GrowLife Inc (PHOT)

[strategydoc]

Great question: valuation of small companies (nanocaps and microcaps), in my opinion, is fascinating because there are few numbers and the numbers reflect early growth. Companies this size are rarely cash flow positive and provide little/no information. It's an art rather than science.

We are left with what we can value which is (1) technology, disruptive innovation, first mover advantage; (2) market analysis-which with new products/new market (suicide quadrant) we will need to evaluate the macro/political climate and consumer acceptance of the product(s); (3) senior executive experience and culture of the company; (4) strategy- probably the most important component. Great companies are create great value out of nothing through ethical behavior manifested by consistent signs of collaboration (mergers and acquisitions).

At this early stage most VC firms use projected revenue x a multiple. A multiple of 10 is generally acceptable given the risk of these types of investments. With a projected revenue of $15M next year, that would calculate to $150M capitalization. With approximately 700M shares fully diluted, that calculates to .22 which was the Grassroots Investor report number which they reaffirmed (.23) last month.