Flora Growth, a Nasdaq-listed company previously focused on the cannabis industry, has secured $401 million in a private placement financing deal. The funding marks a significant strategic shift for the company, which will establish a digital asset treasury for Zero Gravity (0G), a new crypto-AI blockchain.
The company plans to rebrand as ZeroStack and will become the first publicly traded entity to hold 0G, the native token of the Zero Gravity network. The deal precedes an anticipated token airdrop and listings on major cryptocurrency exchanges.
Key Takeaways
- Flora Growth (FLGC) secured $401 million in a private placement to create a treasury for the upcoming 0G token.
- The company will rebrand to ZeroStack but retain its FLGC ticker on the Nasdaq exchange.
- The financing consists of $35 million in cash and $366 million in 0G tokens, valuing the token at $3 each.
- The deal implies a fully diluted valuation of $3 billion for the Zero Gravity project ahead of its token launch.
- The 0G Foundation plans an airdrop for early supporters, with major exchange listings expected to follow.
A Strategic Pivot into AI and Blockchain
Flora Growth is undergoing a complete transformation of its business model, moving away from its origins in the cannabis sector. The company's new focus will be on the emerging intersection of artificial intelligence and blockchain technology through its partnership with Zero Gravity.
As part of this transition, Flora Growth will seek shareholder approval to change its name to ZeroStack. Despite the new name and business direction, the company will continue to trade on the Nasdaq stock exchange under its current ticker, FLGC.
This move positions ZeroStack as a unique investment vehicle, offering public market investors exposure to the Zero Gravity ecosystem through a traditional equity structure. The deal is expected to be finalized on Friday, September 26.
From Cannabis to Crypto
The transition by Flora Growth reflects a broader trend of companies in various sectors exploring opportunities within the digital asset space. By pivoting to manage a treasury for a new blockchain protocol, the firm aims to capitalize on the high-growth potential of AI and crypto infrastructure.
Dissecting the $401 Million Financing Deal
The $401 million financing round is structured as a combination of cash and digital assets. It includes $35 million in cash and $366 million in in-kind digital assets, primarily composed of the yet-to-be-launched 0G token.
The valuation of the token component is based on a price of $3 per 0G token. This pricing establishes a significant pre-launch implied fully diluted valuation (FDV) of $3 billion for the Zero Gravity project.
Key Investors and Participants
The private placement is led by DeFi Development Corp., a prominent treasury management firm known for its significant holdings of Solana (SOL). According to a statement, ZeroStack will also hold a small portion of its new treasury in SOL tokens as part of the agreement.
Other notable investors participating in the round include:
- Hexstone Capital
- Carlsberg SE Asia PTE Ltd.
- Dao5
- Abstract Ventures
- Dispersion Capital
- Blockchain Builders Fund
- Salt
Parker White, the COO and CIO of DeFi Development Corp., clarified the firm's position on X, stating, "We did not sell any SOL to do this deal, and we still maintain full SOL exposure + additional upside with the SOL we deployed here."
The Technology Behind Zero Gravity (0G)
Zero Gravity is a project developed by Zero Gravity Labs (0G Labs). The core mission is to build a decentralized operating system designed for the distributed training of advanced artificial intelligence models. This infrastructure aims to make large-scale AI development more transparent, cost-effective, and privacy-focused.
According to the company, its technology has already demonstrated significant capabilities during its testnet phase. The team reported it has "successfully [trained] a 107 billion parameter model using distributed clusters over low-throughput internet connections."
Previous Funding
Prior to this deal, 0G Labs had already secured substantial backing. The firm raised $75 million in seed funding and entered into a $250 million token purchase agreement with the 0G Foundation, the independent entity that governs the protocol.
The mainnet for the Zero Gravity blockchain is expected to launch around the same time as the token, according to comments made by Michael Heinrich of 0G Labs in late 2024.
"This treasury strategy offers institutional investors equity-based exposure to the foundational infrastructure enabling transparent, verifiable, large-scale, cost-efficient, and privacy-first AI development," said Daniel Reis-Faria, the incoming CEO of Flora Growth.
Market Reaction and Token Launch Details
The announcement of the financing and strategic pivot had an immediate and positive impact on Flora Growth's stock. According to data from Yahoo Finance, the price of FLGC shares surged by 69% in after-hours trading following the news.
This rally reversed a significant downturn for the stock, which had declined 32% year-to-date prior to the announcement.
The official launch of the 0G token is scheduled to begin with an airdrop. The 0G Foundation has confirmed it will distribute tokens to early supporters and community members on the Monday following the announcement. This initial distribution is a common strategy in the crypto space to reward early adopters and decentralize token ownership.
Following the airdrop, the 0G token is expected to be listed on several major cryptocurrency exchanges, which will provide liquidity and broader market access for the new digital asset.
