California-based marijuana grow op supplier Growlife (OBB:PHOT
, Stock Forum
) is slumping from one problem to the next right now, as two partner companies have rescinded an earlier supply agreement
for a large scale Canadian medical marijuana facility in the wake of yesterday’s announcement the SEC had suspended trading in the company.
Creative Edge Nutrition (OTO:FITX
, Stock Forum
), its subsidiary CEN Biotech, and IP player RXNB released a statement early Friday announcing they were done with Growlife, saying “In light of [the SEC halt] and other contributing factors
, RXNB and CEN Biotech have advised the CEO of GrowLife and the Board of OGI that both the RXNB Agreement and the CEN Biotech Agreement, and any and all amendments to those agreements, are rescinded, void and of no further force and effect.”
FITX CEO Bill Chaaban stated, "We act in the best interests of our shareholders. During our due diligence process we arranged suitable alternative private financing to fund our project at 20 North Rear Rd in Lakeshore, Ontario. The terms of this deal were a 25% equity stake in the CEN Biotech project located at 20 North Rear Rd in exchange for $20 million USD. The project has been funded $5.0 million USD to date and will be fully funded per the agreement in 90 days from the agreement date.”
He continued, “Our project continues on schedule and we intend to call for our pre-license inspection before month`s end. We have already sourced equipment from alternative sources which meet or exceed the quality required at a more competitive price."
The due diligence closure date for the deal was extended in late March, with Chabaan saying at the time, “The magnitude and complexity of this deal required an extension of the due diligence period. We are at the dawn of a new era.”
Growlife CEO Sterling Scott had previously stated “RXNB, with its extensive intellectual property, will serve as the underpinning to our strategic business model
,” which indicates the announcement today will have a heavier impact on Growlife than its former supply deal for the FITX complex.
Growlife was trade halted due to questions raised about accuracy and adequacy of PHOT information in the marketplace, as well as the validity of marketplace trades.
The company says it is continuing business as normal and has asked the SEC for more information
regarding its investigation.
Growlife announced in February it had received shareholder permission to expand its common stock shares by 2 billion
, though it would not use them immediately to avoid dilution.
Several law firms are investigating the company for potential shareholder lawsuits