Next Green Wave Holdings Inc (CSE:NGW) (OTCMKTS:NXGWF) announced Thursday that the cannabis company has closed a C$2.75 million financing with the Cannabis Growth Opportunity Corporation (CGOC), an investment corporation focused on the global cannabis sector.
The firm said funds raised will go towards advancing its strategic partner alliances in California and provide working capital to accelerate its operations.
The market responded, sending shares up 12.5% at C$0.27 on Thursday.
"We have been strategic investors in Next Green Wave since June 2018 when they were still a private company and have continued to support their efforts through their go-public transaction in October 2018. They anticipate near-term revenue generation and at the low-end of their annual revenue expectations we believe their current valuation is extremely low especially compared to similar companies," said Jamie Blundell, chief operating officer of CGOC, in a statement. "We remain confident in their strategy as we see tremendous growth ahead and believe this is a perfect entry point for investors."
Next Green Wave is a California-based producer of medical and recreational cannabis, with a 35,000 sq/ft production facility in Coalinga, California.
Next Green Wave will issue 11 million shares to CGOC at a price of C$0.25 per share. Additionally, the company will acquire C$1.25 million shares of CGOC at a price of C$1.72 in a private placement. The firm noted this replaces its most recent offering, which was announced on June 19.
Both companies have entered into a voting and resale agreement to hold their shares until February 1, 2020, as well as vote in favour of management on any issues requiring a shareholder vote.
"Due to comparative weakness in the cannabis sector while markets adjust and earnings expectations naturally become heightened, we have chosen to collaborate with a strong industry partner who shares our vision and will assist us to move towards revenue at the earliest possible opportunity - our near-term focus is on production, product roll-outs and sales - we believe that the company can achieve this milestone without further financing," said Next Green Wave CEO Leigh Hughes.
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