Growgeneration Corp (GRWG)

[banellie]

I don't believe debt being accrued due to acquisitions is a problem at all. In fact, I would sure like to see this company tap the debt markets instead of issuing more stock. Due to all the stock being issued, there is a constant and large supply of shares weighing on the share price. I really only want there to be one more dilution to fund acquisitions and then after that profits and debt should be able to fund all future acquisitions. Once the dilution stops, I believe that is when the stock price will respond favorably.

You mentioned that we don't know how much is spent on a lot of their acquisitions, which could become a problem due to how their CEO and president are compensated. They get a bonus based on revenue growth, not EPS growth so that could lead to problems. As long as their revenue increases, these two executives collect their bonuses, even if that growth is unprofitable. Their compensation structure should be changed to include both revenue and profit growth since that would bring their interests would now be fully aligned with shareholders.

So far though it looks like they are not sacrificing profitability just to achieve high revenue growth. In fact, all the metrics point to the opposite. They are not only profitable now, but they are increasing their EBITDA margins so everything is pointing in the right direction too.

It is normal for executives to sell their shares that they received as compensation, but it doesn't inspire confidence when they sell the vast of them. However, between the president and CEO, they own about 5% of the company, so they still have quite a bit of skin in the game. Don't get me wrong though, I would sure like to see far less insider selling going on.

"In addition, commencing with the year ending December 31, 2017, each of Mr. Lampert and Mr. Salaman is eligible for a cash bonus payment equal to 0.5% multiplied by the difference between revenue in each fiscal year less $7,980,471, and is granted up to 300,000 options to purchase shares of Common Stock of the Company, of which 30,750 have been granted as of the date of their respective agreements.: