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Bullboard - Stock Discussion Forum CubicFarm Systems Corp V.CUB

Alternate Symbol(s):  V.CUB.DB | CUBXF

CubicFarm Systems Corp. is a Canada-based local chain agricultural technology company. The Company is engaged in developing and deploying technology to feed a changing world. The Company’s proprietary ag-tech solutions enable growers to produce quality, predictable produce and fresh livestock feed with HydroGreen Nutrition Technology. The CubicFarms system includes patented technology for... see more

TSXV:CUB - Post Discussion

CubicFarm Systems Corp > The Overhead
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Post by bandit69 on Sep 12, 2022 9:32pm

The Overhead

What a difference a month makes.  Wow.  Can you say mess?

August 15th earnings were released with an announcement of downsizing.  It is apparent that was not enough and more was needed.  I think reality of a dwindling cash pile and, a rising interest rate environment, limited future financings and that realization finally lit a fire under someone's a.r.s.e somewhere but I think at this point there would not have been any choice but to downsize...alot.  I've been writing about this huge overhead for over a year and kept asking why the ongoing relentless hiring?  I couldn't follow the org chart if I tried and I have worked for some big corps over the years with more legible charts.  Where were the sales?  more important, where was the cash to support it all?  I think that was answered today with the announcement of about a 50% staffing reduction.  There wasn't enough.  

The Fresh Hub cancellation is also a major blow to the business no doubt about it.  I did not expect the Fresh Hub to be cancelled but I did write in past about the potential for projects to be cancelled because they state in every fin release their cancellation policy that deposits could be refunded depending on manufacturing and shipping status.  It doesn't look like lettuce will sustain the business model though whatever it was.  As time wore on, I kept wondering what exactly is their business model?  It seemed like far too many irons in the fire and that costs money.  I also get marketing costs are a part of doing business but it sure seemed like the Amplified "launch" that was done last November? was a flop and that alone was likely not cheap.  It also seemed bold to state they were responsible for launching a new tech sector like "Tesla" and "others" did.

If a dummy like me could see this trainwreck coming, then why couldn't those who were being paid using shareholder dollars see it?  where was the board? It was so obvious.  I don't know what the cash position is but I suspect it'd be ugly right now.  We will see if they can remain solvent but I have a hunch they will squeak through it all.

I don't know what the future holds but I can guess a little.  I think the share price will continue to languish so more pain to come.  I also suspect there will be a consolidation of the float and a subsequent financing to re-capitalize.  Just a hunch and based on past experience in markets where I've seen companies run out of cash and the same sort of procedure was initiated.  Dilute dilute dilute, consolidate, then comes more financings.  I also think the lettuce part of the business will be sold and it will just be Hydrogreen going forward at some point.  Whatever is going to occur, I think it's going to happen very quickly and soon.

I will continue watching from the sidelines and see what will transpire and then I might take a punt at some point.  Where cash is going to come from is my question.  Such great tech but it is my view there was far too much Kool Aid consumption and articles being written and, somehow, a refusal to acknowledge there was a problem in their business model.  Or, a lack of the ability to see it. 

As a side thought, I wonder if there could be wrongful hiring suits as a result of this debacle?  What if this talent they procured left other jobs with promises of unicorns prancing about and butterflies flying around people's heads only to now be laid off at CUB?  I don't know enough labor law but I wonder if this might pop up.  Lawsuits have to be disclosed in the notes to financials so I will keep my eyes open for that.

All in my opinion.
Comment by bandit69 on Sep 14, 2022 2:49pm
Moving fast.  Let's recap. - they announced funding today via a 6.25MM loan at 10% (not bad for such a high risk so maybe there is lender confidence there??) so they have some liquidity...for now.  check - part of the loan (unsure of amount)  is coming from a current director, not sure who but I see this as a positive.  They're putting their own money where their ...more  
Comment by RandomGuy25 on Sep 15, 2022 11:50am
Bandit, What are the things that would make you a buyer versus a fence sitter? What would you like to see in their updates going forward? Below what valuation do you think they will receive a takeover offer? Thanks
Comment by bandit69 on Sep 16, 2022 2:17pm
Hi Randomguy25, I like to see strong financial health for any business so the same applies here.  I've written ad nauseam here about their cash burn rate since early last year and no sales to support it so to see a focus on it now is a good thing and they likely didn't have much choice but to do so. I like to see cash to sustain operations and fund future growth so I am assuming that ...more  
Comment by therealmccoy on Sep 18, 2022 12:21pm
great points bandit69,, really appreciate your posts and points on Cubic Farms.... it'll be interesting to see how things go for CUB going forwards.. i did a tour of Bevo Agro (pre-Zenabis) and the prototype Cubic Farm systems were housed at Bevo in Langley BC (in transport trailers/containers).... very interesting technology/units.... i sold out of Bevo prior to the "Zenabis deal" ...more  
Comment by bandit69 on Sep 18, 2022 11:01pm
Hi therealmccoy.  That's interesting.  I didn't realize CUB was a spin out from Zenabis but I remember you mentioned Zenabis before and I did look up some history.  It's not surprising now then what's happened if many that were operating CUB were in Zenabis too.  I chuckled when I read that the interim? chairman was also involved in the "restructuring" ...more