Enerdynamic to deliver agricultural units to hi!farms
2018-11-13 08:28 ET - News Release
Mr. John Gamble reports
ENERDYNAMIC HYBRID TECHNOLOGIES ENTERS A MANUFACTURING AND SUPPLY AGREEMENT WITH HI!FARMS
On Nov. 11, 2018, Enerdynamic Hybrid Technologies Corp. executed a manufacturing and supply agreement with hi!farms to deliver custom controlled environment agricultural units (CEAU) grow units to hi!farms' new facility in North Bay, Ont.
hi!farms of North Bay, Ont., is negotiating agreements to supply medical grade cannabis to academic, medical and distribution partners for research and sales in Ontario. The CEAUs are designed by hi!farms with patent applications in process. The company was selected to deliver these CEAUs by hi!farms due to the superior Enertec materials and the speed of production and delivery of the units. Under the manufacturing and supply agreement, phase 1 of the project, which consists of 32 flowering units and supporting infrastructure modules, is to be completed before the end of the second quarter of 2019. Phase 2 of the project, which consists of a further 270 flowering units and supporting infrastructure modules, is expected to be completed by the first quarter of 2020. Sales and contract information for the additional 270 units will be released in the early 2019.
The company will build and supply the initial 32 flowering units and supporting infrastructure modules to hi!farms, deferring the $6.34-million sale price while hi!farms establishes the initial crop. Thereafter, the company will receive the full sale price from 100 per cent of the net income of each unit until the original sale price is paid in full. The company anticipates receiving payment in full approximately 12 months following installation and expects a gross margin of 30 per cent. Protected through priority PPSA securitization, the company will also participate in the net profits of the medical cannabis sales from every unit, on a 50/50 basis (following repayment in full of original sale price) with hi!farms, for six years from the date of installation. There is some risk to waiting 12 months for payment, namely that hi!farms is unable to generate as much revenue as it anticipates. However, this is offset by the securitized first call on cash flow which should shift the risk to only the time to be paid rather than if the company will be paid.
John Gamble, chief executive officer of the company, indicated, "We are confident that we can deliver leading-edge grow units to hi!farms and that the risk associated with initial purchase price deferral is more than offset by the long-term recurring revenue benefit."
"The team at hi!farms is excited to be working with EHT to provide the foundation for our advanced end-to-end cultivation system," commented hi!farms' chief technology officer Paolo Pincente. "hi!farms utilizes a technology-focused approach to cultivation operations, deploying proprietary hardware and software, modern techniques, and innovative business models which represents advancements in both the cannabis industry and controlled environment agriculture in general."
About Enerdynamic Hybrid Technologies Corp.
The company delivers proprietary, turnkey energy solutions which are intelligent, bankable and sustainable. The company's expertise includes the development of its Enertec module structures with full integration of smart energy solutions. Using a proprietary skin and foam core that are stronger than traditional wood or steel structural insulated panels, the company provides exceptional thermal energy efficiency in modular homes, cold storage facilities, residential/commercial outbuildings and emergency/temporary shelters. The company works with its partners worldwide to erect the buildings on-site utilizing company staff and local crews.
The company's advanced Enertec modular wall and roof system uses a proprietary skin and foam core that are stronger and more energy efficient than traditional wood or steel structures, providing the highest ratings for energy efficiency. After installation, each structure can be furnished and finished to meet the customer's requirements including siding, tile, kitchens and bathrooms, or segregated commercial rooms. The finished wall product can be shipped on pallets and delivered via rail, truck or water in standard formats.