The execution of the agreement provides several significant benefits to iFabric:
- Expansion of distribution and marketing rights from North American rights to Worldwide rights;
- A direct, and more secure, relationship with the manufacturer of the technologies, including access to future product advancements and developments;
- Increased product margins as a result of the direct relationship with the manufacturer; and
- The elimination of the previous profit share arrangement.
As a result of securing the global rights to the products, IFTNA will rebrand on a global basis, its current offerings of antimicrobial, antiviral and other products. In addition, these products will now be offered on a global basis and will not be restricted to only the North American market as was previously designed.
“This new agreement clearly demonstrates the confidence the manufacturer has in the Company to execute on the future growth plans for these products. The agreement provides us with not only world wide distribution rights at increased margins, but also a direct contractual relationship with the manufacturer and more efficient supply of our product to our customers” said Hylton Karon, President and CEO of iFabric.
“In addition, we now have the ability to supply technical assistance and advice on product development in a wide variety of market areas on a global basis” he added.
IFTNA is terminating its existing Joint Venture Agreement (“JVA”) with Intelligent Fabric Technologies Plc (“IFT-UK”,) an unrelated company. The agreement with IFT-UK is being terminated for reasons of breach of material terms of the JVA by IFT-UK.
The severance of the JVA will result in a onetime write-off of approximately $300,000 in current Joint Venture balances in the quarter ended September 30, 2013 and reflected in the audited financial statements of the Company for the year ended September 30, 2013, which are expected to be released during the third week of January 2014.
“The execution of the new agreement ensures that business will not be affected by the termination of the JVA” stated Mr. Karon. The Company also estimates that future costs in connection with the new branding of the technologies will amount to approximately $100,000. These costs will be expensed as incurred.
The Company is also pleased to announce the approval from the United States Environmental Protection Agency (“the EPA”) of its public health claims testing protocol.
“This represents the culmination of a three year process during which our protocol was developed in conjunction with the EPA and marks an important milestone towards higher level medical claims” said Hylton Karon. “However, there is still additional testing required in bringing this project to fruition” he added.
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