Marijuana growing supply company GrowLife Inc. announced on Thursday it will restate first quarter non-cash losses totaling nearly $34 million.
The Woodland Hills company said it made the decision to be more financially transparent. The restatement stems from declining value of warrants and will not affect the company's cash position.
The company had reported an operating loss of $2.4 million on revenue of $2.4 million for the quarter.
The company has been rapidly expanding to gain market share as pot legalization gains traction. It had used warrants and stock as currency for everything from acquisitions to wages and rent on its corporate offices.
Trading in its stock was halted April 10 for two weeks by the Securities and Exchange Commission for what the agency called “potentially manipulative transactions.” At the time, shares traded for 50 cents.
On Thursday, shares closed down a penny to 10 cents in over-the-counter trading, sharply reducing the value of the warrants.
GrowLife President Marco Hegyi said the decision to restate earnings will help the company move forward. The company also promulgated new ethics, insider trading and other policies.
“GrowLife has become a different company than it was three months ago,” Hegyi said in a statement. “Our decision to adopt and exercise a sustainable and conservative financial structure will increase our accountability to our shareholders and to government agencies.”
Sterling Scott, who was chief executive while the warrants were issued, has since resigned.