Roots Sustainable Agricultural Technology (ROO) is an up and coming microcap (approx. $3.7 million) company operating within the agricultural technology space which aims to address many of the problems faced by a growing population and therefore greater demand for food as resources become increasingly finite.ROO offers an extensive array of projects which spans from the use of their Root Zone Temperature Optimisation (RZTO) system to successfully increase crop yields of plants such as asparagus, okra and cannabis as well as their off the grid irrigation by condensation technology. Furthermore, they have an exposure to the plant-based protein sector which has seen significant attention recently from investors, particularly in the US market. This exciting industry has seen companies such as Beyond Meat (NASDAQ: BYND) reach a market capitalisation of roughly $8 billion dollars, demonstrating the potential of companies operating within this industry.

Looking at their latest quarterly cashflow report, ROO currently holds US $169,000 in the bank and therefore their announcement that they will be undertaking a capital raising comes with little surprise as the company entered into a trading halt on the 18th of August. While the amount being raised is still yet to be disclosed with this expected by the commencement of trading next Monday the 24th, this should go a long way to funding ROO’s impressive portfolio of projects and hopefully providing a return for investors in this hot sector.

UPDATE: Upon commencement of trading on the 24th of August, ROO has announced the capital raising will entail a placement of $2.51 million to Sophisticated and Professional investors. This will take place at a 20% discount to the 5-day VWAP ($0.02) at $0.016 with the capital to be used to “expand commercialisation of Root Zone Temperature Optimisation (RZTO) systems” which will go towards “installation and engineering costs, sales and marketing, business development, IP creation and maintenance, to pay out existing debt (and) costs of the placement” with 6% of capital raised  going to Everblu Capital Pty Ltd as the lead manager conducting the placement.

Market Capitalisation (24/08) $3.7 million
Share price $0.023
52 Week High $0.090
52 Week Low $0.009
Cash and cash equivalents $169,000 USD

Nevertheless, it should be noted that since listing on the ASX, ROO has struggled to capture interest from prospective investors which, as demonstrated by the share price chart below, has seen the share price fall significantly in this short space of time. With any stock, an established long-term bearish trend like such must be approached with caution where this ultimately demonstrates the company’s as well as management’s ability to provide value to investors.

Roots Sustainable Agricultural Technology

Commsec, 2020

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This article does not take into account the investment objectives, financial situation or needs of a particular person or entity. Before acting on any investment strategy or advice you should first consult with your current ASIC accredited investment professional or seek out a compliant investment professional for such.