Gilla Inc. ("Gilla" or the "Company") announced it has closed a new $500,000 Revolving Credit Facility for the exclusive purpose of purchasing inventory for sale in the Company's electronic cigarette business initiatives. This new Credit Facility demonstrates Gilla's successful strategy to grow and diversify its financing sources to support its growing operations.
"Our new revolving credit facility provides substantially greater financial flexibility and the expanded capacity to finance inventory purchases while improving our overall working capital position," said Graham Simmonds, CEO of Gilla. "We are pleased with the confidence shown in our Company by our lenders and we are encouraged by their indication to provide additional funds within the facility as we grow and expand our business."
The Revolving Credit Facility (the "Credit Facility") provides for the ability to draw on the aggregate principal amount of CDN$500,000 for the exclusive purpose of purchasing inventory (together with related costs) for sale in the Company's ordinary course of business to approved customers. The Credit Facility shall mature on August 1, 2015 and bear interest at a rate of 15% per annum on all drawn advances alongside a standby fee of 3.5% per annum with respect to the undrawn portion of the facility, such interest accruing daily and paid monthly, in arrears. The Credit Facility is secured by all of the Company's inventory and accounts due relating to any inventory.
In connection to the Credit Facility, the Company issued 250,000 warrants to purchase the Company's common stock at an exercise price of US$0.30 per share, exercisable over a term of two years from the date of issuance.
Additionally, the lender is acting as an agent for a consortium of investors, of which the Company's CEO and CFO have each committed to provide 10% of the principal amount of the Credit Facility. Neither officer shall have any participation in the warrants issued in connection to the Credit Facility.
Gilla Inc. designs, markets and distributes electronic cigarettes ("e-cigarettes"), vaporizers, e-liquids and related accessories. Gilla provides white-label solutions to its clients including branding, marketing and sales support. E-cigarettes and vaporizers are replacements for traditional cigarettes allowing smokers to reproduce the smoking experience. E-cigarettes and vaporizers do not burn tobacco and are not smoking cessation devices.