Todor Pichurov

Growlife Inc (OTCMKTS:PHOT) Trundles Down the Chart

by Todor Pichurov March 10, 2016

Despite putting up a new bit of PR containing some upbeat announcements, Growlife Inc (OTCMKTS:PHOT, PHOT message board) ended up 15% down in yesterday's session. Volume picked up and was at its heaviest since the grey sheets exodus euphoria from mid-February.

PHOT's release that failed to excite investors much informed of the resignation of two of its board members. The company is now looking for replacements and open for interviews. The PR wraps up with the usual fluff about how PHOT is “strengthening its financial position” as well as “expanding its market presence”. The hook that got some investors excited was the mention of “potential acquisitions” dropped at the end of the PR.

With its last reported share structure and financial situation, PHOT has a lot to worry about before thinking about acquisitions. Here is what the last quarterly from the company for the three months ended September 2015:

  • $62 thousand in cash
  • $4.6 million in current liabilities
  • $525 thousand in quarterly revenues
  • $78 thousand in quarterly gross loss
  • $777 thousand in quarterly operating loss

The company struggled with three unprofitable store locations in different states and eventually ran a liquidation sale of their inventories before closing them, which in turn led to the gross margin being negative.

There's also the matter with PHOT's convertible debt, no small portion of which converts into common stock at prices per share that are within double-zero territory. The same quarterly also mentions PHOT “expects” to issue $2 million worth of new shares, or around 115 million shares, as settlement under consolidated class action and derivative lawsuits spurred on from the company's SEC suspension in 2014.

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