel.

Next-generation agricultural solution

During the period, Roots developed a next-generation agricultural solution, which combines plant irrigation and fertigation functions within its revolutionary heat exchange probe, providing a number of systems in one complete offering.

Roots is confident that the new solution will significantly reduce costs for farmers, as they will now be able to use the one solution infrastructure for two functions.

Roots has identified a number of potential customers in Israel and more broadly and is confident that it will secure first purchase orders shortly.

Sale of RZTO systems in northern California

The company signed a non-binding, non-exclusive Letter of Intent (LOI) with smart technology provider Humboldt CCTV to market, sell and distribute root zone heat exchange device kits.

Humboldt will initially target the Lake, Mendocino and Humboldt counties and on meeting certain milestones, both parties will expand the LOI to a binding agreement to cover the remainder of California and other states in the US.

Following the initial LOI, Roots furthered the agreement with Humboldt to integrate its heat exchange probe into the group’s SmartAg solution, allowing growers to wirelessly monitor soil moisture, crop temperature weather, weather station data and environmental conditions at a grow site.

As part of the agreement, Roots will invest US$100,000 in Humboldt CCTV in return for 10% of its holdings.

The invested proceeds will be devoted to marketing and sale initiatives in Canada and the US cannabis sectors.

ROOTS and Humboldt will also progress the first deployment of the company’s heat exchange stub, managed and controlled by Humboldt’s SmartAg offering at a large cannabis cultivation facility located in Northern California.

The trial will be used to progress business development initiatives with other growers and potential customers across Northern California.

Preferred distributor for Serbia and select Balkan nations

Roots secured an LOI with established agriculture and water treatment technologies provider Avital COO to deploy the company’s technologies into Serbia and other countries in the Balkans.

Under the LOI, Roots and Avital will progress a demonstration of the RZTO and heat exchange probe technology at one of Avital’s customer farms which is a commercial grower of blueberries.

Further, both parties will progress the LOI to a binding agreement whereby Avital becomes Roots’ preferred distributor for Serbia and select Balkan nations, giving Roots a broader presence in Europe encompassing the Balkans, Italy and Spain.

The company expects to commence the trial with Avital’s customer in the first quarter of 2021 or before.

Roots is confident that a successful trial will generate revenue-generating installation and service contracts in Serbia.

Plant-based meat opportunities

The plant-based meat division was established to capitalise on recent POC study results that show the positive effects that RZTO technology has on the yield of protein-based plants and to pursue opportunities presented by the lucrative plant-based food market.

The Roots plant-based meat department will focus on collaborating with industry partners and developing go to market strategies that would allow growers and product creators to use RZTO technology for protein-based plants used in the growing artificial meat industry.

World-leading researcher Zohar Kerem will lead the department on an advisory basis.

The expected value for the plant-based meat market in 2019 is US$12.1 billion and is expected to grow at a compound annual growth rate of 15%, to US$27.9 billion by 2025.

The company also secured a non-binding LOI with leading organic hemp grower and hemp food manufacturer Hempoint s.r.o. to further its plant-based meat department.

Roots and Hempoint will review Academic IP, technical development and sourcing of protein from hemp for plant-based meat product initiatives.

Both parties will review the current state of technologies to increase hemp protein content and will choose a specific technology to collaborate and potentially license to use to increase protein content

Placements to drive growth

In the year, the company completed a number of private placements to provide the company with the necessary financial flexibility to drive growth.

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