GrowLife Inc (PHOT)

[Trained Monkey]

Let’s talk Q4 earnings, speculatively.

GrowLife's real revenue will not be generated until well into 2014, as the 'grow side' of operations is not up and running yet. Any gains, if there are to be any, will come from the equipment side where things are quietly stacking up and worth a once over IMO.
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Growlife has been an equipment company for over 25 years. In Q3 2013 earnings report, PHOT reported 1.313M in net revenue. Link to Quarterly Earnings filing: https://research.scottrade.com/qnr/uploadhandler/z05a7100az0b803dc989b648fea32f45e80a6a85e1.htm

So, should we expect a revenue rise from the 1.31? Likely yes, for the reasons below. However, those expecting big numbers will likely be disappointed and I am not sure the PPS will be able to be sustained. Similar to Q3, we may see nice gains but a drop in PPS. Nevertheless, there are some reasons to expect a better bottom line.


1. Rocky Mountain Hydroponics and Evergreen Garden Center were acquired in June, but closing was not until Fall 2013.

Link to the 1/23 8k: https://research.scottrade.com/qnr/Reports/GetSecFiling?key=137-000107997414000060-6HRT3GKUDG7ANJ2S4V1DMBQA58&format=HTM

The gist of the acquisition: PHOT now owns 100% of Rocky Mtn Hydro and Evergreen. In all, GrowLife acquired 4 brick and mortar stores in Colorado, Massachusetts and Maine, as well as an online business, which had profits of $94,404 in 2013.

Total revenue for these companies? $1.014M last reported quarter.



2. New store in Santa Rosa – GrowLife to Open New Santa Rosa Store Friday, October 25, 2013

Link to store: https://trading.scottrade.com/quotesresearch/ScottradeResearch.aspx?page=%2fqnr%2fStocks%2fArticle%3fdockey%3d1-SN20131024008617-751O7MT1U8LATTGOV3CF9VVGH3%26searchTerm%3d%26searchAcross%3dAll%26timePeriod%3d150%26startDate%3d2013-09-07+19%3a14%3a24%26endDate%3d2014-02-04+19%3a14%3a24%26firstRow%3d15

So, a 7th store up and running, and any revenue will be addition to what was reported Q3. Only two months of business, but still a net plus.



3. Greners.com, 58hydro, and the brick and mortar stores reporting record sales – This is ‘word of mouth’ from posters here and customers. Numerous posts that the stores are busy, inventory continually moving. More to come when they report, surely. Basically, the marijuana business is rapidly expanding and they are selling more product. This is also a positive.



4. Expedited delivery of the Stealth Grow

Link: GrowLife Expedites Launch of Expanded Stealth Grow(R) Commercial Line to Address Rising Cannabis Demand and Shortages
https://trading.scottrade.com/quotesresearch/ScottradeResearch.aspx?page=%2fqnr%2fStocks%2fArticle%3fdockey%3d1-SN20140113003797-6TTBVTAMM7D40LV1IU789MLKCE%26

Selling so many they had to expedite delivery. This bodes well IMO.

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Takeaway:
Looking ahead, we see a 1.3M revenue increase substantially based on equipment ventures. Possibly as much as double, as the brick and mortar sales and revenue on Rocky Mtn and Evergreen alone are approximately $1M and this will be the first full quarter this revenue will be reported.

Add in the new store in Santa Rosa.

And, of course, existing marijuana business and sales, both in-store and online, have been going up since the 1st, as reported by national media.

While the deals with CEN Bio and RXNB may in time dwarf the equipment aspect, there are positive reasons to belive revenue will be up in the interim. Nevertheless, the market will NOT see huge numbers and may still see GrowLife in the red come 3/31. Similar to post Q3, a drop may come. IMO.

GLTU

TM