Crop Infrastructure Corp (CSE: CROP) has been a curious case to us at The Deep Dive. On one hand, the firm should have generated revenues prior to the last financial statements in our eyes. On the other hand, the firm may just now be hitting its stride as slightly evidenced by yesterdays news release.
Within the release, an announcement was made by the company wherein they identified that a Crop Corp tenant was now self-sustaining after launching a new product line of Tiff CBD cartridges. The interesting tidbit however, was that this tenant had now accrued $642,000 in payables to Crop for lease, rental, and brand fees. While not a significant number, it’s a guaranteed start to revenues at the very least which are known to come into Crop’s coffers.
While a handful of news releases over the past couple of months have identified that tenants are generating revenues, due to the nature of Crop Corp’s structure it hasn’t been entirely clear just what portion is attributable to the firm. Further consolidation limitations due to the markets the company operates in muddies these waters even more.
The perennial habit of Crop Infrastructure to at most take a 49% claim in any investment further limits what the company is eligible to recognize as revenues. This news however clearly identifies that the firm has finally begun to generate cash which undoubtedly will satisfy the firms dedicated shareholder base.
Crop Infrastructure Corp is set to release financials by the end of the month for FY 2018, which closed on February 28, 2019. Chief among the results, our team will be looking at revenues which should either prove or disprove the business model that Crop is currently working with. As of the last reporting period, the company had a strong balance sheet with little in the way of liabilities however it failed to post any revenues for the nine month period.
The primary source of income we’ll be on the watch for is revenue related to an agreement announced in fall 2018, wherein it was identified that Crop had signed an off take agreement that had the potential for revenues anywhere from US$27 to US$71 per pound of dried CBD flower. While it’s believed that Crop is entitled to roughly 49% of this revenue due to its joint venture with Elite Venture’s in Nevada, it’s unclear if this agreement was executed upon as of yet.
Additional revenues are expected to come from bulk sales of CBD isolate which the firm identified in early November. While no hard figures were given, evidence of significant revenue from the Nevada hemp operations will justify Crop’s investment in the 2,115 acre farm that it is now entering its second season of production.
Crop Corp closed yesterdays session at $0.22, down $0.01 or (4.26%).
Information for this briefing was found via Sedar and Crop Infrastructure Corp. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.