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Re: freshy post# 97282

Wednesday, 02/24/2016 9:23:14 AM

Wednesday, February 24, 2016 9:23:14 AM

Post# of 120633
Update from the CEO!

Marco Hegyi 12 hrs ago

A New Day

Thoughts and updates as GrowLife resumes public trading

Last Wednesday afternoon, February 17th, FINRA informed the public of PHOT‘s Market Center Change Moving to Bulletin Board and notified our market maker that they approved its 15c2–11 filing to allow them to facilitate trading of PHOT. After almost two years since the April 10th, 2014 halt, we are executing our strategy to get to profitability. The following morning PHOT traded a million shares before the market opened at about $0.01. Over the next 48 hours the market traded just under 50,000,000 shares, going from $0.01 to a high of $0.09, and closed at $0.06 per share with a corresponding market cap of $57 million.

I see our return to trading as a significant accomplishment and the first of many to come. We have been preparing for some time and started executing on our plan well in advance of our return to trading. While the GrowLife team has constantly maintained our sales efforts, the shareholder’s tremendous support is providing the company with the necessary financial resources to move forward. We are focusing on the following three priorities over the next 30–90 days in order to harness the many opportunities we have lined up:

Revenue recovery?—?With our lean operations and lack of supplier financing terms over the last year, the public saw our September 30, 2015 10-Q filingrevenue decline. Now, with the return to trading, customers are purchasing with confidence from us and our supplier terms are improving, thereby putting us on a competitive footing with even greater market access. Additional revenue growth is expected from a combination of increased demand from more States, exclusive and private-label products, and more points of distribution. GrowLife Eco, for example, is a successfully tested concept of ecologically-friendly products that can be sold by GrowLife and to an expanding number of GrowLife value-added resellers (VAR) across the US and in local markets.

Direct marketing programs that reach out to cultivators by call centers and VARs are driving transactions to GrowLife’s e-commerce and leads to our direct sales team. The broad range of products sold by GrowLife includes necessary lighting, HVAC, trimmers, extraction and other demanded equipment, as well as regularly consumed supplies such as organic nutrients, growing mediums, fabric pots and approved pesticides. Relationship, availability and pricing are the key drivers to continued customer purchasing.

Positive cash flow?—?Next, as we prepare to expand and deepen our national presence, we are closer toEBITDA profitability than ever before. Reaching this goal is not about EPS or PE ratios, it’s too early to embrace these optics. It is more important to achieve positive cash flow and enable the company to acheive organic growth. Being the national leader is not about top line market share, but about maximizing our profit share. To do this we must increase volume, gross margins and market reach. Our plans support these three metrics.

As I explained in my last posting, we have leaned out our operations to maintain our public listing presence and continue generating revenue. We see this as a solid starting point. Also, PHOT is a fully reporting company, which is a necessary action to move from OTC Pink to OTCQB, which we plan on doing shortly. We see GrowLife’s public trading as a competitive advantage for many reasons, not the least of which is to instill confidence in our customers and suppliers, along with bringing financial resources to thoughtful expansion. Allow me to reiterate: The trading volume and broad investor base along with their strong interest in our success, is the real competitive advantage. Simply dropping a revenue-generating business in a public shell does not make a GrowLife.

Fortifying the balance sheet?—?As I have always said, our market valuation should be based on business fundamentals. We must seek to be the best operators and service providers for the indoor growing industry. The high demand by the legal Cannabis industry across 23 States and Washington, DC, is continually growing. Approximately 11 States appear set to vote on legalization in 2016, including California for recreational. Demand per capita has the potential to rapidly transition from an estimated 13% medicinal consumption to 50% recreational demand, using aprescription drugs vs. alcoholconsumption comparison. Then, there is the State’s revenue benefit. Colorado, for example, is at a billion dollar annual revenue run rate today with taxes benefiting all participating municipalities.

It is our public trading position that gives GrowLife a powerful currency to attract many innovators with tangible assets and support the expansion of our company. These assets, added to our distribution channels, increase both revenue and gross margins. In addition, the retirement of liabilities will, by definition, increase our shareholder equity and further increase our buying power.

More details will follow as we strengthen these business fundamentals and strategic partnerships. In the meantime, I encourage our shareholders to stay informed using the SEC website, Twitter @marcohegyi and the Medium @hegyiblog.


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