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How I think PHOT 'dropped the ball' - analysis and opinion.
I have been reading the dialogue between the SEC and PHOT on Edgar, trying to decide what to do. It looks like the company was first notified of SEC questions on December 23, 2013. It is a combination of comments of what PHOT needs to do in future filings and requests for info:
https://www.sec.gov/Archives/edgar/data/11615...ename1.pdf
Here, we see the SEC had questions over certain sections of the EOY 2012 8k filed April 1, 2013 and the 8k filed June 10. Some appear innocent (state competition in the markets) and some appear damning (sale of unregistered securities).
Next, we see PHOT's response on Jan 8 requesting an extension to reply, and the reply dated Jan. 22, where it appears they provided answers in full, and noted where changes would be made in future filings to address the comments made by the SEC in the Dec 23 filing.
https://www.sec.gov/Archives/edgar/data/11615...ename1.htm
https://www.sec.gov/Archives/edgar/data/11615...ename1.htm
On Feb 4 we hear from the SEC that the review has been completed, and the SEC is not foreclosed from taking further action despite the changes in disclosure. And on Feb 10....they did so.
https://www.sec.gov/Archives/edgar/data/11615...ename1.pdf
Takeaways :
1. This investigation and suspension for potentially misleading info seems to relate to the 2012 EOY 8k, filed April 1, 2013.
2. The suspension does NOT appear to relate in any way to the dumping of shares by Sterling and/or Hunt preceding the suspension but rather the information on past filings. Combined with the letter GrowLife released April 14 where Sterling states 'shareholders and investors should understand that insiders have lives, taxes, debts, and families. For example, company employees who received shares as part of their compensation in 2013 must under normal conditions address that tax obligation prior to April 15, 2014, creating for some the necessity to sell some of their shares,' I don't think the blame being hoisted upon the directors for 'illegally selling' in April is justified. Doesn't make me like it, though. .
3. None of this changes the fact that IMO management was extremely incompetent in their filings. They might be outraged and blindsided, and never expected such a severe punishment... but here it is and the reason seems to be the poorly done paperwork. These errors have resulted in the suspension and delisting of GrowLife. The grays, and the imminent drop in PPS awaits, and the business model takes the crushing blow of losing the CEN Bio and RXNB deals which propelled us from the teens...
So, at the end of the day, the mistakes they made cost them dearly. It cost us dearly as well. We all must make decisions in the next few days. Hope this clarifies much more about WHY PHOT was suspended... but at the end of the day it's just my best guess.
This analysis gives very little credence to the bombastic legal theories so many boisterous, self-proclaimed 'Clarence Darrow's' over at the message-controlled IHub board proffer. They popped out of the woodwork, claiming all these illegal insider maneuvers, but in large part this seems to relate to incomplete paperwork and potentially hiding the value of unrestricted shares subsequently issued. Not that PHOT's executives are innocent, mind you, because the reporting or non-reporting here is serious stuff. However, tracing this to the share dumping in April seems off. Especially when you consider the vast amounts of shares these officers still hold and how little they realized from the sales...
Personally, I'm getting what I can within the first day or two of trading being resumed. I hope it goes up to $1 this summer. Good people here deserve it. I just don't invest where I feel the company was negligent and it cost us. The trust and faith is gone and the relationship has to end for me. Just my opinion.
Hope this helps in any way.
TM
I have been reading the dialogue between the SEC and PHOT on Edgar, trying to decide what to do. It looks like the company was first notified of SEC questions on December 23, 2013. It is a combination of comments of what PHOT needs to do in future filings and requests for info:
https://www.sec.gov/Archives/edgar/data/11615...ename1.pdf
Here, we see the SEC had questions over certain sections of the EOY 2012 8k filed April 1, 2013 and the 8k filed June 10. Some appear innocent (state competition in the markets) and some appear damning (sale of unregistered securities).
Next, we see PHOT's response on Jan 8 requesting an extension to reply, and the reply dated Jan. 22, where it appears they provided answers in full, and noted where changes would be made in future filings to address the comments made by the SEC in the Dec 23 filing.
https://www.sec.gov/Archives/edgar/data/11615...ename1.htm
https://www.sec.gov/Archives/edgar/data/11615...ename1.htm
On Feb 4 we hear from the SEC that the review has been completed, and the SEC is not foreclosed from taking further action despite the changes in disclosure. And on Feb 10....they did so.
https://www.sec.gov/Archives/edgar/data/11615...ename1.pdf
Takeaways :
1. This investigation and suspension for potentially misleading info seems to relate to the 2012 EOY 8k, filed April 1, 2013.
2. The suspension does NOT appear to relate in any way to the dumping of shares by Sterling and/or Hunt preceding the suspension but rather the information on past filings. Combined with the letter GrowLife released April 14 where Sterling states 'shareholders and investors should understand that insiders have lives, taxes, debts, and families. For example, company employees who received shares as part of their compensation in 2013 must under normal conditions address that tax obligation prior to April 15, 2014, creating for some the necessity to sell some of their shares,' I don't think the blame being hoisted upon the directors for 'illegally selling' in April is justified. Doesn't make me like it, though. .
3. None of this changes the fact that IMO management was extremely incompetent in their filings. They might be outraged and blindsided, and never expected such a severe punishment... but here it is and the reason seems to be the poorly done paperwork. These errors have resulted in the suspension and delisting of GrowLife. The grays, and the imminent drop in PPS awaits, and the business model takes the crushing blow of losing the CEN Bio and RXNB deals which propelled us from the teens...
So, at the end of the day, the mistakes they made cost them dearly. It cost us dearly as well. We all must make decisions in the next few days. Hope this clarifies much more about WHY PHOT was suspended... but at the end of the day it's just my best guess.
This analysis gives very little credence to the bombastic legal theories so many boisterous, self-proclaimed 'Clarence Darrow's' over at the message-controlled IHub board proffer. They popped out of the woodwork, claiming all these illegal insider maneuvers, but in large part this seems to relate to incomplete paperwork and potentially hiding the value of unrestricted shares subsequently issued. Not that PHOT's executives are innocent, mind you, because the reporting or non-reporting here is serious stuff. However, tracing this to the share dumping in April seems off. Especially when you consider the vast amounts of shares these officers still hold and how little they realized from the sales...
Personally, I'm getting what I can within the first day or two of trading being resumed. I hope it goes up to $1 this summer. Good people here deserve it. I just don't invest where I feel the company was negligent and it cost us. The trust and faith is gone and the relationship has to end for me. Just my opinion.
Hope this helps in any way.
TM
