Todor Pichurov

Growlife Inc (OTCMKTS:PHOT) Down 32% in Two Days

by Todor Pichurov March 11, 2016

It was an interesting push but it seems Growlife Inc (OTCMKTS:PHOT, PHOT message board) has run almost entirely out of steam. In yesterday's session the stock dropped another 20.9%, stopping at $0.024 per share. Just a few days ago the stock was flying high, hitting intra-day levels of over $0.08 per share.

As a matter of fact, yesterday was PHOT's tenth consecutive red session. The reason why the price has so much empty space to fall is that PHOT climbed a little too high for its own good in the first place. Nothing had changed in terms of material significance over at the company but the big news that PHOT was marching out of the grey sheets and was coming back to being quoted on the OTC as a pink sheet stock drove the price up.

The fact that PHOT was one of the pot stocks analysts were citing as one of the standout marijuana OTC picks adds a lot to the image and the legend of the company, which played no small part in this recent climb. It's quite rare to see a grey sheet stock clamber back out of obscurity but buying into one solely because of that reason, without pausing to look at the company's financials, debt and share structure is never wise.

PHOT's financial situation is far from favorable. The company's latest available report is for the three months ended September 2015 and contains the following:

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

As of the date of the report PHOT had 902 million outstanding shares and needed to issue another 115 million in a $2 million settlement of class action and derivative lawsuits alleging violations of securities law violations.

The fact that PHOT had to close three unprofitable stores and logged gross loss for the quarter due to liquidation sales of those stores' inventories is not helping investor confidence much either.

It remains to be seen whether PHOT will keep sinking until it reaches its price levels from its grey sheet days.

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