Investment Opportunity in Advanced Greenhouse Technologies USA, Inc. [Sept 17 2014]

8/10/2019 Investment Opportunity in Advanced Greenhouse Technologies USA, Inc. [Sept 17 2014]

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Investment Opportunity:

Advanced Greenhouse

Technologies USA, Inc.

1200 Westlake Ave N, Suite 604

Seattle, Washington, 98109

Tel: (206) 829-8015


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Presentation Summary

I-502 Overview;

Advanced Greenhouse Technologies USA, Inc.

Jam Box, Inc.; and

Financial presentation*.

* All dollar figures in this presentation are in USD


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I-502 Overview

In April, 2011, the State of Washington passed ESSB 5073, which providedmedical marijuana (cannabis) to qualifying patients and allowed theDepartment of Health and Department of Agriculture to authorize and licensecommercial businesses that produce, process or dispense cannabis.

In November, 2012, the Washington State Liquor Control Board (WSLCB)

passed Initiative 502 (I-502) pursuant to a vote by the people of the Stateof Washington. I-502 authorized the WSLCB to regulate and tax recreationalmarijuana products for persons over twenty-one years of age and thereby,created a new industry for the growing, processing and selling of State-regulated recreational marijuana products.


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Advanced Greenhouse Technologies USA,Inc.

Advanced Greenhouse Technologies USA, Inc. is a Washington corporationwhich designs and provides leading-edge turnkey greenhouse packages toState of Washington-licensed production and processing companies (AGT).

AGTs technology, equipment and greenhouse systems are designed to suit avariety of budgets, growing locations and required size of operation.


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Jam Box, Inc.

Jam Box, Inc. is a Washington corporation, founded by William Whelan in July,1992 (Jam Box).

Jam Box is in the process of obtaining a Tier 3 production and processlicense from the State of Washington for the purpose of growing andprocessing two products, including bud (sold per gram as a premium product)and edible products (created from oil using lower grade cannabis).

With a three-year operational history as a profitable State of Washington -licensed medical cannabis grower and processor, along with a solid reputationas a reliable business that provides quality products and services, we believeJam Box is in a strong position to become successful in its anticipatedtransition from Washingtons medical cannabis industry to the newrecreational marijuana market.


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AGTs Arrangement with Jam Box, Inc.

AGT and Jam Box desire to enter into an arrangement whereby AGT shallprovide the AGT Services to Jam Box. This arrangement will include Jam Boxrenting space owned by AGT, licensing technologies provided by AGT andentering into various operational and marketing agreements for the purposeof conducting its business.

Specifically, AGT will acquire real estate and provide greenhouses (andrelated equipment and technology) in connection with the design anddevelopment of the AGT green campus.


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Greenhouse Design


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Real Estate

AGT has identified approximately 30 acres of real estate located in Thorp,Washington.

This real estate will serve as the initial location for the design anddevelopment of the AGT green campus. This real estate is compliant with I-502.

It is anticipated that AGT shall enter into a Purchase and Sale Agreement with

the owners of the real estate sometime in the month of September, 2014.


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Investment

AGT is seeking an investment of $3,500,000.00 (the Investment).

The Investment will allow AGT to do the following (the AGT Services):

Purchase real estate in the State of Washington;

Acquire greenhouse equipment;

Lease real estate to State of Washington-licensed production and processingbusinesses;

Lease and/or contract labor, equipment and infrastructure to those production andprocessing businesses;

Consulting services; and

License its greenhouse infrastructure and growth technologies to those production

and processing businesses.


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Investment

In consideration for the Investment, AGT is offering a 10% three-yearPromissory Note with the following terms:

Length of Term: 3 Years;

Interest Rate: 10%;

Repayment Terms:

Interest-only in Year 1, 2 and 3 ($29,166 per month);


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The Model

Real Estate lease, Equipment,Greenhouse technology,Contracts and Consulting services

Advanced GreenhouseTechnologies USA, Inc.

Jam Box, Inc.Operations (site,

technology, people)

Investor

CashConsideration

$3.5M Investment

Promissory Note


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Financial Presentation Jam BoxAssumptions & Introduction*

Assumptions:

Year 1: 21,000 square foot facility;

Year 2: 21,000 square foot facility; and

Year 3: 21,000 square foot facility.

State tax on products will be assessed only at the Processor level (tax rate =25%);

We expect that Jam Box will generate the following net income (productionand processing operations combined):

Year 1: $1,571,000 USD;

Year 2: $5,570,000 USD; and

Year 3: $5,242,000 USD.

*Dollar figures are estimates based on projected Net Income derived from basic production/processing model not associated w

real estate location or technology.


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Jam Box Revenue Assumptions(Year 1, 2 and 3)

Revenue Generated by Bud Product Sales is Calculated Using the FollowingAssumptions:

Year 1 assumes a 21,000 sq ft facility;

500 lights in the area;

500 lights yield 500 lb bud;

1 lb Bud = 453.59 grams bud;

Jam Box will produce and process 595,337 grams of bud per harvest;

Four harvests in a year;

= Jam Box will produce and process 2,381,348 grams of bud per year;


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Financial Performance Overview

Gross Revenue

Year 1 $6,939,000 USD

Year 2 $13,878,000 USD

Year 3 $13,878,000 USD

Total: $34,615,000 USD

Net Income

Year 1 $1,571,000 USD

Year 2 $5,570,000 USD

Year 3 $5,242,000 USD

Total: $12,383,000 USD

Net Income Margin

Year 1 22.64%

Year 2 40.14%

Year 3 37.78%


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Financial Performance Overview (cont.)

Build-out and Operating Expenses

Year 1 $6,738,000 USD

Year 2 $4,488,000 USD

Year 3 $5,166,000 USD

Total: $16,437,000 USD

Net Operating Expense as Percentage of G

Revenue

Year 1 97.75%

Year 2 32.34%

Year 3 37.22%


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Investment Summary

Net Present Value*

Investment $3,500,000 USD

Net Income, Year 1 $1,571,000 USD



IRR (end of Year 3)** 15.95%

NPV (end of Year 3)*** $8,884,000 USD

NPV of Future Income**** $14,659,000 USD

* Net Income calculated excludes Investment;** IRR assumes that source of $3.5 M Investment is entitled to 20% of Net Income each year;*** NPV calculated with adding Net Income of Year 1, 2 and 3 and subtracting $3.5M Investment;

****Discount is 66% and Multiple of 5;


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Cash Return on Investment

Return on 20% Equity*

Year 1: $314,200 USD

Year 2: $1,114,088 USD

Year 3: $1,048,579 USDTotal : $2,476,867 USD

Rate of Return: 70.77%

* By Year 3, AGT anticipates net income of $5,242,000. This net income with a multiple of 5 equals $26,210,000. 20% of

this equals $5,242,000.


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Questions & Answers

Please direct questions and comments to:

Attn: David M. Otto, Managing Partner

1200 Westlake Ave N, Suite 604

Seattle, Washington, 98109

Tel: (206) 829-8015

Email: [email protected]

Web: www.martindavislaw.com
mailto:[email protected]:[email protected]

Documents

Investment Opportunity in Advanced Greenhouse Technologies USA, Inc. [Sept 17 2014]