Energy Firm Secures CA$540,000 from Equity Facility for Growth Initiatives

Hillcrest Energy Technologies Ltd. (HEAT:CSE; HLRTF:OTCMKTS) has initiated a drawdown of CA$540,000 from its CA$5-million equity drawdown facility, which was initially announced on December 19, 2023. This recent financial maneuver is part of Hillcrest's ongoing strategy to leverage the equity facility for its operational and growth needs. The drawdown is fully financed by a third-party investor, and the company will issue the investor units equal to the CA540,000 drawdown amount. Each unit consists of one common share and one-half of one share purchase warrant. The issuance price of these units will be determined by the higher of two benchmarks: the discounted market price allowed by the Canadian Securities Exchange (CSE) policies or 90% of the average closing bid price of the shares over the ten consecutive trading days before the drawdown date.

The warrants issued with the units will be exercisable for three years at a price equal to the greater of 125% of the unit issue price or the minimum exercise price permitted by CSE policies. Hillcrest will also pay a 12% drawdown fee, which can be settled in shares or deducted from the advance, at the company's discretion. The completion of this transaction is expected around August 2, 2024, subject to customary closing conditions, including the receipt of the drawdown proceeds.

Pioneering Innovation and Collaboration for a Sustainable Future

The energy sector is recognized for its critical role in maintaining a stable energy supply, which is fundamental to the health, welfare, and economic stability of the nation. According to America's Cyber Defense Agency, "The energy sector protects a multifaceted web of electricity, oil, and natural gas resources and assets to maintain steady energy supplies and ensure the overall health and wellness of the nation." This sector's infrastructure is pivotal, as "the U.S. energy infrastructure fuels the economy of the 21st century. Without a stable energy supply, health and welfare are threatened and the U.S. economy cannot function."

The interconnectedness of the energy sector with other critical infrastructure sectors is significant. Presidential Policy Directive 21 identifies the Energy Sector as uniquely critical because it provides an "enabling function" across all critical infrastructure sectors. This sentiment is echoed in the observation that "more than 80 percent of the country's energy infrastructure is owned by the private sector, supplying fuels to the transportation industry, electricity to households and businesses, and other sources of energy that are integral to growth and production across the nation."

The sector's reliance on pipelines to distribute products underscores the interdependencies between the Energy and Transportation Systems Sector. The reliance of virtually all industries on electric power and fuels means that all sectors have some dependence on the Energy Sector. Acknowledging its vulnerabilities, the energy sector has led significant voluntary efforts to increase planning and preparedness. "Cooperation through industry groups has resulted in substantial information sharing of best practices across the sector," with many sector owners and operators focusing more recently on cybersecurity.

At an international level, the energy sector has been the focal point of collaborative efforts to advance clean energy technologies. On July 25, Solar Quarter reported, "In a significant event held on July 22, 2024, in Bucharest, senior leaders and stakeholders from both public and private sectors gathered to discuss advancements and opportunities in the global clean energy landscape." This event highlighted the robust international collaboration in the clean energy sector, with U.S. representatives praising recent policy initiatives like the Inflation Reduction Act and the Bipartisan Infrastructure Law, which have significantly boosted clean energy investments.

Furthermore, the U.S. administration's efforts were underscored by the substantial funding allocated to clean energy. "With over US$70 billion in grants and loans announced by the Department of Energy and nearly US$300 billion in private sector investments, the clean energy sector is witnessing unprecedented growth." The event in Bucharest showcased successful collaborations and ongoing initiatives, emphasizing the importance of transitioning to renewable energy sources such as wind and solar for future energy security and economic growth.

According to Breakthrough Energy on July 11, "The world is experiencing an energy transition that has the potential to power economic growth while also tackling the worst impacts of climate change." The report "Advancing the Landscape of Clean Energy Innovation" elaborated on how the U.S. could lead this transition by building on its tradition of collaboration in energy innovation, from basic research to deployment. It identified potential "breakthrough technologies" with high impact on greenhouse gas emissions, showing promise for deployment at scale.

The World Economic Forum, on June 28, emphasized the role of innovation and technology in the energy sector. "Through innovation, technology holds the promise of expediting the processes of decarbonization and energy transition, propelling us towards a sustainable future." It stressed that "realizing the full potential of clean energy innovation requires international cooperation and collective action. By working together, nations can accelerate the transition to a sustainable energy future."

The Catalysts of Hillcrest

Hillcrest Energy Technologies Ltd. is leveraging this drawdown to further its technological advancements and market reach. The proceeds are earmarked for several strategic initiatives, including technology and product development, commercialization efforts, investor relations, and general working capital. These areas are critical for Hillcrest as it aims to strengthen its market position and foster innovation in energy technologies.

Don Currie, CEO of Hillcrest, emphasized the importance of these funds in achieving the company's strategic objectives in the company news release. The drawdown not only provides necessary capital but also aligns with Hillcrest's broader financial strategy to ensure sustained growth and development.

The securities issued in this transaction will be subject to a statutory hold period of four months and one day, as required by applicable securities legislation. This condition ensures compliance with regulatory standards and provides a structured timeline for the investor and the company.

Hillcrest's proactive approach to financing through the equity facility showcases its commitment to maintaining financial health and driving forward with its innovative projects. The anticipated closing of this drawdown marks another step in Hillcrest's ongoing efforts to expand its technological capabilities and market influence.

Expert Opinions on Hillcrest

According to Technical Analyst Clive Maund on July 24, Hillcrest Energy Technologies Ltd. has shown remarkable performance with a significant price increase of approximately 50% in the span of seven weeks. Maund highlighted that the company was an attractive buy following the identification of a large clear Head-and-Shoulders bottom pattern, indicating strong accumulation. The breakout, which occurred on high volume – the largest since 2020 – was driven by the significant news that "Hillcrest partners with Ocean Batteries to deploy ZVS inverter in grid-connected energy storage systems."

This partnership with Ocean Batteries is expected to unlock a substantial market for Hillcrest's products. As Maund pointed out, CEO Don Currie stated, "Our partnership with Ocean Batteries marks the first deployment of our ZVS inverter technology into stationary, grid-connected applications as we look to accelerate future revenues. The sheer size of the ESS market represents a phenomenal opportunity for the integration of our technology. Upon successful demonstration and integration of our ZVS inverter prototype, a commercial supply agreement with Ocean Batteries could result in attractive annual sales revenues." Currie also praised the expertise of Kent and his team at Ocean Batteries, emphasizing their specialized experience necessary to serve the marine market and their potential to deliver best-in-class onshore ESS systems.

Maund observed that the dramatic breakout from the Head-and-Shoulders bottom was a bullish indicator, promising much higher prices ahead. The initial surge in price was followed by a normal post-breakout reaction, bringing the price back down to briefly touch the "neckline" of the H&S bottom intraday. However, after stabilizing above its now rising 50-day moving average, the stock broke sharply higher again. This strong breakout in mid-June is believed to mark the beginning of a major bull market for Hillcrest. Maund anticipates further consolidation in the CA$0.30 – CA$0.46 range over the coming weeks, after which an uptrend is expected to be established. He advises staying long on Hillcrest and considers it a buy on any near-term dips.

Ownership and Share Structure

According to Refenitiv, management and insiders own 7.29% of Hillcrest Energy. Of those, Founding CEO Donald J. Currie owns 3.20%, Founder Michael Krzus owns 1.97%, and Director David Paul Farrell owns 1.09%.

The rest is retail.

The company currently has 100.57 million shares outstanding and 93.24 million free float shares. The 52 week range is US$0.15 - 0.50 with a market cap of US$26.04 million.

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1) James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.

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