Valens GroWorks Corp. (CSE:VGW) together with its subsidiary (collectively, the "Company") is pleased to announce its engagement under a 5-year, renewable, Professional Services Agreement with Arizona-based marijuana cultivation and medicinal dispensary business MKHS.
In addition, MKHS has issued to the Company a US$1,212,500 Promissory Note, Loan Agreement and Guaranty that secures repayment of previous advances. This Arrangement supersedes and replaces the Company's previously described investment in MKHS and settles all outstanding issues between the parties.
As a result of this Arrangement, MKHS will complete the buildout of the 28,000-sf Farmtek greenhouse expansion, as proposed and funded by the Company in 2016 (the "Buildout"). In accordance with the PSA, payments of US$60,000 per month for management services will commence to the Company upon completion of the Buildout, with the initial three month's payments to be deferred and paid at the end of the third month following Buildout to allow for an initial harvest. In addition, the Company will provide consulting services to be performed and invoiced monthly, and will be reimbursed for approved out-of-pocket expenses and sub-contracted services.
In accordance with the Arrangement, loan interest accrues at the rate of 15% per annum commencing May 15, 2016. Principal and interest, as well as US$30,000 in cost recoveries for past accrued fees, shall be payable to the Company by MKHS in arrears commencing at the end of the third month following Buildout, and on the 15th day of each month thereafter over a 5-year term.
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