GrowLife Inc (PHOT)

[streak1977]

Sterling needs to coach Bill a little better before his NEXT slip-up...

"How did you raise the money you needed?

We entered into a collaborative partnership with a company called GrowLife and sold them 25% of our revenue stream. They are funding our operations, providing financing and equipment. They are in the picks and shovels part of the business. They sell lighting and equipment to other growers."

Read more: http://www.businessinsider.com/company-plans-to-make-5b-selling-pot-2014-2#ixzz2tah8rJom

Am I just reading this wrong?

http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=9739042

In addition to the 25% equity interest in CEN, OGI is entitled to a preference should there be any Distributed Income. Distributed Income is defined as CEN’s net income, after adding non-cash expenses less any reserves designated by CEN’s Board of Directors. The reserves are not to exceed 20% of CEN’s gross revenues. Under the terms of the Interest Purchase Agreement (“IPA”), Distributed Income is to be allocated 60% to OGI, 20% to AJOA, and 20% to WP until distributions have been made equal to $40,000,000. After the distribution of $40,000,000, any Distributed Income is to be allocated 40% to OGI, 30% to AJOA, and 30% to WP. It is the intention of the parties to the IPA that distributions from available funds are to be made at least on an annual basis.

CEN’s obligations to OGI under the IPA are secured by all of CEN’s assets, excluding personal property and inventory to be sold in the normal course of CEN’s business. OGI shall retain this security interest until such time as CEN has distributed an amount equal to $40,000,000.

In exchange for the rights discussed above, the Company is obligated to issue a total of 235,294,118 restricted shares of its common stock (“Payment Shares”) ($40,000,000 calculated at $0.17 per share), should certain conditions be satisfied. 117,647,059 of the Payment Shares will go to WP and the other 117,647,059 Payment Shares will go to AJOA upon the satisfaction of the issuance conditions. In addition to certain document delivery requirements (e.g., financial statements and other corporate records), GrowLife will issue the Payment Shares only if it receives documentary evidence that a Canadian government agency has by contract, license, or otherwise granted specific rights to Sellers or CEN to grow, harvest, sell, import or export cannabis and cannabis bi-products in an amount not less than 1.3 million pounds of dried cannabis annually. If CEN is not granted the right to grow, harvest, and sell at least 1.3 million pounds, then OGI has the right to rescind the IPA or reduce the Payment Shares proportionately. This transaction is also conditioned upon the Company’s shareholders approving an increase in the Company’s authorized common stock at the February meeting of shareholders.

8.1.ii.3
Issuance Condition.
In addition to all of the documentary deliverable requirements contained under this Agreement, which the issuance of the Payment Shares are expressly subject to the satisfactory acceptance of Investor, in his sole discretion, additionally, such issuance of the Payment Shares are also expressly subject to Investor’s receipt of documentary evidence, satisfactory to Investor, in his sole discretion, that a Canadian governmental agency (e.g. Health Canada, Canadian Ministry of Health, etc.), the Minister of Health, or other person acting upon authority under the laws and regulations of the Country of Canada, has by contract, license or otherwise, granted specific rights to Seller, R.X.N.B. Inc., or CEN Biotech Inc., to produce, grow, harvest, package, sell, import and export, cannabis and cannabis products and bi-products, directly or indirectly, to sanctioned importers, exporters, distributors and/or end users of not less than 1.3 million pounds (“Minimum Volume Amount”) (collectively the “Issuance Condition”). Once the Issuance Condition is approved and verified by Investor, Growlife will be obligated to issue the Wise Phoenix Shares and the AJOA Shares. In the event that the Minimum Volume Amount is less, then the Investor shall have the right to rescind this Agreement or reduce the Payment Shares proportionately compared to the Minimum Volume Amount shortfall.


OK, so PHOT already gave them the money that was contingent on them getting a grow license and subject to be modified based on the amount they got approved to grow? Kinda means all those 8-Ks and contracts are fraudulent then doesn't it? Would also mean that PHOT already diluted a GIFT into their shares without an announcement to fund this project would it not?