Company Reaches Financing Agreement for $2.5 million, Enabling the Company to Bring Proprietary Hemp Clones to Market Through EZ-CLONE
Summary:
GrowLife to leverage subsidiary EZ-CLONE expertise by adding CBD-rich hemp clones to product offering, eyeing large market opportunity driven by lack-of-supply of hemp clones
Company reaches definitive agreement for equity financing of $2.5 million
Financing to enable company to pay-down outstanding debt, further invest in manufacturing core business unit, and introduce new products including hemp clones
KIRKLAND, Wash. — GrowLife, Inc. (OTC: PHOT), one of the nation’s leading plant cultivation and cannabis/hemp cloning solution providers, announced today the company has entered into a definitive equity financing agreement of $2.5 million, enabling the company to add CBD-rich hemp clones sales to its current service offering by next year.
“With the federal legalization of hemp and nationwide demand for CBD increasing, the need for high yield, CBD-rich hemp has never been greater and we have an unprecedented opportunity to supply these farmers with the clones they need to start their plants through EZ-CLONE,” said Marco Hegyi, GrowLife CEO and President. “We are working with the best hemp geneticists and large-scale propagation partners to deliver the highest-quality CBD-rich hemp clones to farmers on a nationwide scale in 2020. In order to do this, we needed solid financing with minimal dilution. This new funding illustrates the confidence our investor has in our strategy by putting in $2.5 million at market price.”
Hegyi added “the demand for CBD-rich hemp has grown 368% in just one year and an estimated 200,000 acres will be planted this year, up from roughly 25,000 just two years ago. Through our propagation experience with EZ-CLONE, we are creating an understated value to hemp farmers nationwide who do not have the time or experience to grow clones internally. These clones have high margins and create a significant revenue generation opportunity for us, on which we plan to capitalize as quickly as possible. We plan to make further announcements on progress of this new initiative in the coming weeks.”
Hemp-derived CBD products are one of the fastest growing consumer segments in the world, with researchers estimating the market for CBD in the U.S. alone could be worth almost $24 billion by 2023. The shift in consumer sentiment for these products has created a large demand for the raw materials needed in order to produce these products. Since the passage of the Farm Bill which legalized hemp production in the US, farmers have been scrambling to plant hemp in order to meet this new demand.
The funding will enable Growlife to make three important advancements in the organization. First, retire some of the diluting debt that is weighing down the balance sheet. With the improved terms, the company will allocate some of the funds towards paying off more expensive debt. Second is to expand the current base business which has proven rapid growth through the integration of EZ-CLONE and its high margin manufacturing business. This unit needs further investment into sales and marketing as it continues to capture market share. Finally, this funding will be used to execute on the market opportunity of hemp cloning by enabling the company to introduce new high margin CBD-hemp clones to GrowLife’s extensive network of plant cultivators across the nation.
The financing is subject to final approval from the SEC.
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