New Blog from Marco Hegyi on Medium:
The 10-day trading halt in April, followed by charges brought against four individuals for stock manipulation, unaffiliated with GrowLife, has had a profound and lasting impact on GrowLife as well other publicly-traded companies operating in the Cannabis-related industry. We have spent considerable effort to resolve these matters, working closely with the SEC and FINRA, to restore financial equilibrium for our Company and its shareholders.
GrowLife has also emphasized customers, and took many strategic steps to best serve cultivators across the nation. We have strengthened our distribution power to provide a wide range of opportunities to customers, improved business fundamentals, and resolved legacy issues. As a result, we’ve reached record sales for 2014, serving more than 1 million square feet of operations with hydroponic equipment, lighting, nutrients, soil and supplies.
Despite our sales growth, our stock price remains highly volatile given that we’re trading in the greys. We trust the process we have in place will get us back to active trading, however, I understand there are still a litany of questions and concerns. I wanted to personally address some of the questions we’ve received from shareholders either in email or on the Company’s Facebook page in an effort to help shed some light on our situation. Please keep in mind that while there is much discussion from shareholders, it is our customers, suppliers and employees that are critical to the Company’s growth.
Is it likely or unlikely GrowLife will obtain a market maker?
Yes, we’re confident the Company will secure a market maker. While there are many market makers interested in participating, there is a significant downside risk to the first one that applies for the 15c2–11. Therefore, an interested broker-dealer must do extensive due diligence in the Company before applying to FINRA with the 15c2–11. Then, FINRA must thoroughly review and, if approved, will reintroduce liquidity in the stock.
What reason does an investor have to stay around?
As with any stock trading on the OTC Bulletin Board, the risks are extremely high and returns on these investments, if any, could take years to recognize?—?even with all the careful consideration and due diligence by an investor. Investors considering GrowLife need to be willing to have confidence in our long game, and clearly see both the opportunities and risks. Unfortunately, some investors are short-sighted, and those who know me are aware of my feelings towards these people. These Short traders bet against both the Company and the Long investors resulting in great volitility in the stock price. When the stock price is low, as it normally is for OTC stocks, the swings can create double-digit gains in just a few days. It’s a reality but I am not a big fan.
I hope to see GrowLife uplist and provide stability that will discourage such predatory behavior so that the Company, on average, is valued on its business performance instead of the Buy-at-$0.10-Sell-at-$0.12 short mentality. I know that many of our current shareholders are from this camp but in time I hope to convince those shareholders to move GrowLife from their short portfolio segment to their long segment. My plan is to earn that spot in their portfolio.
Allow me to speak about the current Long investors who have a deep appreciation for strong financial controls and business fundamentals over daily trade gains or losses. They stay because they trust GrowLife will inevitably become a huge and true success in this industry, appreciate the steps we have taken so far, and most important to me, trust us to achieve our vision as a leading and lasting partner to cultivators.
How will GrowLife deal with competitors? In other words, what does the business plan look like?
Our customers come to us because we have an experienced and knowledgeable team who work with them to help manage build-out investments, track supply usage and streamline their supply chain needs. Many, therefore, compare us to the ‘picks and shovels’ sold to miners during the gold rush, but that is a small part to the story.
Picks and shovels was a retail play for miners and is ridiculously simplistic. GrowLife’s mission is far greater as we serve cultivators who have an expensive crop for human consumption; I really hate the picks comparison. Our supplies, equipment and services enable cultivators to grow crops that ensure their operations meet compliance standards and produce medicinal crops that are safe for consumption. Comparing our business to picks and shovels dismisses patients who consume these crops.
On another note, we also help cultivators identify products that can reduce their carbon footprint and conserves vital resources, such as water and electricity. This is an area where we will be more actively involved starting this quarter. Few of our competitors take this long view.
How much of your predecessor’s claims still ring true and are still a possibility? i.e., partnerships, GIFT, kiosks, etc. Granted you have so much more to gain by being successful, but how can you assure your investors that you’re not just out to sell shares and shut down the company?
I see GrowLife as a dramatically different Company than it was before. For example, partnerships and claims that make business sense will be pursued, others will not. GrowLife is about its customers and helping them serve their customers. No one can be everything to everyone without sacraficing quality and GrowLife is about quality. I’ve seen it in the tech industry where the leaders offer dozens of products but it’s usually their top two or three that make up 80%+ of the business because that’s what matters.
In GrowLife’s case, we serve cultivators with equipment, supplies and services. We’re not a bank so financing, ATM kiosks, etc. were tested concepts that are off the table. I see our customers as Commercial Cultivators, Urban Farmers, and Home Growers. Although we have five retail stores, I believe that our other sales channels?—?eCommerce, direct sales, and distribution?—?will eclipse our retail business. GrowLife may best serve the industry by helping other retailers address Urban Farmers and Home Growers.
As for your second question, my short answer is that if you believe in a company, then invest in it. If you don’t, then don’t. I would not invest in a company that I don’t trust. I didn’t come here to fix a company. I came here to grow an industry. It just so happens that, for whatever reason, things broke in the industry and fixing has become the priority. I hope to get past this fixing distraction soon and focus on building.
There’s so many cool things that I see coming out of this new cultivation industry beyond legalization: Smart growing technology, cleaner and healthier ways to control our food supply in an affordable manner, the economic engine behind a crop that provides undiscovered medicinal benefits without insane side effects, a new entrepreneurial segment that rewards and validates a healthier lifestyle, and a crop that funds all this innovation without tapping our already depleated government funds. Not to mention the crime reduction benefits.
You recently promoted Joseph Barnes to Senior VP. Can you tell us more about him?
When I took charge of the Company in May I zero-based it, including every employee. I decided that we were going to either have the best people or have open positions, but we were not going to compromise the Company. Joe has been with our Hydroponics subsiduary for about five years; four years before it was merged with GrowLife. I stack ranked our organization and have found him not only consistently number one but a solid leader who puts the business and his team before himself.
Joe leads a team responsible for serving cultivators across the nation. He is also responsible for strengthening our distribution power so that our customers can have access to premium cultivation equipment and supplies that are good for the plants as well as people at the best possible price. The Company is fortunate to have him on the team. I promoted him to Senior Vice-President of Business Development to head up all our sales channels because he is the best both inside and outside of GrowLife.
