Flora Growth Secures $401M, Rebrands to ZeroStack for Decentralized AI Pivot

Executive Summary

Flora Growth Corp. (NASDAQ: FLGC) has finalized a $401 million financing round, including a $22.88 million strategic investment from Defi Development Corp. Concurrently, the company announced its rebranding to ZeroStack, signaling a complete strategic pivot toward developing "0G," a decentralized artificial intelligence (AI) infrastructure project. This move positions the former pharmaceutical distributor within the rapidly evolving Web3 AI sector, with a stated aim to achieve significant efficiencies in distributed AI model training.

The Event in Detail

Flora Growth Corp. announced a $401 million private placement, with lead investors including DeFi Dev Corp., Hexstone Capital, and Carlsberg SE Asia PTE Ltd. This financing comprises $366 million in in-kind digital assets and an additional $35 million in cash and equivalent commitments. Following the transaction's expected closure around September 26, 2025, the company will officially rebrand as ZeroStack, while retaining its NASDAQ ticker symbol, FLGC. This marks a strategic departure from its previous operations as a pharmaceutical distributor through its subsidiary, Phatebo GmbH. The newly formed ZeroStack will focus on the "0G" project, described as an "AI-first blockchain" designed for distributed AI. Key leadership changes include the appointment of 0G co-founder Michael Heinrich as Executive Chairman and Daniel Reis-Faria as CEO. As part of its new treasury strategy, ZeroStack also plans to hold a portion of its reserves in Solana (SOL) tokens, stemming from its collaboration with DeFi Dev Corp.

Financial Mechanics

The $401 million private placement is structured with $366 million in in-kind digital assets and $35 million in cash and equivalent commitments. The transaction involves the purchase and sale of the company's common shares, including pre-funded warrants, at a price of $25.19 per share. For investors contributing in-kind $0G tokens, each token is valued at $3.00. The proceeds from this private investment in public equity (PIPE) offering are designated for the acquisition of additional $0G tokens, the native cryptocurrency of the 0G ecosystem. These $0G tokens are slated to serve as ZeroStack's primary reserve asset. Pre-funded warrants, issued to certain cash investors and those funding purchases with $0G tokens, will become exercisable upon shareholder approval. Furthermore, the company will strategically hold a portion of its treasury in Solana (SOL) tokens, aligning with its collaboration with DeFi Dev Corp., which is positioned as a digital asset treasury company focused on Solana.

Business Strategy & Market Positioning

ZeroStack's rebranding signifies a comprehensive strategic overhaul, shifting from a pharmaceutical distribution model to a focus on Web3 AI infrastructure. The company positions itself as a decentralized AI platform and aims to be the "first and largest decentralized AI treasury company." This strategy is designed to offer institutional investors equity-based exposure to what the company describes as foundational infrastructure for cost-efficient, large-scale AI development. The underlying "0G" technology, specifically its DiLoCoX framework, claims the ability to train 107 billion parameter AI models using distributed clusters over low-throughput internet connections, achieving a 357x improvement over Google's DiLoCo research. This positions 0G as a potential disruptor to centralized data center reliance for AI training. The 0G platform is presented as an all-in-one operating system that integrates storage, compute, and training marketplaces, enabling both Web2 and Web3 developers to deploy AI tools with transparent, verifiable, and privacy-first capabilities. This move aligns with a growing trend of companies leveraging digital assets as primary treasury reserves, drawing parallels to MicroStrategy's approach, but with a distinct focus on AI-specific infrastructure tokens.

Broader Market Implications

This strategic pivot by Flora Growth Corp. to ZeroStack has several potential implications for the broader Web3 ecosystem and AI development. The establishment of a publicly traded entity focused on decentralized AI infrastructure could accelerate the development and adoption of such solutions, potentially attracting more traditional enterprises into the Web3 space. It also carves out a new niche for AI-centric infrastructure projects, thereby increasing investor interest in the decentralized AI sector. The claimed 357x efficiency improvement by 0G's technology in distributed AI model training challenges the conventional reliance on large, centralized data centers, suggesting a shift towards more democratized access to advanced AI infrastructure. Daniel Reis-Faria stated that 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." This move also highlights the increasing convergence of AI and blockchain technologies, with 0G's integration of storage, compute, and data availability designed to support the next generation of AI-native applications. The 0G ecosystem's reported expansion, with over 350 integrations across 236 projects, indicates a growing community and potential for wider adoption within the decentralized AI landscape.