Georgi Kamburov

Growlife Inc. (OTCBB:PHOT) Tries To Create Shareholder Value

by Georgi Kamburov June 13, 2013
9PHOTchart.pngSince the end of the paid pump in late-January and the hype around the medical marijuana industry dying out, Growlife Inc. (OTCBB:PHOT, PHOT message board) have been on a major slump. They have lost more then 60% of their price compared to the heights of February. If you take a look at their chart some positive spikes can be observed but they are almost always as a result of a PR news released by PHOT and yesterday's close in the green is no different.

As soon as the market opened the ticker shot up and maintained the high price throughout the session to close at $0.05. This increase of 18% may not be that impressive but the 4-times bigger traded amount of 21 million shares compared to the previous day sure is. Investors rushed in lured by the latest announcement made by the company.

PHOTchart1.pngApparently they hired Grassroots Research to make an extensive report regarding PHOT and maybe convince people how awesome the company is. Now that the report has been completed we must say that at least it looks impressive with its whopping 55 pages. Still this is little more than a paid advertising presented as a serious financial report. Grassroots Research still received compensation in the form of 620 000 rule 144 common shares which means that after a six-month period they can be freely traded.

We turned to PHOT's latest financial report to see how much fresh shares they have been using and it turned out that the amount is quite concerning. Just for the three months between January and March more than 79 million shares have been issued with another 32 million for April alone. W-Net Fund I, LP received the major portion of the shares at a conversion price of just $0.007 or more than 80% lower the the current price per share.

Another major point used to make PHOT attractable is the 725% increase in revenues compared to the same period last year. Well, lets take a look at some of their other financial results:

  • $246 thousand cash
  • $661 thousand total current assets
  • $312 thousand total current liabilities
  • $760 thousand revenues
  • $1,1 million net loss

Although their fundamentals are much better than those of most of the pennystock companies, PHOT are still unable to turn a profit. They have to further increase their revenue gains or cut on their costs.

Another company that was rising on optimistic expectations yesterday crashed hard, leaving many investors scrambling to recover their losses. For more details about Sitoa Global Inc.(OTCMKTS:STOA)'s disaster you can read our article. But STOA wasn't the one with the most horrendous session, no that honor goes to Inova Technology Inc (OTCMKTS:INVA) who plummeted by 58%.

Unlike them PHOT may continue climbing up in light of the announced an hour and a half ago official launch of a national television advertising campaign. If you are contemplating investing in them be sure to do your own research beforehand and decide on an acceptable time horizon because the volatility of such stocks shouldn't be underestimated.

Comments 1

1. Guest
June 14, 2013, 01:05PM

Quotes Why open your books if someone like you can bash them in three sentences.

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