Grassroots Reseach - GrowLIfe, Inc Report

GRASS ROOTS O RESE EARCH* AND D DISTRIBU UTION, INC.
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Telephone: 415.454.6985 4
June e 7, 2013
GROW WLIFE, INC.

Symbol Exchange Current Price 52 Week Hig gh/ Low Average Vol lume (3 mos.) Shares Outst tanding (in mn) m Current Mar rket Cap (in $ mn) Float (as a % of shares ou ut.) PHOT T OTC QB B $0.042 2 $ $0.12/$0.0042 2
5,190,908 8 531.1 1
$22.25 5
77.3% %
Cohen Price Index T Target
$0 0.22
INVE ESTMENT T THESIS S AND RECOMMEN E NDATION NS
GrowLife, Inc G c. (OTC QB: PHOT) is a holding com mpany with multiple m operat ting businesse es that manuf facture and s supply branded equipment and expendab bles in the Un nited States. The T Company ys products an nd services ar re used for u urban gardenin ng, inclusive of o equipment and a expendabl les for gardening of medica al marijuana. GrowLifes G 10 00% owned s subsidiaries in nclude SGT, Phototron, P an nd Greners. In n addition to promotion an nd sales of GrowLife G own ned brands, G GrowLife com mpanies distrib bute and sell over o 3,000 pro oducts (includi ing the Stealth h Grow line of o LED lightin ng products a SG Senso and ors automated d lighting and growing equ uipment) throu ugh on-line distribution d ch hannels. The Companys C p products are sold through Greners.com, G an on-line sup perstore, and through retail l sales of the Companys in nitial retail s storefront busi iness, Urban Garden G Suppli ies. In additio on, the Compa any, through www.cannabis w s.org, expects to provide w recognition and is targeted to becom wide me an authorita ative channel for f branded pr roduct promotion and sales. According to A o data collected by MMJ Bus siness Daily y from a Washington n State Re eport, the M Marijuana Ind dustry is expected to becom me a $45 billi ion annual in ndustry. The current c size of f the medical marijuana m market is $1.7 billion, 25 mi illion potentia al patients, proj ojected to grow w at 39% CAG GR to $8.9 bill lion in 2016. The T market is estimated to o grow to $29.0 0 billion by 20 016. PHOTs busin P ness model is brilliant. The Company has s unique asset ts unavailable e to most micr ro cap stocks: access to c capital, massiv ve USA and worldwide w ma arket demand, , leveraged distribution cha annels and a very v strong management m team. GrowLi ife is actively y engaged in improving and a expanding g its lineup of o branded pr roducts throug gh organic d development, business allia ances and acqu uisitions. Based on the Companys stron ng performanc ce in the rece ent quarter, s significant rev venue growth previous p year and excellent business outl look, we believ ve that GrowL Life is on track to record $ $5.4 million in n revenues in 2013, 2 $10.9 million m in 2014 4 at impressive margins. Ba ased on these projections p an nd provided th he Company raises r $5.0 million in capita al, the Cohen Target T Price is s 456.2% high her than the current price.
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SALES AND MARGINS ANALYSIS

all figures in $ million; unless otherwise mentioned Revenues % growth EBITDA EBIT Margin Net Profit Net Profit Margin Earnings Per Share Diluted Free Cash Flow to Firm 2012 1.5 (1.3) 87.1% (2.2) 150.8% (0.01) (1.8) 2013 F 5.4 275.0% (0.8) 14.4% (1.1) 21.0% (0.00) (4.0) 2014 F 10.9 100.0% 0.2 1.7% (0.4) 3.7% (0.00) (3.9) 2015 F 19.0 75.0% 2.1 11.0% 1.0 5.3% 0.00 (0.6) 2016 F 30.5 60.0% 5.1 16.6% 3.2 10.5% 0.01 0.0 2017 F 45.7 50.0% 9.4 20.6% 6.5 14.2% 0.01 1.5 2018 F 61.7 35.0% 14.2 23.0% 8.8 14.3% 0.02 4.1 2019 F 77.1 25.0% 18.7 24.2% 13.5 17.5% 0.03 9.0
THE COHEN PRICE TARGETTM SUMMARY

The Cohen Price Target is calculated by 25% equal weighting of four different valuation methodologies. We use an industry average PE, an industry average price/capital employed (P/CE), a Cohen Performance Index, and the fundamentally driven Cohen DCF.
Price toEarnings(P/E) EarningsPerShare 2016Forecasts IndustryAverageFuture P/ERatio DiscountFactor PricebasedonP/ERatio Price toCapitalEmployed(P/CE) Capital Employed IndustryAverageP/CERatio DiscountFactor PricebasedonP/CERatio CohenDiscountedCashFlowModel CohenDCFValueBaseCase CohenPerformance Index CohenPrice Performance Index Value CurrentStockPrice PricebasedonCohenPerformanceIndex CohenPrice IndexTarget CurrentPrice Upside/(Downside)Potential 82.5% 0.04 0.07 0.22 0.04 456.2% in$ 0.01 41.35 0.72 0.21 in$ 0.07 6.19 0.72 0.32 in$ 0.29 in$
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EXECUTIVE SUMMARY
GrowLife, Inc. (OTC OB: PHOT), based in California, operates as a holding Company with a focus on providing legal products to the specialty urban gardening market and the legal medical marijuana market. We believe the Company is somewhat protected to the extent the state and federal regulatory landscape allows. 2012 was a year of transformation for PHOT. In the last year, the Company grew from a single product line to multiple operative businesses with strong revenue growth potential. This was achieved through attractive mergers and acquisitions. The GrowLife family of companies now includes the online distribution hub Greners, the pioneering grow light product line Stealth Grow LED and a retail supply location, Urban Garden, all of which were acquired during 2012. SGSensors.com and its wireless automation products for grow rooms is a prominent example of our product development and brand extension. SG Sensors products are expected to be available for commercial sale in late 2013. Further, GrowLife also controls premier industry portal www.cannabis.org, which will serve as another widely recognized and authoritative social channel for branded product promotion, sales and information. The Company also launched business units that are active in industry events, media and consulting services for the urban gardening and legal marijuana industry. GrowLife is actively engaged in improving and expanding its lineup of branded products through organic development, business alliances and acquisition. GrowLife is also actively engaged in building upon its direct to customers sales business by expansion and promotion of Phototron products to a wider consumer market. There is significant potential expansion for all companies involved in the marijuana space. We believe, management has grown the business despite numerous legalization issues faced by the industry and well positioned to leverage the benefits from legalization of marijuana. Risks: Legal issues, political pressure, executing multi divisional subsidiaries, pricing, black market, Federal Laws, controversial industry group.
Financial Highlights and Valuation

We project revenues of approximately $5.4 million in 2013 and $77.1 million by 2019. Margins are likely to expand with the Company increasing its production capacity and distribution reach. The Company will have to raise additional capital during our forecast period to meet our estimates. The Cohen Price Target is calculated using market-based multiple valuation, Discounted Cash Flow (DCF) and by applying the Cohen Price Performance Index approach. The multiple based valuation approach uses the expected 2016 Price-to-Earnings and Price-to-Capital Employed ratio. We also include the Cohen Price Performance Index, which is representative of the past coverage performance of all stocks evaluated by us. The last component in calculating the Cohen Price Target is the value derived using the long-term Cohen Discounted Cash Flow (DCF) valuation approach. Based on an average of these methods, GrowLife common stock is valued at $0.22, 456.2% higher than the current stock price of $0.04. We recommend purchase for short term traders and long term risk-averse investors.
WHY BUY GROWLIFE STOCK?

While still in a very nascent stage of growth, the Marijuana Industry has consolidated after visible companies unified and organized their business models. The best known industrial hemp and medical marijuana companies are Hemp, Inc., GrowLife, Inc., Medical Marijuana, Inc. Greengro Technologies. Cannabis Science is a biotechnology company with an excellent future. The industry is now at the beginning phase of what many predict will be cohesive growth. However, deeper research into each of these stocks and their complex business structures gives us a completely different picture. We explain below why GrowLife should be the focus stock in the Marijuana Industry.
Figure 1: Comparison of Major Publicly Traded Marijuana Stocks
Medical Metrics Marijuana, Inc. Ticker MJNA Exchange OTCPink SharesO/s(inmillion) 935 Price (in$) 0.16 52WeekRange (in$) 0.500.02 MarketCap(in$million) 145.0 Float 43.9% 2012Revenues(in$million) 5.2 3 yrRevenues20102012(in$million) 12.8 2012Free CashFlows(in$million) (3.7) Price toSales 27.9
Hemp,Inc HEMP OTCPink 1,310 0.04 0.150.01 46.5 42.7% 0.0 0.0 (0.8) 5,171.7
GrowLife,Inc PHOT OTCQB 531 0.04 0.120.0042 22.3 77.3% 1.5 2.8 (1.8) 15.3
Source: Cohen Research If HEMP includes 2 preference shares, total dilution is 4+ billion shares outstanding
GrowLife, Inc. (OTC QB: PHOT) has a simple and scalable business model. The Companys management team in our view is better, smarter, more experienced and more capable than its competitors. PHOT is a holding company with multiple operating businesses that manufacture and supply branded equipment and expendables in the United States. The Companys products and services are used for urban gardening, inclusive of equipment and expendables for gardening of medical marijuana. Investors are only beginning to understand the true potential of the PHOT story. Currently the industry focus had been on Medical Marijuana and HEMP, Inc. Certain writers on the Seeking Alpha website have questioned MJNA regarding regulatory issues and their accounting. Some have recommended the immediate sale of MJNA stock. MJNAs issued and outstanding shares exploded from 250 million shares to roughly 938 million shares. HEMP Inc., run by Bruce Perlowin, the King of Pot, has over 1.3 billion diluted shares outstanding and large blocks of preferred shares. Should the Company convert these preference shares, which they will do sooner or later, the total outstanding equity shares will explode to over 4 billion shares. This huge dilution renders a very low sub penny valuation for HEMP. Further, in more than four years, Perlowin, past President of MJNA and current CEO of HEMP has produced
virtually no sales in both companies (total sales less than $20,000) nor any positive cash flow for HEMP. The Company has lost over ($2.5 million) in operating cash over the last 3 years without any significant revenues. HEMP is currently divesting certain divisions, and acquiring others. Using a Discounted Cash Flow method of valuing HEMP common stock, requires the assumption of 4 billion shares divided into projected 5 year sales. This math argues against any price target above a penny. HEMP does not have a track record of making money in the hemp industry. Perhaps it will one day. Should MJNA continue to lose its luster in view of their potential problems, and should HEMP continue its past history of failed operating results, we believe PHOT will be the logical alternative for investment in this industry. If PHOT can capture a percentage of interested stock investors in the marijuana industry, liquidity and the share price of PHOT common stock should improve considerably. PHOT is a real company. Grass Roots Research issued a Sell recommendation on MJNA at $0.25 cents, due to accounting concerns and potential regulatory issues. The stock trades today at $0.15 cents. One Seeking Alpha contributor projects the stock will trade around 2 cents. Another contributor has projected it to go to $0.00. MJNA and HEMPs track record argues against significant participation in an exciting industry. Our 48 page informational report on HEMP did not include a valuation of that stock. With 4+ billion shares of stock outstanding and virtually no revenues since Perlowin has guided HEMP INC, it appears to us that HEMP is not a viable investment vehicle. We believe the multi divisional operating models of MJNA and HEMP will not come to long term fruition. We believe the GrowLife (OTC QB: PHOT) business model is the logical common sense alternative for investment in the marijuana industry.
UNDERSTANDING LEGALIZATION OF MARIJUANA

Over the last few years, public opinion towards legalization of Marijuana is rapidly changing. This has highlighted a number of publicly traded marijuana stocks. Many research reports and articles on various websites such as Seeking Alpha have been written on marijuana companies, including Medical Marijuana, Inc. (MJNA.PK), Hemp, Inc. (HEMP.PK), MediSwipe, Inc. (MWIP.OB), Tranzbyte Corp. (ERBB.PK), Growlife Inc. (PHOT.OB), Medbox, Inc. (MDBX.PK), AVT, Inc. (AVTCE.OB), Terra Tech Corp. (TRTC.OB), Rapid Fire Marketing, Inc. (RFMK.PK), GW Pharmaceuticals Plc. (GWPRF.PK) and a few other companies. However, we believe that before analyzing these companies fundamentally or technically, investors should understand the politics of legalization of marijuana. Legalization of Marijuana and its impact on these relatively early growth stage companies, in our view, is the most important factor to be considered before making an investment decision. For many years prior to the last decade, public opinion on legalization of marijuana was quite stable. As a substance classified as a Schedule I drug, people were against the move to legalize marijuana as they believed that marijuana would lead to harder drugs. However, over the last decade, public opinion has shifted dramatically toward support for the legalization of marijuana. As per a recent survey, sentiment in favor of legalization has increased by 20 percentage points and showed a narrow national majority in just over a decade.
Figure 2: Past and Present Trends Towards Legalizing Marijuana
Source: Pew Research Center 2010-2013, General Social Survey and Gallup Research
The percentage of Americans who view marijuana use as immoral has fallen from 50% to 32% in just seven years. This sentiment and support has resulted in ballot initiative victories in Colorado and Washington State in 2012 for legalizing the use of Marijuana for medical and/or recreational use. The exhibit below highlights the growing support for legalization, especially strong among the young, while the only age group staunchly opposed consists of those 65 years old and over. However, analysts believe that unless the younger generation substantially alters its views as it grows older, generational change alone is likely to keep support well above the past low levels of acceptance.
Grass Roots Research and Distribution, Inc. Figure 3: Increasing Support for Legalization of Marijuana
Source: Pew Research Center for the People and the Press, March 13-17, 2013
Another notable trend in the favorable consensus towards use of marijuana is that most conservatives who do not favor legalization and believe marijuana should be illegal nonetheless support states rights to legalize it. They take a dim view of governments ability to enforce a ban. However, a majority agrees that the road to rescheduling a Schedule I drug is difficult, complex and likely to take much time as there are a number of considerations that State and Federal Governments need to take into account prior to deciding on legalization of marijuana. Much of it depends on Attorney General Eric Holder and his views on legalization of marijuana in the states of Washington and Colorado. In a recent article, Mr/ Holder has made it clear that he is in no hurry to address the issue and hinted that legalization would be very complex matter. Some important factors that investors should be aware of regarding the legalization process of marijuana are listed below: Supremacy Clause of the Constitution: Under this clause, the Constitution and federal laws take precedence over state laws. This means that the Constitution grants the Congress the power to preempt any state law which counters federal laws. In this case, the Federal Government has the power to overturn the recent legalization by states. Re-classification of the Schedule I Substance: While the Government can reclassify the drug from Schedule I, it is still very difficult to understand all of the chemical components of marijuana and its consequences to one's health. High Taxation Impact: On a positive note, marijuana being the largest cash crop in the United Sates, can earn significant revenues for Federal and State Governments if it is legalized and taxed. Going by estimates, it is believed that the Marijuana Industry may be a $45 billion annual industry. Further, the ancillary products and services related to marijuana may also be a very large annual industry. Given this, legalization and taxation of Marijuana may results in a large pool of tax income.
Impact of Legalization on Marijuana Companies

These considerations will continue to play a central role in determining the outcome of future legalization politics. Hence, it becomes critical to understand the impact of legalization and status quo on marijuana prior to investing in Marijuana stocks. Summarized below are the likely outcomes of the ongoing legalization debate: Effects of Legalization of Marijuana: If the federal government decides to favor legalization, it would open doors that are currently closed to the Marijuana companies in terms of capitalization, product assortment/selection, R&D, ability to conduct business freely, and the ability to provide (for reputable companies) more disclosure and increasing transparency to shareholders with regard to company operations. Effects of continuing Marijuana as Schedule I substance: In case the government continues its current quasi-legal medical status or illegal status, this could leave each of these companies open to the repossession of all assets, criminal actions and money laundering laws. For these reasons, it would be difficult for these companies to capitalize via traditional methods. We believe this is why institutional investors will not be attracted to, or participate in the current trading of these stocks.
Impact of Legalization on Growlife

GrowLife is in an enviable position regarding legalization issues. Should legalization come to fruition, PHOTs industry leverage is powerful. Its current business model is also buffered from industry uncertainties. GrowLifes diversified multiple wholly-owned, respected brands provide a strong base for scalable, retail sales channels to drive revenue and sales of core products and new GrowLife innovations. The Company is currently not involved, nor does it intend to be involved in the production of marijuana. PHOT intends to be at the forefront of the product and service segments incidental to the marijuana industry. As advancements are made toward potential legalization of marijuana, GrowLife expects to be ideally positioned in all U.S. federally legal, profitable aspects of this industry. We believe that the recent acquisitions and product innovations will enable the Company to aggregate data and marketing knowledge that will be key to long term success once the industry is legalized. The Company intends to leverage industry relationships, state-of-the-art innovations, and equity to develop a fully integrated lifestyle brand targeted at the cannabis and marijuana industry as well as other venues. The Companys current brands and businesses make it the pure play marijuana industry stock of the future. The Stealth Grow brand of products is expected to be a leading supplier of automation equipment and hi-powered LED grow light products for indoor horticulture. Once home cultivation of marijuana is legalized, these products will be in significant demand. Similarly, Greners.com, the online hydroponics superstore and Phototron, producer of hydroponic grow containers are perfectly designed to grow marijuana in any environment, in addition to other fruits, vegetables, flowers and herbs. Further, the Companys website, www.cannabis.org is expected to be transformed from currently a information portal with massive visitors to a full-fledged e-commerce platform for everything legal to marijuana. This will be well supported by the Companys strong retail sales channel and wholesalers network.
ABOUT THE COMPANY
GrowLife, Inc. (OTC QB: PHOT) is a United States based holding company that manufactures and sells high end, progressive horticulture and lifestyle products throughout the country. With core holdings in innovative technology-based products and services for the indoor gardening industry and specialty markets, PHOT is a welldiversified group in the growing Marijuana Industry. The Companys brands include Stealth Grow, a producer of grow room automation equipment and hi-powered LED grow light products for indoor horticulture (www.sgsensors.com and www.stealthgrow.com), Greners.com, the online hydroponics superstore (www.greners.com) and Phototron, producer of hydroponic grow containers, which are designed to grow vegetables, herbs, flowers and fruits in any environment (www.phototron.com). GrowLife is also the US distributor for the Urban Cultivator brand the greens machine (www.urbancultivator.net). Through GrowLife Productions, PHOT targets co-producing and co-sponsoring entertainment, lifestyle, music and film events across the country. The website, www.cannabis.org, is an information portal for the medical marijuana industry that is in development by GrowLife with the objective of establishing the premier informational portal for the industry worldwide. GrowLife is actively engaged in pursuing acquisitions that will allow its GrowLife Hydroponics retail sales division business to expand regionally in the United States. GrowLife features a combination of core technologies, retail sales channels and wholesale relationships to build a sizable enterprise for shareholders. As the industry advances, GrowLife expects to be at the forefront with a richly populated customer database, revolutionary products and services, and a vast retail network to satisfy consumer demand with sound margins. This well diversified portfolio places the Company in an enviable position. In the event of regulatory change towards marijuana, the strong platform built by the Company will establish itself on the forefront of an exciting industry.
GrowLifes Business Strategy

Post the attractive investment made by GrowLife in 2012, during the current year the Company is expected to realize the benefits, synergies and efficiencies from consolidation of its acquired businesses. Management expects to continue acquisitions in 2013 which are both favorable to shareholders and conducive to long-term growth, while improving and expanding scalable existing operations. Through product integration and retail integration, PHOT intends to create a scalable supply chain that will accelerate sales of the Companys core brands. Further, the Company will build a strong platform for new technologies that will be introduced or acquired by GrowLife. The cornerstone of corporate growth is its ability to aggressively market core products, create new innovations, and make acquisitions which contribute to revenue and overall corporate growth.
Grass Roots Research and Distribution, Inc. Figure 4: PHOTs Business Focus
GROWLIFE INNOVATIONS
WHOLESALE & MASS-MARKET
PRODUCT OR SERVICE ACQUISITIONS
BRICK-ANDMORTAR HYDRO STORES

Source: Cohen Research and Company Presentation
ONLINE RETAIL
BULL AND BEAR CASE

Bull Case
Huge Market Opportunity: It is estimated that the market for marijuana in the United States alone is $35-$45 billion. We believe the size of the US medical marijuana market is estimated to be $1.7 billion, a figure that is likely to increase in the coming years. By 2016, the medical marijuana market could surge to approximately $8.9 billion. Note: A Modern Alcohol Prohibition Market. Note that Alcohol is a $188 billion dollar market. Some estimates project that marijuanas total worldwide market size is about $120 billion, or almost 2/3 the size of the Alcohol market. While we are using in our report $35 - $40 billion, if $120 billion is realistic, the marijuana story is just starting to be understood. The Marijauna industry might be compared to Prohibition 80 years ago. The stock market is telling us that this may be true at this time.
Figure 5: Marijuana Market
Source: Industry Report, S&P, CNBC Analysis
Growing User Base: Within the 18 states and Washington D.C. that have legalized the use of Medical Marijuana, there are as many as 25 million patients eligible to benefit from medical marijuana. The strong demand for medical marijuana is providing opportunities for business development through several different facets of the industry, including extensive marijuana cultivation as well as its retail distribution. Attractive Markets: The emerging industry of medical marijuana is dominant in California and Colorado which account for 92% of current market share. Application to Treat Multiple Ailments: According to research, various extracts from cannabis and hemp have shown to have a positive effect on a wide variety of ailments. These cannabidiol extracts and compounds represent pharmaceutical opportunities to be captured by Companies engaged in the Medical Marijuana Industry. As the usage of medical marijuana grows, it represents a huge sales and distribution opportunity for PHOT, because it is positioned to leverage its excellent wholesale and retail network.
Grass Roots Research and Distribution, Inc. Figure 6: Expenditure on treatment of selected diseases
Anti-Aging Arthritis Cancer Chronic Pain Management High Blood Pressure PTSD
Source: US dept. of HHS, CNBC Analysis
$50 billion $35 billion $75 billion $22 billion $25 billion $72 billion
Figure 7: Pharmaceutical Actions of Cannabis
Support for Medical Marijuana Legalization Gaining Momentum: In a recent Gallup Poll, the majority of respondents under 30 (58%) support Marijuana legalization. However, the support declines with age. The poll also revealed that 40% of respondents have tried marijuana. Approximately 64% are expected to support legalization for medical purposes. Large majorities of Americans across all ages, favor doctors to recommend medical marijuana for treatment. Multiple Revenue Opportunities: The opportunity to expand into the previously highlighted markets with a more socially acceptable form of marijuana and related products and services provides multiple
revenue streams for PHOT. Numerous research studies have borne out the benefits of CBD, but products have not been available. Recession Proof Industry: The marijuana industry is a recession resistant industry and has performed well during the recent and current economic downturn. Nationwide, the industry currently has approximately 2,500 growing operations and dispensaries.
Bear Case
Unfavorable regulatory environment: The strict and unfavorable regulations in the US for marijuana have slowed the growth of the medical marijuana industry. Unless the U.S. federal government changes its regulatory outlook towards the legality of medical marijuana, industry growth could stagnate. Other issues that the medical marijuana industry faces are the regulatory systems within each state that have passed medical marijuana legislation. Patients, caregivers and dispensaries must abide by the state rules and laws, which include separate rules and regulations for each county and city. Competition with established firms: PHOT may face stiff competition from established firms that have a proven track record, although non-operative in its particular market niche. However, at this current point the medical marijuana market is fractured, as there are no dominant companies taking firm control of the industry. Growth of underground distribution network: Colorado has legalized the possession of marijuana. However it faces the rise of a black market due to supply side issues. It is expected that the demand for legal marijuana is bound to increase but such a rise leaves an important gap on the supply side. If local growers are unable to satisfy demand, it will lead to drug runners entering the market. As a legal product being sold in retail shops, it is likely that price will become a tool to attract business and build market share. Does the government set prices or increase availability of marijuana? If these issues are solved it is likely to lead to the growth of an underground distribution network fulfilling demand.
COHEN GROWTH DRIVERS AND FINANCIAL FORECASTS

Figure 8: Cohen Growth Driver Analysis Base Case
Annual Revenues, Margins, Assets, Turns all figures in $ million; unless otherwise mentioned 2012 Net Revenue 1.5 Operating Margin 87.1% Net Margin 150.8% EPS Diluted (0.01) EBITDA (1.3) Free Cash Flow (1.8) Cash and Equivalents 0.1 Working Capital (0.2) Total Debt 1.1 Total Assets 1.3 DSO 3.8
2013 F 5.4 16.9% 21.0% (0.00) (0.8) (4.0) 1.0 (0.1) 1.1 6.3 54.8
2014 F 10.9 0.7% 3.7% (0.00) 0.2 (3.9) 1.7 0.5 0.8 11.6 54.8
2015 F 19.0 9.0% 5.3% 0.00 2.1 (0.6) 0.8 0.7 0.5 14.5 54.8
2016 F 30.5 15.0% 10.5% 0.01 5.1 0.0 0.5 3.1 0.3 18.3 54.8
2017 F 45.7 19.2% 14.2% 0.01 9.4 1.5 2.0 5.1 0.2 27.1 54.8
2018 F 61.7 21.7% 14.3% 0.02 14.2 4.1 6.1 7.0 0.2 38.6 54.8
2019 F 77.1 23.1% 17.5% 0.03 18.7 9.0 15.0 8.8 0.2 54.7 54.8
Percentage Change in Annual Revenues, Margins, Assets, Turns 2012 2013 F 2014 F 2015 F 2016 F 2017 F 2018 F 2019 F Revenues NM 275% 100.0% 75.0% 60.0% 50.0% 35.0% 25.0% Operating Margin NM 81% 96.1% 1468.8% 67.1% 28.1% 13.3% 6.2% Net Margin NM 86% 82.3% 243.5% 98.0% 34.7% 1.0% 22.3% EPS Diluted NM 71% 66.2% 351.1% 216.8% 102.0% 36.3% 52.9% EBITDA NM 38% 123.7% 1023.6% 142.7% 85.4% 50.8% 31.9% Free Cash Flow NM 121% 1.3% 84.3% 105.0% 4921.8% 167.3% 118.9% Cash NM 1097% 71.5% 54.8% 34.9% 296.7% 204.9% 148.0% Working Capital NM 58% 944.1% 28.1% 355.4% 63.2% 36.1% 25.6% Total Debt NM 0% 25.0% 33.3% 50.0% 14.3% 14.3% 14.3% Total Assets NM 390% 84% 25% 26% 48% 43% 42% DSO NM 1347% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Source: Cohen Research
The Cohen Growth Drivers Model is an intelligent road map used by many securities analysts to analyze the forecasted growth of a given Company. PHOT is comprised of a diversified portfolio of high end, progressive horticulture and lifestyle products encompassing all aspects of the cannabis cultivation process: LED grow lighting, hydroponics and advanced grow room monitoring systems. The Companys subsidiary lineup appears impressive. Though this particular market is saturated with other high-tech and well-capitalized rivals, we estimate that this area of the market will experience tremendous growth in the new states that have brought about legal reform regarding recreational use of cannabis. Finally, PHOT appears to be gearing up a media production and distribution business. For the year ended December 31, 2012, the Company reported revenues of $1.45 million when compared to $948,406 in the same period last year. During 2012, the Company witnessed a significant rise in its gross profit margins from 24% in 2011 to 28%. GrowLife is just beginning to realize the business synergies and efficiencies from consolidation of the 3 acquisitions made in 2012. The increase in revenues and gross profit percentage reflects the acquisition of higher margin business lines. Going forward, we expect the Company to continue acquisitions in 2013 which are both favorable to shareholders and conducive to
long-term growth, while improving and expanding existing operations to scale. This will result in continuation of impressive growth in revenues at higher margins as highlighted in the exhibit above. We believe our revenue and cost estimates are conservative. In addition to our Base Case forecasts, we have prepared financial forecasts under two additional scenarios, the optimistic (aggressive top-line growth) and pessimistic case. The exhibit below shows our revenues and earnings assumptions under all three forecasted scenarios:
Figure 9: Revenue Forecasts All Scenarios
Revenues - All Scenarios

90.0 80.0
in $000s
70.0 60.0 50.0 40.0 30.0 20.0 10.0 2012 2013 F 2014 F 2015 F 2016 F 2017 F 2018 F
Optimistic Case
Base Case
Pessimistic Case
Grass Roots Research and Distribution, Inc. Figure 10: Earnings Forecasts All Scenarios
Earnings per share - All Scenarios

0.03 0.03 0.02 0.02
in $
0.01 0.01 -
(0.01) (0.01) (0.02)
2012
2013 F
2014 F
2015 F
2016 F
2017 F
2018 F
Optimistic Case
Base Case
Pessimistic Case
COMPANYS BUSINESS DIVISIONS AND SUBSIDIARIES

Figure 11: PHOTs Corporate Structure
1
StealthGrowLED [hempremoved]
GrowLife,Inc.
Brands
SGSensors Phototron Greners.com UrbanGarden
Channels Cannabis.org GrowLife Productions
Description of Companys Operating Divisions and Subsidiaries has been sourced from PHOTs and other group companies website and other released information. Copyright2013byGrassRootsResearchandDistribution,Inc.Allrightsreserved.Thisreportmaynotbereproduced. Page17of55
Brands
STEALTH GROW LED
Widely considered to be the best LED product on the market, Stealth Grow LED is a leading brand of Hi-Power LED lights for indoor growing. Stealth Grow LED has a proven sales history over 2 years prior to the GrowLife acquisition and is distributed by the largest wholesaler in the industry. The product paves the way for LED lighting to change from an option, to an absolutely superior alternative, in virtually any growing environment. Stealth Grow LED introduced the SG 602, the first quad band LED product with the intensity to replace energy inefficient 600 watt HPS lamps. It then expanded its line of industry leading LED products with the SG Veg, an extremely powerful LED light source that outperforms 1000 watt Metal Halide light sources. Stealth Grow LED further expanded its product offerings with the SG 1250 HO and the industry leading Nite Light, to allow growers to perform all necessary tasks during the dark cycle without interfering with plant photoperiods.
Figure 12: Stealth Grow LED Products
Source: Company Website
SG SENSORS
SG Sensors is an operating division of SGT that markets wireless monitoring and control equipment to operate all major grow room functions. The revolutionary technology used in SG Sensors and designed by management and shareholders, allows growers to not only monitor but change conditions in real time. The product line allows 24/7 access to all lighting, irrigation, environmental and security controls through the use of a smart phone, tablet or CPU with optional cloud based data storage. Utilizing a combination of proprietary features, and NASA based wireless technology SG Sensors by GrowLife is poised to become the first and only solution for wireless and remote controls, ensuring both optimum conditions and yield, with the convenience of smart phone or tablet integration. PHOT expects to launch this product in 2013, and has announced that a waiting list of customers has already been established that could result in revenues of $1.0 million in year one.
Figure 13: SG Sensor Products
PHOTOTRON
Phototron is a 25 year old, United States based manufacturer of plant growing systems complete with its own selfcontained attractive cabinet with a full line of accessories including nutrients, media, timers and controls. With favorable results in many different states on medical and even recreational cannabis initiatives in 2012, the company believes that the addressable market for its plants growing systems has expanded considerably. New initiatives will be rolled out throughout 2013, most of which will be direct to consumers, for direct sales of Phototron units and accessories into the expanding addressable market.
Grass Roots Research and Distribution, Inc. Figure 14:
Distribution Channels GRENERS.COM
Greners.Com is a Sonoma County, California based online supplier of a full range of hydroponic equipment for shipment worldwide. Started as a family business, its core strengths lie in its extensive and continuously updated product offering, its knowledgeable staff and their commitment to informative product reviews for customers, next day shipping across the country. Greners joined the GrowLife family of companies in July 2012. With the added resources of GrowLife, Greners is set to expand its business in 2013 through volume growth in supply of end user customers, increased commitment to unique opportunities for wholesale distribution and retail sales of GrowLife company brands.
GROWLIFE HYDROPONICS
Growlife Hydroponics owns and operates a specialty hydroponics store in Los Angeles doing business as Urban Garden Supplies. The store strives to provide realistic, hands on product demonstrations of core technology in a one stop shopping environment with well-informed full service sales and technical staff. The Companys core brands are first and foremost technology products that flourish where they can be demonstrated.
GROWLIFE PRODUCTIONS
Growlife Productions is a wholly owned business unit dedicated to promotion of GrowLifes core brands through co-production and co-sponsorship of entertainment, lifestyle, music and film events across the country. GrowLife Productions aims to foster a growing community around GrowLife brands. Entertainment industry notables Eddie Bernard, Lucas Hildebrand and Kyle Tracey will direct the day to day activities of GrowLife Productions as the team partners with events of all sizes, including club and theatre shows, music tours and festivals. The GrowLife Productions team brings with them considerable experience in producing and promoting edgy, ground-breaking productions such as the first-ever High Times Medical Cannabis Cup in the United States as well as management of related VIP events featuring Kid Cudi (Denver, 2011) Lyrics Born, Keith Murray and the Eagles of Death Metal (San Francisco, 2010). GrowLife Productions has a long roster of notable artist clients that includes Sublime with Rome, DJ Tiesto, Pepper, Queens of the Stone Age, Iration, The Parlor Mob, Mix Master Mike and many more. Earlier this year the GrowLife Productions team implemented a multi-level marketing campaign for the largely successful Grammy nominated Sony Pictures Classics release, Beats, Rhymes & Life: The Travels of A Tribe Called Quest.
CANNABIS.ORG
Cannabis.Org is an information portal for the medical marijuana industry that is in development by GrowLife. Its objective is establishing the premier informational portal for the industry worldwide that, in the event of regulatory change, can also be a major revenue driver for expansion of GrowLife brands, a platform for establishing additional partnering and revenue share relationships and direct revenue generation through a myriad of ad revenue opportunities.
VALUE PROPOSITION
PHOT has grown organically as well inorganically since its inception. Its recent acquisitions have solidified its position in the market as an innovator and as a leader. Financial benefits from these acquisitions notwithstanding, we see the Company benefitting more from understanding and applying the processes and the intellectual properties of the acquired companies.
Figure 15: Value Proposition
Strategy to aggressively market core products, create new innovations, and make acquisitions
High demand for industrial hemp and medical marijuana
Diversifed and Scallable Business Model
Business not reliant upon the Legalization of Marijuana
GrowLife, Inc.
Excellent Retail Sale Channels; Strong Wholesale Relationships
Building A Multi-channel Brand with Established Sales and Customers Other Progressive Countries Opening Their Markets CBD Extracts and Compounds Replacing Smoked Cannabis
Legalization of Marijuana likely to result in Huge Demand
UNDERSTANDING THE DIFFERENT CANNABIS VARIETIES

Industrial hemp2 is a variety of Cannabis sativa and is of the same plant species as marijuana. Although marijuana is also a variety of cannabis, it is genetically distinct from industrial hemp and is further distinguished by its use and chemical makeup. Hemp is genetically different. Hemp has long been cultivated for non-drug use in the production of industrial and other goods. For centuries, industrial hemp (plant species Cannabis sativa) has been a source of fiber and oilseed used worldwide to produce a variety of industrial and consumer products. Some estimate that the global market for hemp consists of more than 25,000 products. It can be grown as a fiber, seed, or other dual-purpose crop.
Comparison of Hemp and Marijuana

There are many different varieties of cannabis plants. Marijuana and hemp come from the same species of plant, Cannabis sativa, but from different varieties or cultivars. However, hemp is genetically different and is distinguished by its use and chemical makeup. Hemp, also called industrial hemp, refers to cannabis varieties that are primarily grown as an agricultural crop (such as seeds and fiber, and byproducts such as oil, seed cake, hurds) and is characterized by plants that are low in THC (delta-9 tetrahydrocannabinol, marijuanas primary psychoactive chemical). THC levels for hemp are generally less than 1%. Marijuana refers to the flowering tops and leaves of psychoactive cannabis varieties, which are grown for their high content of THC. Marijuanas high THC content is primarily in the flowering tops and to a lesser extent in the leaves. THC levels for marijuana are much higher than for hemp, and are reported to average about 10%; some sample tests indicate THC levels reaching 20%-30%, or greater. A level of about 1% THC is considered the threshold for cannabis to have a psychotropic effect or an intoxicating potential. Current laws regulating hemp cultivation in the European Union (EU) and Canada use 0.3% THC as the dividing line between industrial and potentially drug-producing cannabis.
Marijuana
When cannabis is grown to produce marijuana, it is cultivated from monoecious fiber varieties that have both male and female flowers on each plant, but where the female flowers are selected to prevent the return of separate male and female plants (known as dioecious varieties). The female flowers are short and tightly clustered. In marijuana cultivation, growers remove all the male plants to prevent pollination and seed set. Some growers will hand-pollinate a female plant to get seed; this is done in isolation of the rest of the female plants. The incorporation and stabilization of monoecism in cannabis cultivation requires the skill of a competent plant breeder, and rarely occurs under non-cultivated conditions. Marijuana is cultivated to encourage the plant to become bushy with many leaves, with wide branching to promote flowers and buds. This requires that plants be well-spaced, by as much as about 1-2 plants per square yard. The flower and leaves are the harvested products.
Source: December 18, 2012 Congressional Research Service: Hemp as an Agricultural Commodity by Rene Johnson - Specialist in Agricultural Policy
Industrial Hemp
To maximize production of hemp fiber and/or seed, plants are encouraged to grow taller in height. Cultivated plants become a tall stalky crop that usually reaches between 6 and 15 feet, and generally consist of a single main stalk with few leaves and branches. Hemp plants grown for fiber or oilseed are planted densely (about 35-50 plants per square foot) to discourage branching and flowering. The period of seeding to harvest ranges from 70 to 140 days, depending on the purpose, cultivar or variety, and climatic conditions. The stalk and seed is the harvested product. The stalk of the plant provides two types of fibers: the outer portion of the stem contains the bast fibers, and the interior or core fiber (or hurds). If marijuana is grown in or around industrial hemp varieties, the hemp would pollinate the female marijuana plant. Marijuana growers would not want to plant near a hemp field, since this would result in a harvest that is seedy and lower in THC, and degrade the value of their marijuana crop. Industrial hemp production statistics for Canada indicate that one acre of hemp yields an average of about 700 pounds of grain, which can be pressed into about 50 gallons of oil and 530 pounds of meal. That same acre will also produce an average of 5,300 pounds of straw, which can be transformed into about 1,300 pounds of fiber.
INDUSTRY ANALYSIS
The US medical marijuana market is estimated to reach $8.9 billion in 2016 from $1.7 billion in 2011. See Change Strategy states that in the US, 24.8 million Americans are medically qualified to use marijuana. There are only about 2.9% or 730,000 total patients that have currently purchased. Clearly the potential user market is just beginning. The industry though in nascent state, is increasingly becoming an excellent source of revenue for the Government and currently represents 3% of the entire revenue earned. In the last 15 years, the medical marijuana industry experienced legalization in 16 states with the District of Columbia and Colorado reporting significant growth and development.
Figure 16: Medical Marijuana Industry US
$10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0
Market Size ($ billion)
8.9
6.4 4.6 3.3 1.7 2.4
2011
2012
2013
2014
2015
2016
California, which contributes 76% of the national volume, dominates the industry with a market share of $1.3 billion a year. Colorado, which currently exhibits the fastest growth market nationally, accounts for 16% of the market share with nearly 131,000 registered marijuana patients. Together, these two states make up 92% of the total US market share.
Figure 17: The US Medical Marijuana Market Share
Rest of the US 24%
California 76%
According to the Marijuana Policy Project, a total of 1,029,315 patients hold identification cards in a total of 19 states and the District of Columbia with mandatory registration. The numbers for patients with no registration or voluntary users in California and Washington have been estimated. While there is the possibility that not all registered people have valid medical use for marijuana, it is also possible that not all medical marijuana users have been registered. The large numbers of medical marijuana users is an indication of the possible growth in the medical marijuana market. The figures for medical marijuana users in 19 states when extrapolated to 50 states yields a number of 24,210,698 users.
Figure 18: Statewise medical marijuana patient figures
State 1.Alaska 2.Arizona 3.California 4.Colorado 5.Connecticut 6.DC 7.Delaware 8.Hawaii 9.Maine 10.Massachusetts 11.Michigan 12.Montana 13.Nevada 14.NewJersey 15.NewMexico 16.Oregon 17.Rhode Island 18.Vermont 19.Washington UnitedStates
Medicalmarijuana #ofpatientsper1,000 patients Statepopulation stateresidents 1,246 722,718 1.72 33,601 6,482,505 5.18 553,684 37,691,912 14.69 107,666 5,116,796 21.04 N/A 3,580,709 N/A N/A 617,996 N/A 21 907,135 N/A 11,695 1,374,810 8.51 16,444 1,328,188 12.38 N/A 6,587,536 N/A 122,349 9,876,187 12.39 8,717 998,199 8.73 3,558 2,723,322 1.31 239 8,821,155 0.03 8,188 2,082,224 3.93 56,939 3,871,859 14.71 4,466 1,051,302 4.25 559 626,431 0.89 99,943 6,830,038 14.63 Total: 10,29,315 Average: 7.78 24,210,698 311,591,917 7.77
Source: Industry Report, S&P, CNBC Analysis and Cohen Research
Notes to the above exhibit: 1. California has voluntary registration (as opposed to mandatory registration in all other legal medical marijuana states besides Washington). The Marijuana Policy Project estimated the number of California patients based on Oregons patients per capita. 2. Connecticuts medical marijuana registration program started on Oct. 1, 2012. Therefore, the is no data available at this time.
3. DCs medical marijuana law took effect on July 27, 2010, but, as of Dec. 28, 2012, its registration program does not yet exist. 4. Maine did not have a registration program until Dec. 31, 2010, when it began requiring patient ID cards. As of Jan. 4, 2011, no statistics are available for the number of registered patients. The Marijuana Policy Project estimated the number of Maine patients based on Michigans patients per capita. 5. Massachusetts medical marijuana program goes into effect on Jan. 1, 2013. Patient data is not yet available. 6. Washington does not have a registration program. The Marijuana Policy Project estimated the number of Washington patients based on Oregons patients per capita. 7. Two states (NJ, DE) have registration programs that took effect in late 2012 which is partially why the number of registered patients in those states is comparatively low. Since these national projections are based on the average of the 16 states with active registration programs, these two states lower the average and thus lower the overall projection of medical marijuana patients 8. If the average number of medical marijuana patients per 1,000 residents in states with legal medical marijuana is extrapolated to all 50 states (population 311,591,917 as of 2011, according to the US Census Bureau), then the total number of medical marijuana users as of Dec. 28, 2012 would theoretically be 2,421,069 [7.77/1,000 x 311,591,917 = 2,421,069]. 9. State population numbers are estimates from the US Census Bureaus 2011 data. Patient numbers were last updated in December 2012
Currently, eighteen states and the District of Columbia are active markets for medical marijuana. Arizona, Michigan and Washington are expected to grow significantly as the industry matures during the next few years.
Figure 19: Status of legalization of marijuana in the US
Source: 2011 Marijuana Market Report by See Change Strategy
Grass Roots Research and Distribution, Inc. Figure 20: States legalizing possession of Marijuana
State 1. Alaska 2. Arizona 3. California 4. Colorado 5. Connecticut 6. DC 7. Delaware 8. Hawaii 9. Maine 10. Massachusetts 11. Michigan 12. Montana 13. Nevada 14. New Jersey 15. New Mexico 16. Oregon 17. Rhode Island 18. Vermont 19. Washington Year Passed 1998 2010 1996 2000 2012 2010 2011 2000 1999 2012 2008 2004 2000 2010 2007 1998 2006 2004 1998 How Passed (Yes Vote) Ballot Measure 8 (58%) Proposition 203 (50.13%) Proposition 215 (56%) Ballot Amendment 20 (54%) House Bill 5389 (96-51 House, 21-13 Senate) Amendment Act B18-622 (13-0 vote) Senate Bill 17 (27-14 House, 17-4 Senate) Senate Bill 862 (32-18 House; 13-12 Senate) Ballot Question 2 (61%) Ballot Question 3 (63%) Proposal 1 (63%) Initiative 148 (62%) Ballot Question 9 (65%) Senate Bill 119 (48-14 House; 25-13 Senate) Senate Bill 523 (36-31 House; 32-3 Senate) Ballot Measure 67 (55%) Senate Bill 0710 (52-10 House; 33-1 Senate) Senate Bill 76 (22-7) HB 645 (82-59) Initiative 692 (59%) Fee $25/$20 $150/$75 $66/$33 $35 * ** $125 $25 No fee TBD7 $100/$25 $25/$10 $200 +fees $200/$20 Possession Limit 1 oz. usable; 6 plants (3 mature, 3 immature) 2.5 oz. usable; 0-12 plants 8 oz. usable; 6 mature or 12 immature plants 2 oz. usable; 6 plants (3 mature, 3 immature) One-month supply (exact amount to be determined) 2 oz. dried; limits on other forms to be determined 6 oz. usable 3 oz. usable; 7 plants (3 mature, 4 immature) 2.5 oz. usable; 6 plants Sixty day supply for personal medical use 2.5 oz. usable; 12 plants 1 oz. usable; 4 plants (mature); 12 seedlings 1 oz. usable; 7 plants (3 mature, 4 immature) 2 oz. usable 6 oz. usable; 16 plants (4 mature, 12 immature) 24 oz. usable; 24 plants (6 mature, 18 immature) 2.5 oz. usable; 12 plants 2 oz. usable; 9 plants (2 mature, 7 immature) 24 oz. usable; 15 plants Accepts other states' registry ID cards? unknown Yes No No No unknown Yes No Yes unknown Yes No No No No No Yes No No
$200/$1008 $75/$10 $50 ***
Source: http://medicalmarijuana.procon.org/view.resource.php?resourceID=000881
Notes: a. Residency Requirement 16 of the 18 states require proof of residency to be considered a qualifying patient for medical marijuana use. Only Oregon has announced that it will accept out-of-state applications. It is unknown if Delaware will accept applications from non-state residents once the program is established. b. Home Cultivation Karen OKeefe, JD, Director of State Policies for Marijuana Policy Project (MPP), told ProCon.org in a Nov. 7, 2012 email that Some or all patients and/or their caregivers can cultivate in 14 of the 18 states. Home cultivation is not allowed in Connecticut, Delaware, New Jersey, or the District of Columbia and a special license is required in New Mexico. In Arizona, patients can only cultivate if they lived 25 miles or more from a dispensary when they applied for their card. In Massachusetts, patients can only cultivate until the department issues regulations unless they get a hardship waiver. Patient Registration Karen OKeefe stated the following in a Nov. 7, 2012 email to ProCon.org: Affirmative defences, which protect from conviction but not arrest, are or may be available in several states even if the patient doesnt have an ID card: Rhode Island, Michigan, Colorado, Nevada, Oregon, and, in some circumstances, Delaware. Hawaii also has a separate choice of evils defence. Patient ID cards are
c.
voluntary in Maine and California, but in California they offer the strongest legal protection. In Delaware, the defence is only available between when a patient submits a valid application and receives their ID card. The states with no protection unless youre registered are: Alaska (except for that even non-medical use is protected in ones home due to the state constitutional right to privacy), Arizona, Connecticut, Montana, Vermont, New Mexico, and New Jersey. Washington, D.C. also requires registration. d. Maryland Maryland passed two laws that, although favourable to medical marijuana, do not legalize its use. Senate Bill 502, the Darrell Putman Bill (Resolution #0756-2003) was approved in the state senate by a vote of 29-17, signed into law by Gov. Robert L. Ehrlich, Jr. On May 22, 2003, and took effect on Oct. 1, 2003. The law allows defendants being prosecuted for the use or possession of marijuana to introduce evidence of medical necessity and physician approval, to be considered by the court as a mitigating factor. If the court finds that the case involves medical necessity, the maximum penalty is a fine not exceeding $100. The law does not protect users of medical marijuana from arrest nor does it establish a registry program. On May 10, 2011, Maryland Governor Martin OMalley signed SB 308, into law. SB 308 removed criminal penalties for medical marijuana patients who meet the specified conditions, but patients are still subject to arrest. The bill provides an affirmative defense for defendants who have been diagnosed with a debilitating medical condition that is severe and resistant to conventional medicine. The affirmative defense does not apply to defendants who used medical marijuana in public or who were in possession of more than one ounce of marijuana. The bill also created a Work Group to develop a model program to facilitate patient access to marijuana for medical purposes. Several states with legal medical marijuana have received letters from their respective United States Attorneys offices explaining that marijuana is a Schedule I substance and that the federal government considers growing, distribution, or possession of marijuana to be a federal crime regardless of the state laws. These letters have caused some states to delay or alter implementation of their medical marijuana programs.
Figure 21: States with Pending legislation for legalizing Medical Marijuana
e.
f.
States With Pending Legislation For Legalizing Medical Marijuana Illinois Mississippi Massachusetts Oklahoma New Hampshire West Virginia New York Kansas Ohio Indiana Pennsylvania Idaho Alabama Missouri Wisconsin Maryland Iowa
Source: Internet and Cohen Research
As per industry data, the observations for medical marijuana users include: 73% of patients are male. Use is heaviest in the 25-44 year age group. Leading indications: o 51% use marijuana as a substitute for prescription medication for significant health cost savings o 82.6% for pain o 70.7% to improve sleep o 55% for relaxation o 41% for muscle spasms o 41% for headaches o 38% for anxiety o 28% for nausea
In order to understand the attractiveness of a new market and its opportunities, it is necessary to understand the current and future size of the market as well as the growth rate of the industry. Since this is a new market industry sources have used three methods to arrive at a figure that will do justice to the potential of the marijuana industry as a whole. The following is cited from an article titled: How Big Is The Marijuana Market?, published on www.cnbc.com on April 20, 2010.
Demand Based Method:

The Demand Based method of estimating the total market size is based on how much volume, how many people consume and at what price. There is no single price or volume that gives us an accurate idea of the total market size. The National Survey on Drug Use and Health states that around 10 percent of the population over the age of 12 years has used marijuana in the past year while 6 percent of the population has used it in any particular month. 15 percent of these monthly users use marijuana on a daily basis. A typical marijuana cigarette contains between 0.5-1.0 grams of the drug and its price for a gram varies from $5 - $20 depending on the origin and the potency of the drug. Based on these figures, we have estimated the demand based market figures to be $10-$40 billion. However the number of users might be underreported since they are collected by the government. Another problem is that the frequency of use and the price of the drug can vary too. A sensitivity analysis to these figures estimates that these numbers can go as high as $100 billion. Supply Based Method: The other method is to infer the total market size from the supply of marijuana in the market. This is done by calculating what percentage do seizures by the US Drug Enforcement Administration and US Customs and Border Protection constitute of the total and then extrapolating the figure to get an overall estimate figure. While consumption figures have remained steady, supply levels, eradications of plants and seizures have continued to grow. Figures from the DEAs National Drug Intelligence Center show a 120 percent increase in
eradications in 2007 compared to 2004. 1.5 million pounds of marijuana was seized in 2008, around 149 percent increase from 2005. A 2006 study Marijuana Production in the United States estimates the total supply of marijuana to be around 22 million pounds in weight. Canada and Mexico harvested another 50 percent of that figure. The average yields for an outdoor plant is around 24 oz. and around 1.5 oz. for an indoor plant. Using the same price ranges and consumption rates as calculated for demand, the market value of the marijuana market jumps up to $120 billion. These figures might be inflated because the weight of the plant, entire plants along with roots as well as the need of the government to show its effectiveness in fighting the war on drugs. Comparison Method: The final method of ascertaining the marijuana market is by comparing it with other vices that are legal and comparable. A comparison with the tobacco and alcohol industries should give a range to the market size that marijuana can grow to. About 52 percent of Americans above the age of 12 years have consumed an alcoholic beverage; 28% of Americans use tobacco in any given month. The use of tobacco by the American population has fallen from 30% in any given month but the use of marijuana has remained constant for the past 10 years and shows only a one percent variation over the last two decades. Similarly alcohol consumption has remained steady around 51%. The November 2009 Standard & Poors industry report states that alcohol and tobacco together generated $263 billion in 2008 of which alcohol industry had a share of $188 billion and tobacco industry contributed $75 billion. The beer industry contributed $99 billion, the spirits industry contributed $61 billion and wine industry contributed $27 billion to the alcohol industry figures. Cigarettes contributed $71 billion in sales to the tobacco industry. The H&HS data suggests that there are nearly 5 smokers to 1 marijuana user. For the marijuana market to be as big as tobacco, marijuana users would need to spend an average of $35 - $40 per day. Such figures suggest that the marijuana market would be smaller than the tobacco market since a typical smoker spends $7 - $8 a pack a day. Taking all three methodologies into consideration, we believe the marijuana market will be between $35 - $45 billion. If an investor believes that marijuana prices are higher and the actual consumption is higher then the market size will be larger. On the other hand, if an investor believes that consumption is unlikely to expand further and prices after legalization will be lower then the market size will be smaller than our estimated figure. While the Food and Drug Administration (FDA) currently denotes hemp based cannabinoids to be food based and legal without a medical marijuana license, it is the past 10 months that have shown definite improvement in the legalization, decriminalisation and implementation of marijuana laws in the US. The recent Gallup polls have given the verdict that approximately 50% of Americans want marijuana to be legalized for the purpose of recreation up from 12% in 1969 whereas a majority of 74% want marijuana to be legalized for medicinal purposes. Not only has the medicinal marijuana movement gained momentum but the support for industrial hemp is also finding takers in the US. The support for legalization of marijuana is based on the two factors of medicinal relief and the possible millions of dollars that states could earn as taxation revenues.
The conservative state of Texas has already proposed a bill short of legalization. The bill states that a person arrested for marijuana can provide evidence that he has been given instructions for marijuana use from a doctor. The bill also provides protection to doctors who have recommended marijuana use. A bill in Hawaii makes the possession of an ounce of marijuana legal for people who are 21 and over. It also allows people to grow a yet unspecified amount of marijuana in a secure place. These benefits come with a system of tax and regulated legal marijuana commerce. Medicinal uses of marijuana has gained wider acceptance in the US but the vote for recreational uses of marijuana is still lacking confidence. We believe that regardless of the manner of use, the support for marijuana will continuing growing and the investment in this industry will increase. The slow growth is a result of investment in a product that is largely illegal but slowly moving to a legal status. Comparing the marijuana industry that could grow to $35-$45 billion to the tobacco and alcohol industry that pays 40%-50% in taxes (sales and excise), it can be expected that the government is looking at $16-$20 billion in taxes. With the burgeoning debt problem that the government faces, it is clear that the government wants to tap into a tax base that will provide consistent as well as large tax revenues. The playing field is developing into one that has positive outcomes for all the parties concerned including investors.
COMPETITION
The Hemp and Cannabis industry is in its nascent stage. However, this industry has a worldwide market without a definite leader. Its growth is becoming more popular worldwide. There are hundreds of businesses and many more potential opportunities that this industry provides. Bloomberg Business estimates that the entirety of the marijuana industry (legal and illegal), on a worldwide basis, exceeds $110 billion. Some of the companies operating in the United States are:
Figure 22: Overview of Publicly Traded Marijuana Stocks
Tranzbyte Corporation OTCBB: ERBB Price: $ 0.0043
Tranzbyte Corporation (www.tranzbyte.com) is a driving force behind Altitude Organic Corporation. The company expects to continue its plan to acquire, hold, or spin out successful divisions in what has been described in previous news releases as "dividend farming," Companies that qualify and decide to become public on their own will agree to carve out shares for Tranzbyte and their ERBB shareholders.
Converted Organics, Inc. OTCBB: COIN Price: $ 0.0022
Converted Organics Inc.'s mission is to promote, develop and operate profitable innovative clean technologies that contribute to the improvement of environment by use of sustainable business practices and the judicious use of natural resources.
Greengro Technologies OTCBB: GRNH Price: $ 0.04
Greengro Technologies is a world class provider of eco friendly green technologies with specific domain expertise in indoor and outdoor agricultural science systems serving both the consumer and commercial farming markets. Its customers include restaurants, community gardens, small and large scale commercial clients.
GW Pharmaceuticals PLC. OTCBB: GWPRF Price: $ 0.77
Operating under license from the UK Home Office, the Company researches and develops cannabinoid pharmaceutical products for patients who suffer from a range of serious ailments, in particular multiple sclerosis and cancer pain. GW has assembled a large in house scientific team with expertise in cannabinoid science as well as experience in the development of both plantbased prescription pharmaceutical products and medicines containing controlled substances. Health Sciences Group, Inc. is an investment technology portfolio company that acquires nascent health sciences technology and related innovations, inventions and IP assets to enhance their growth and development. The company builds revenues and asset value through a model of continuous growth, income from or sale of its portfolio holdings, and technology licensing or distribution agreements.
Health Sciences Group, Inc. OTCBB: HESG Price: $ 0.0001
Fusion Pharm, Inc. OTCBB: FSPM Price: $ 0.21
FusionPharm, Inc. was organized to capitalize on opportunities present in the rapidly growing the $26 billion organic food and specialty herb market. FusionPharm's primary focus is the development and deployment of the patent pending PharmPods advanced hydroponic cultivation systems.
Hemp, Inc. OTCBB: HEMP Price: $ 0.03
HEMP, Inc. focuses on the vast market created by the quickly emerging, and growing, multibillion dollar industrial hemp industry. Hemp, Inc. is not involved in the cultivation or marketing of medical marijuana. The company is building infrastructure with the potential to gain substantial market share before and after industrial hemp prohibition ends.
Medbox, Inc. OTCBB: MDBX Price: $ 27.75
Medbox is a leader in the development, sales and service of automated, biometrically controlled dispensing and storage systems for medicine and merchandise. Medbox has offices throughout the world, including New York, Arizona, Connecticut, Massachusetts, Tokyo, London and Toronto, and has their corporate headquarters in Los Angeles. Medical Marijuana, Inc.'s mission is to be the premier cannabis and hemp industry innovators, leveraging our team of professionals to source, evaluate and purchase valueadded companies and products, while allowing them to keep their integrity and entrepreneurial spirit. MJNA strives to create awareness within the industry, develop environmentally friendly, economically sustainable businesses, while increasing shareholder value. Medical Marijuana Inc. does not grow, sell or distribute any substances that violate United States Law or the controlled substance act. MediSwipe Inc. provides innovative patient solutions for electronically processed transactions within the medical marijuana and healthcare industries. MediSwipe provides terminalbased service packages and integrated Web Portal addons for physicians, clinics, hospitals and medical dispensaries that include: digital patient records, Electronic Referrals, Credit/Debit Card merchant services, Check Guarantee and Accounts Receivable Financing.
Medical Marijuana, Inc. OTCBB: MJNA Price: $ 0.15
MediSwipe, Inc. OTCBB: MWIP Price: $ 0.04
VALUATION
THE COHEN PRICE TARGETTM - $0.22 The Cohen Price TargetTM is a dynamic and logical valuation approach that combines market-based approaches and intrinsic value methodologies. Capital raising and cash are the life blood of any micro-cap/small cap Company. Hence, the Cohen Price TargetTM includes four components, 25% equal weighted that together reflect and are based on the Companys ability to raise capital for growth. The four components used in our price index are: Price-to-Earnings ratio (P/E), Cohen Price-to-Capital Employed ratio (P/CE) (Both Market based valuation approaches), Cohen Discounted Cash Flow (DCF) method (Theoretically an Intrinsic Value based approach) and Cohen Price Performance Index. Note: Our above price targets are based on the financial forecast and intrinsic value of the stock. In case of a possible acquisition of PHOTs assets by a larger industry player, we believe investors can expect a large premium. In the case of an exit from either of its investments at attractive valuation, shareholder value would increase. Our formula for The Cohen Price TargetTM is shown below.
Figure 23: The Cohen Price Target
TM
Formula
Price toEarnings(P/E) EarningsPerShare 2016Forecasts IndustryAverage Future P/ERatio DiscountFactor PricebasedonP/ERatio Price toCapitalEmployed(P/CE) Capital Employed IndustryAverage P/CERatio DiscountFactor PricebasedonP/CERatio CohenDiscountedCashFlowModel CohenDCFValueBaseCase CohenPerformance Index CohenPrice Performance Index Value CurrentStockPrice PricebasedonCohenPerformanceIndex CohenPrice IndexTarget CurrentPrice Upside/(Downside)Potential
in$ 0.01 41.35 0.72 0.21 in$ 0.07 6.19 0.72 0.32 in$ 0.29 in$ 82.5% 0.04 0.07 0.22 0.04 456.2%
Grass Roots Research and Distribution, Inc. Figure 24: Cohen Discounted Cash Flow
TM
Range of Target Price vs. LongTerm Growth Rates

1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10
in US $
Range of LongTerm Growth Rates 4.0% 0.31 0.19 0.08 5.0% 0.37 0.23 0.10 6.0% 0.47 0.29 0.13 7.0% 0.62 0.39 0.18 8.0% 0.94 0.60 0.28
Optimistic Case Base Case Pessimistic Case
Range Target Price vs. Cost of Equity

1.20 1.00
in US $
0.80 0.60 0.40 0.20 Range of Cost of Capital 12.0% 0.28 0.17 0.07 11.0% 0.35 0.22 0.10 10.0% 0.47 0.29 0.13 9.0% 0.66 0.41 0.19 8.0% 1.04 0.66 0.31
Optimistic Case Base Case Pessimistic Case

CONCLUSION
GrowLife, Inc., is an exciting Company comprised of a diversified portfolio of products, services, technology and businesses focused on the marijuana industry. GrowLife companies manufacture and supply branded equipment and expendables that promote and enhance the characteristics of quality and quantity of indoor and outdoor urban gardening. GrowLife is in a unique position to leverage industry relationships, state-of-the-art innovations, and equity to develop a fully integrated lifestyle brand through acquisitions and internal growth entirely dedicated to the cannabis and marijuana industry. With many states rapidly adopting laws for medical access, and the potential message within President Barack Obamas announcement regarding the Federal Governments priorities - it would appear that the industry has progressed to a point of acceleration. A nascent national medical marijuana industry, fueled by legalization in 18 states plus the District of Columbia, is in the midst of unprecedented development and growth. Unlike other industries, the marijuana industry does not face the problem of whether the consumer will accept the product. Demand is very strong. It faces issues regarding the regulation and legalization of the use of marijuana. Simply put, there is no inherent risk in acceptance and consumption of the product. The wholesale legalization of marijuana, whereby the cultivation, sale and distribution is regulated similarly to alcohol or tobacco, is highly enticing and necessary for cash-strapped municipalities and state governments. We believe the Companys fully integrated business model that features a combination of core technologies, retail sales channels, and wholesale relationships provides a perfect platform to be at the forefront of the nascent but growing industry. Further, the strong and experienced management team, financial capabilities, robust projected revenue streams and growth potential in its marketplace makes the stock a valuable investment proposition. GrowLife, Inc. provides an exciting potential short term trade and long term investment opportunity for long term risk-averse investors.
RS/Grass Roots Distribution Research and Distribution, Inc.
MANAGEMENT BIOS
The PHOT team is an impressive mix of highly skilled professionals and industry veterans in their respected fields. This team has several years of professional working experience with industry and world authorities on marijuana and cannabis, evaluate, acquire and develop value added companies and products. By leveraging its managements experience and exciting business model, PHOT is able to provide an unparalleled platform of businesses that are unique among industry competitors. We have spoken with other management teams in the industry. PHOTs management professionals are more highly qualified than those we have interviewed.
Executive Management Team Sterling Scott, CEO & Chairman Sterling Scott has served as the Chairman and CEO of GrowLife Inc. since April of 2012. As a former Federal regulatory attorney he brings a refreshing level of credibility to a fragmented industry with exponential growth potential. Scott brings nearly 30 years of experience in managing businesses and practicing business law to GrowLife. BA in Social Sciences from Shimer College and a JD from DePaul University. Previously an associate and partner with acclaimed Jenner & Block in Washington D.C., as well as becoming a member of the Senior Management Team for Technical Management Services Company (TAMSCO). He has a successful M&A track record, having assisted with transactions as high as $100 million.
Kyle Tracey, Interim President Strategically appointed as interim President of GrowLife, Inc. for his industry credentials, work ethic, and capacity to innovate, market, and sell hydroponic equipment. Mr.. Tracey has been serving the company as President of GrowLife Productions, Inc. Kyle Tracey delivers the imperative contacts and respect to achieve market penetration for GrowLife brands and sales channels (brick-and-mortar stores or online properties). BA in Business Management from the University of Rhode Island.
Kyles association and experience with High Times Magazine, live event promoters Guerilla Union and Live Nation, and entertainment industry powerhouse Sony Pictures Classics, all have the potential to position GrowLife business units for expansive sponsorship opportunities and market penetration.
IMPORTANT COMPANY NEWS

GrowLife Reports 725% Increase in Quarterly Revenue GrowLife, Inc. (OTCQB: PHOT), a provider of highly effective indoor growing technologies and unique lifestyle brands, is pleased to announce the timely filing of its First Quarter, 2013, financial results for the quarter ending March 31, 2013. The full 10Q filing is available at www.GrowLifeInc.com or on the SECs website http://edgar.sec.gov/. Growlife Inc Signs LOI To Acquire Hydroponics Store Chain Rocky Mountain Hydro, Evergreen Garden Centers And 58Hydro.com Growlife Inc announced that it has signed a letter of intent (LOI) to acquire Rocky Mountain Hydroponics, LLC., Evergreen Garden Center, LLC. and 58Hydro.com (EGC) in a transaction that involves a combination of common stock, debt securities and cash. Financial terms of the transaction were not disclosed. Growlife Inc Announces Strategic Alliance To Begin Production Of Medical Cannabis Grow Chambers Growlife Inc announced that it has entered into a strategic alliance with GrowOpp, LLC, a Nevada based company, for initial production of the MEDIGROW climate controlled grow chambers for production of medical grade organic cannabis. GrowLife and GrowOpp, LLC have agreed on cross licensing and incentives to produce the initial MEDIGROW production units. MEDIGROW's will be available for sale or lease only in States with legal medical marijuana programs. Growlife Inc Signs Distribution Deal With Major Home Kitchen Brand Growlife Inc announced the signing of their first North American distribution deal with at-home gardening brand, Urban Cultivator earlier. Urban Cultivator offers a distinct line of products for at-home gardeners that focus on bringing fresh micro greens, herbs and leafy produce to families around the globe. Offered in both residential and commercial capacities, the company's automated and user-friendly machines are designed to promote year-round agricultural sustainability for users of all types. Finally, the firm also provides extremely helpful and informative customer service base as well, for all users who have questions or would like to be taught how to grow their own. Phototron Holdings Inc Announces Name Change To GrowLife And Outlines Recent Accomplishments Phototron Holdings Inc announced that effective August 6, 2012, it has changed its name to GrowLife, Inc.
THE COHEN PRICE TARGETTM

The Cohen Price TargetTM is derived using a combination of academic and market-based valuation approaches. The following four equal weighted (25%) components used in calculating our target price, include the assumption of capital raised: 1. The first 25% equal weighted component: is the market multiple based valuation methodology. This method uses the industry average 2011E Price-to-Earnings ratio to calculate the potential stock price (and/or price to Book if an asset based Company). We take the average Price-to-Earnings multiple of a given industry. This means that, on an average, stocks in this industry should currently trade at a multiple times their 2011 expected earnings. These earnings are usually only generated by a small Company raising cash to meet its master budget. The index, therefore, reflects capital invested in any micro/small cap Company. 2. The second 25% equal weighted component: Cohen Capital Employed based valuation. Most start-up and micro/small cap companies require significant capital to meet our projections. Our Cohen Price TargetTM reflects the Companys ability to raise additional capital. Based on our capital projection and long-term price target from our Cohen DCFTM valuation model, we derive a Price-to-Capital Employed ratio. We then multiply this ratio with our capital employed per share assumption to derive this target price.
3. Our third 25% equal weighted component is our use of the Cohen Price Performance IndexTM, which calculates the average price increase of all the stocks covered by Grass Roots Research and Distribution Inc. and Cohen Research after their release. Currently, for the period ending December 8, 2012 the Cohen Price Performance IndexTM is up by 82.5%, meaning that we expect the stock to follow the same trend and rise by 82.5%. To date, since May 2009, 96.2% of all of our stocks post report release have traded above the price of our initiate coverage report within 20 days. The Index assumes that all of its companies had capital employed in each Company.
4. Our fourth 25% equal weighted component is our Cohen Discounted Cash Flow (DCF) method of valuation. Our Cohen DCFTM valuation includes a complex trademarked formula proprietary to our firm, which includes an assumed long-term sustainable growth rate, cost of capital and assumed capital invested in a given Company. Our DCF price target values a Company today, based on projections of how much future cash will be generated from a given Company. We assume that a Company is worth all of the cash it can make available to investors in the future. It is called discounted cash flow because cash in the future is worth less than cash today, and therefore must be discounted to today. We forecast various line items including assuming a given amount of capital is raised, to calculate the free cash flow we project a Company to generate during our 5 year forecasted time period. If a Company does not raise our estimated cash requirements, it is highly unlikely to reach our forecasts and can go out of business. After using a formula to discount free cash flow, we divide the total forecasted equity of the Company by the shares of stock outstanding to calculate our Cohen DCFTM valuation, or theoretical price per share target. We believe the Cohen DCFTM formula is a more accurate measurement of operating cash than the
traditional DCF used by most Wall Street research analysts. A DCF, or 5 year forecasted free cash flow projection, cannot be calculated without forecasting the three statements (IS,BS,CF) for 5 years. We are the only firm in the investor awareness industry that forecasts all of our companies for 5 years in three assumed cases. We believe this in depth level of securities analysis is a must for all of our companies, and is a foundation of the Cohen Research MethodTM.
Capital raising and cash are the life blood of any micro-cap/small Company. Our Cohen Price TargetTM includes 4 components, 25% equal weighted, that together reflect capital is raised in our client companies. Our components are trademarked and proprietary to our firm, as is the Cohen Performance IndexTM. Most micro/small cap companies have difficulty raising sufficient funds to reach our theoretical forecasts; hence there is considerable risk for any investor. While we do not give investment advice, any Company that cannot raise adequate capital to finance its business model is a highly risky investment, short term or long term. Investment awareness campaigns also affect our price targets. Do not rely on our price targets because they are based on academic theory. Do your own research or consult with your investment professional.
Price Targets
Price targets can be heavily influenced by investor awareness campaigns. In general, we observe the more money spent on such campaigns, the greater the probability for short term price increases post report release. Our price targets assume capital raising and forecast 5 year Income Statement, Balance Sheet and Cash Flow statements. In a perfect world, these assumptions may be realized. We do not give investment advice. However, in the practical/real world, it is very difficult for a small Company to reach our theoretical 5 year projections. We are not aware of any research firm that forecasts the three statements (IS, BS, CF) in 3 cases for 5 years. We believe our price targets are unique to the body of knowledge in the field of securities analysis.
Note: How we calculate our Price Targets

We further explain our Cohen DCF, which is an important 25% component of The Cohen Price Target. The Cohen Discounted Cash Flow Analysis (DCF) creates a price target and values a Company today, based on projections of how much future cash will be generated from a Company. Our DCF analysis assumes that a Company is worth all of the cash that it can make available to investors in the future. It is called discounted cash flow because cash in the future is worth less than cash today, and therefore must be discounted to today. We forecast various line items including assuming capital is raised, to calculate the free cash flow we expect a Company to generate during our 5 year forecasted time period. After using a formula to discount free cash flow, we divide the total forecasted equity of the Company by the shares of stock outstanding to calculate our Cohen DCF (Discounted Cash Flow) valuation, or theoretical price per share target. We believe our Cohen DCF is a more accurate method of calculating operating cash. We forecast three assumed price targets because companies change during 5 years, Base Case, Optimistic Case, and Pessimistic Case.
Note: What is our formula used to calculate our DCF, the Cohen Price Target?
Some line items include free cash flow to the firm, the weighted average cost of capital, assumption of capital raised and capital spent, and the total enterprise value of the business less its debt, total equity value, total shares outstanding, and our projected price per share. A DCF cannot be academically calculated without projecting the 5 year cash flow statement.
Risks of the Cohen Price Target

Our Price Targets assume capital will be raised in our four components, or 100% of the Cohen Price Target. The majority of micro-cap/small cap companies need capital to reach our 5 year sales and cash flow projections. In the academic world, The Gordon Growth Model justifies an analysts decision to forecast for 5 years. We forecast the three statements for 5 years in 3 cases. However, in the practical/real world, buying a micro-cap stock based on 5 year forecasting is highly risky. If smaller companies are able to raise capital, our theoretical price targets in a perfect world might be justified, providing the Company executes on its business model. If an investor believes that a given Company cannot raise the necessary capital to reach our projections, then any investment becomes highly risky. The investor should consider all of the possibilities of any given Company being able to raise capital and execute over 5 years. Few micro to small cap companies are able to raise enough capital and execute over an extended period of time, primarily due to competition, management competence, access to capital and continued execution of their master plan, agenda and budget. Our price targets are academic theory and should not be relied upon. Investors should do their own research and consult with their financial consultants.
FINANCIAL EXHIBITS

Base Case
Income Statement
all figures in $ million Revenues Total Cost of Goods Sold Gross Profit 2012 1.5 1.0 0.4 2013 F 5.4 3.6 1.8 2014 F 10.9 7.3 3.6 2015 F 19.0 12.8 6.3 2016 F 30.5 20.4 10.0 2017 F 45.7 30.6 15.1 2018 F 61.7 41.3 20.3 2019 F 77.1 51.6 25.4
Expenses Selling, General and Admin Expenses 1.7 Total Expenses 1.7 Operating Profit/ EBITDA
2.7 2.7
3.7 3.7
4.6 4.6
5.5 5.5 4.6 0.5 4.1 0.0 4.0 0.8 3.2 459.7 459.7 0.01 0.01
6.3 6.3 8.8 0.6 8.1 0.0 8.1 1.6 6.5 459.7 459.7 0.01 0.01
6.9 6.9 13.4 0.8 12.6 0.0 12.6 3.8 8.8 459.7 459.7 0.02 0.02
7.6 7.6 17.8 0.9 16.9 0.0 16.9 3.4 13.5 459.7 459.7 0.03 0.03
(1.3) (0.9) (0.1) 1.7
Depreciation and Amortization 0.0 0.1 0.3 0.4 Earnings Before Interest and Tax (1.3) (1.0) (0.3) 1.3 Interest Expense, Net Other Income (Expenses), Net Profit Before Tax Taxation Expenses (Recovery) Net Profit/Loss for the period Shares Outstanding Basic Shares Outstanding Diluted EPS Basic EPS Diluted 0.4 0.1 0.1 0.1 (0.5) (2.2) (1.1) (0.4) 1.3 0.3 (2.2) (1.1) (0.4) 1.0 245.4 245.4 439.7 439.7 459.7 459.7 459.7 459.7
(0.01) (0.00) (0.00) 0.00 (0.01) (0.00) (0.00) 0.00
Balance Sheet
all figures in $ million ASSETS Cash and Cash Equivalents Accounts Receivable Other Current Assets Inventory Total Current Assets Property, Plant and Equipment, Gross Accumulated Depreciation Property, Plant and Equipment, Net Investments Other Assets Total Assets LIABILITIES Accounts Payable & Liabilities Other Short term Liabilities Current Portion of Debt Instruments Total Current Liabilities Convertible Notes Payable Total Liabilities 2012 0.1 0.0 0.0 0.4 0.5 0.0 0.0 0.0 0.5 0.3 1.3 2013 F 1.0 0.8 0.1 0.7 2.6 0.5 0.1 0.4 3.0 0.3 6.3 2014 F 1.7 1.6 0.1 1.5 4.9 1.0 0.4 0.6 5.5 0.5 11.6 2015 F 0.8 2.9 0.1 2.6 6.3 1.5 0.8 0.7 6.5 1.0 14.5 2016 F 0.5 4.6 0.1 4.1 9.3 2.0 1.3 0.7 7.0 1.2 18.3 2017 F 2.0 6.9 0.2 6.1 15.1 2.5 1.9 0.6 9.5 1.8 27.1 2018 F 6.1 9.2 0.2 8.3 23.7 3.0 2.7 0.4 12.0 2.5 38.6 2019 F 15.0 11.6 0.2 10.3 37.1 3.5 3.6 (0.0) 14.5 3.1 54.7
0.3 0.1 0.2 0.5 1.1 1.6
1.3 0.1 0.3 1.7 1.1 2.8 0.0 0.0 7.6 (4.2) 3.5 6.3
2.2 0.2 0.3 2.6 0.8 3.4 0.0 0.0 12.6 (4.6) 8.1 11.6
4.3 0.2 0.3 4.8 0.5 5.4 0.0 0.0 12.6 (3.6) 9.1 14.5
5.1 0.3 0.3 5.6 0.3 5.9 0.0 0.0 12.6 (0.3) 12.3 18.3
7.7 0.3 0.0 8.0 0.2 8.2 0.0 0.0 12.6 6.1 18.8 27.1
10.3 0.3 0.0 10.7 0.2 10.9 0.0 0.0 12.6 15.0 27.7 38.6
12.9 0.4 0.0 13.3 0.2 13.5 0.0 0.0 12.6 28.5 41.2 54.7
Preferred Stock 0.0 Common Stock 0.0 Additional Capital 2.6 Retained Earnings (3.0) Total Shareholders Equity (0.3) 1.3 Total Liabilities, Shareholders Equ
Cash Flow Statement

all figures in $ million Operating Activity Net Income 2012 2013 F 2014 F 2015 F 2016 F 3.2 2017 F 6.5 2018 F 8.8 2019 F 13.5 (1.1) (0.4) 1.0
Adjustments to Reconcile Cash Flows Depreciation and Amortization Other Adjustments Changes in operating assets and liabilities: Accounts receivable Deposits Other assets Accounts payable Accrued liabilities Other liabilities Change in Working Capital Cash Flow from Operating Activities
0.1 (0.8) (0.1) (0.4) 1.0 0.1 0.1 (0.1) (1.1)
0.3 (0.8) (0.0) (0.7) 0.9 0.0 (0.6) (0.7)
0.4 (1.2) (0.0) (1.1) 2.1 0.0 (0.2) 1.2
0.5 (1.7) (0.0) (1.5) 0.8 0.0 (2.5) 1.3
0.6 (2.3) (0.0) (2.0) 2.6 0.0 (0.2) (2.0) 5.1
0.8 (2.4) (0.0) (2.1) 2.7 0.0 (0.0) (1.9) 7.7
0.9 (2.3) (0.0) (2.1) 2.6 0.0 (0.0) (1.8) 12.6
Investing Activity Expenditures for property, plant and equipment (0.5) (0.5) (0.5) (0.5) (0.5) (0.5) (0.5) Other Longterm assets (2.5) (2.8) (1.4) (0.8) (3.1) (3.1) (3.1) Cash Flow from Investing Activities (3.0) (3.3) (1.9) (1.3) (3.6) (3.6) (3.6) Financing Activity Proceeds from or repayment of debt Proceeds from issuance of common stock Cash Flow from Financing Activities Effect of Foreign Exchange Net Change in Cash Opening Cash Balance Ending Cash Balance
5.0 5.0 0.9 0.1 1.0
(0.3) (0.3) (0.3) (0.0) (0.0) (0.0) 5.0 4.7 (0.3) (0.3) (0.0) (0.0) (0.0) 0.7 1.0 1.7 4.1 2.0 6.1 9.0 6.1 15.0
0.1
(0.9) (0.3) 1.5 1.7 0.8 0.5 0.8 0.5 2.0
Cohen Research and Grass Roots Research Current Rating Distribution
Meaning of Ratings Speculative Buy

The Company may be a short term trade or a long term investment provided it raises adequate capital to reach our theoretical price targets. Our price targets are academic theory and should not be relied on. All equities, especially micro cap stocks have significant downside risk, high volatility and can continue to trade at a discount to its market.
Neutral
No recommendation; for information only.
Sell
Our analysts view is that the Company is significantly overvalued based on its current status. The future of the Companys operations may be questionable. There is a very high level of investment risk relative to reward.
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The reader acknowledges that GRRD will not be liable to any person or entity for the quality, accuracy, completeness, reliability or timeliness of Information in this commercial advertisement, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of Information, products or services from any person or entity including but not limited to lost profits, loss of opportunities, trading losses, and damages that may result from any incompleteness or inaccuracy in any of GRRDs profiled companies of the disseminated Information. GRRD does not undertake any responsibility whatsoever for updating the Information contained in its prior publications. GRRD analysts rely on information provided to them by issuing companies. This information may or may not be accurate or truthful. GRRD and its analysts are limited in validating, quantifying and researching such distributed information. GRRD does not undertake any responsibility or liability whatsoever for any forward looking statements or any legal obligation whatsoever for updating the Information. Quality of Information GRRD outside analysts rely on Information from the issuing companies. This Information is provided to GRRDs analysts for writing their commercial advertisements. This Information may include SEC filings, public available Information and other Information provided to them by the issuing companies. (a) This Information may or may not be accurate or truthful. GRRD and its analysts have no access to this Information beyond an issuing Companys providing such Information to GRRD analysts. (b) GRRD does not independently verify or assert the truthfulness, completeness, accuracy or reliability of the Information. (c) Because the Information is presented on an as is basis, your use of the Information is at your own risk. (d) GRRD disclaims, expressly and impliedly, all warranties of any kind, including those of merchantability and fitness for a particular purpose or whether the Information is accurate or reliable or free of errors. (e) Statements contained in the Information that are not historical facts are forward looking statements that involve risks and uncertainties as indicated by words such as believes, expects, estimates, may, will, should or anticipates or similar expressions. These forward looking statements may materially differ from the Issuers presentation of Information to GRRD analysts, and actual operational and financial results or its actual achievements, claimed or otherwise. (f) Reading our commercial advertisements alone (including other reasons cited herein) should never be used as the sole basis for making an investment decision. We urge you to use the Information (if you find such Information to be useful) only as a starting point for your further investigation and research. Consult with your investment or financial adviser, attorney or other counselor as to the advisability of taking any actions including buying or the selling of securities. Do your own research. Corporate, Third Party and Promotional Firms Activities GRRD disclaims and is not a part of or connected to any corporation or third party IR, PR or investor awareness firms methods of operation, distribution, programs, inner workings and use of GRRDs research materials. (a) GRRD may act as an independent non-affiliated subcontracting vendor of research materials to certain third parties. (b) All GRRD subcontracted vended research materials become assets of a paying third party client to use at their choice, and do not represent in any way GRRDs endorsement or participation in any third partys programs. GRRD is not a part of, connected to or responsible for any content, associated links, resources, or services associated with any third party website or means of communication. (c) GRRD is not a part of or connected to any and all potentially illegal corporate, third party outside communications of all types, including outside trading activities. (d) GRRD has no knowledge or inside Information or participation in any illegal activities, including illegal trading, of any of its profiled companies or third party clients. (e) Such activities might include: causes of potential bankruptcy, fraud, fraudulent and false dissemination of Information and other dissemination of Information, insider trading, corporate and third party non-disclosure, illegal trading, trading manipulation, other legal issues and regulatory violations. (f) Certain content in our releases or website may be written, edited and published by our clients or third parties. Our releases and website may contain the symbols of companies and/or news feeds about companies that are not being profiled by us but refer to certain activity in the micro cap or penny stock market that we have profiled or are currently highlighting. Readers are advised that all reports and news feeds are issued solely for informational purposes. (g) Our profiled companies on our website may not have approved certain or any statements within the website or research reports. (h) This release may provide hyperlinks to third party websites or access to third party content for which we are not responsible. (i) By accessing, viewing, or using our website, release or communications originating from this commercial advertisement, you agree that you alone are entirely responsible for your investment decision(s). (j) GRRD and its outside sources have no firsthand knowledge of any profiled Company or third partys capabilities, intent, resources, financing, operations, politics, inner workings, plans, management competence and decisions, internal corporate and third party goals, legal compliance, historical activities, ethical standards, or their ability to reach their corporate or third party goals. Readers Due Diligence and Regulatory Sources The Information should only be used, at most, and if at all, as a starting point for Readers to conduct a thorough investigation of the Profiled Company and its securities, to consult with their financial, legal or other advisor(s) and avail themselves of filings and Information that may be accessed at www.sec.gov . or www.picksheets.com or other electronic medium, including: (a) Reviewing SEC periodic reports (Forms 10-Q and 10-K), reports of material events (Form 8-K), insider reports (Forms 3, 4, 5 and Schedule 13D); (b) Reviewing Information and Disclosure Statements and unaudited financial reports filed with the Pink Sheets; (c) Obtaining and reviewing publicly available Information contained in commonly known search engines such as Google; and (e) Investment guides at www.sec.gov and www.finra.com pertaining to the risks of investing in penny stocks. The SEC has published an investor-focused
Grass Roots Research and Distribution, Inc. website to help your due diligence and protect you against fraud at www.investor.gov. FINRA has published information on its website outlining how to invest carefully at www.Finra.org/investors/index.htm. Readers Risks You agree that you alone, Readers of our commercial advertisements and users of our website must evaluate and bear all the risks associated with the Information, including reliance on its accuracy, completeness or usefulness. In all instances, the Reader should conduct further inquiry into the Profiled Company and its securities. The Profiled Companies are subject to possible risks, including but not limited to: (a) The Information pertains to penny stocks that are subject to the SECs penny stock rules and commonly involve a high degree of risk that may result in the loss of some or all of an investment in the Profiled Companys securities; (b) The Issuers penny stock may be thinly traded, which may lead to difficulties of selling its securities; (c) The SEC reporting issuer may be delinquent (not current) in its periodic reporting obligations (i.e., in its quarterly and annual reports) or the Pink Sheet quoted Company may be delinquent in its Pink Sheet reporting obligations as indicated by Pink Sheets New Services posting a negative sign pertaining to the Issuer at www.pinksheets.com , as follows: (i) Limited Information for companies with financial reporting problems, economic distress, or that are unwilling to file required reports with the Pink Sheets; (ii) Pink Sheets No Information, which indicates companies that are unable or unwilling to provide disclosure to the public markets, to the SEC or the Pink Sheets; and (iii) Caveat Emptor, signifying Buyer Beware that there is a public interest concern associated with a Companys illegal spam campaign, questionable stock promotion, known investigation of a Companys fraudulent or alleged fraudulent activities or its insiders, regulatory suspensions or disruptive corporate actions; Risks of Small Companies (d) If the Issuer is a development stage Company with little or no operations, the securities should be considered extremely speculative for investment purposes; (e) Many companies that have their securities quoted on the OTCBB or Pink Sheets (as well as Exchange listed companies) have been negatively affected by the economic downturn, the general economy and the lack of adequate financing to meet their operational goals or expansion plans; (f) Many of the energy related and other Profiled Companies are subject to increasing environmental and other governmental regulations, which subjects them to significant costs and possible fines and liabilities for failure to comply with applicable state and federal statutes; (g) The future success of many OTCBB and Pink Sheet quoted Issuers is dependent upon receiving adequate financing or raising sufficient capital, which they may be unable to obtain; Conflict of Interests Risks (h) There is an inherent and actual conflict of interest that exists between our Readers interests and GRRDs interests because GRRDs owners may(i) Receive the Shares as compensation for disseminating the Information and thereafter sell those Shares at before, during or after a commercial advertisement release, or at any time for monetary gain, and (ii) Buys and sells the Profiled Companys shares in the open market shortly before, during or after the dissemination of the Information or at any time; (i) We do not receive any direct verification from the Issuer regarding the Information; (j) A third party shareholder may have a potential or actual conflict of interest in paying GRRD for the dissemination of the publication while still holding the Issuers shares of common stock that he or she may sell after the third party shareholder has paid GRRD with his or her shares; Stock Comparison Risks (k) The comparisons we provide in our Featured Reports under Similar Companies in Sector should not be interpreted in any shape, form or manner whatsoever as an indication of the Issuers future stock price or future financial performance since, among other reasons, such comparison companies may be listed on Exchanges (i.e., the New York Stock Exchange, NASDAQ, American Stock Exchange) and trade at stock prices that may be thousands of percent higher than the companies we profile; and (l) Readers may encounter difficulties determining what Information contained in our publications is material or non-material making it all the more imperative that they conduct further investigation of the Profiled Company and its securities; and Other Risks (m) We may hire independent third party Service Providers in group distribution investment awareness firms campaigns, aka quarterback campaigns and other providers, to electronically disseminate live news regarding the Issuer, Information over which we have no control. We pay cash consideration to the Service Providers; no securities compensation is paid to the Service Providers. (n) The Penny Stock Market is highly volatile and carries a high degree of risk. Penny stocks can be short term trades or long term investments provided client companies have enough cash or are able raise sufficient cash to reach their business objectives. (o) Our Profiles, commercial advertisements and other Information regarding the profiled Issuers may include recommendations regarding positive or negative short term trading results or long term investment strategies providing that issuing companies have or must raise sufficient capital to reach our price targets, the interpretations of which are subject to various risks. Short term trading results and long term investment may result in positive or negative results. Short term trading results ultimately defy exact, or even approximate predictable results of an Issuers long term trading results. Do not rely on these recommendations; (p) Note that some of the stocks in which we disseminate Information are not stocks for which we have received any compensation. Profiled Companies and Non-Client Profiled Trading GRRD, its associates, consultants, affiliated entities, officers, employees, independent contractors, family and friends and directors can trade, buy and sell Profiled and non client profiled companies and may buy and sell the Shares in the open market of profiled and non profiled client companies at any time before, during or after the dissemination of the Information or for general non client profiled companies trading purposes at any time. These trading activities may cause significant volatility in the Issuers stock price or non client profiled Companys stock price, and/or significantly depress or increase the Issuers or non-profiled client Companys stock price. GRRDs selling of an Issuers securities for both profiled and non client profiled companies may cause its stock price to significantly decline, especially when such securities are thinly traded. Because we disseminate the Information about various issuers and their securities, the price and trading volume of such securities may increase or decrease by hundreds or thousands of percent from the Information that we disseminate in our publications. We may simultaneously or at any time sell those same securities or other non client profiled companies that result in stock price increases or decreases and volume increases or decreases for substantial profits or losses, including the sale of millions of shares of our securities
Grass Roots Research and Distribution, Inc. compensation and/or buying the same securities in the open market. GRRD may at times receive its compensation in free trading shares or Rule 144 shares of stock for its associates, consultants, affiliated entities, officers, employees, independent contractors and directors and family. GRRD and immediate family members may sell the Shares of profiled or non-profiled client companies immediately upon their receipt as well as during the dissemination of such Information or within hours, days, weeks or months thereafter, during before or after a commercial advertisement is released, or buy and sell securities for non client profiled companies in individual trading accounts or accounts in which the individual is the beneficiary. As a result, GRRDs selling activities may cause significant volatility in the Issuers stock price and/or significantly depress the Issuers stock price. We Do Not Provide Investment Advice We do not hold ourselves out to the public as an investment adviser and do not otherwise act in the capacity of an investment adviser because we do not engage in the business of advising others as to investing in, purchasing, or selling securities or otherwise acting in the capacity of an investment adviser or performing any of the activities as follows: (a) we provide no financial planning type services to our Readers or any persons; (b) we do not manage financial resources on behalf of any person, including financial management based upon analyzing individual client needs; (c) we do not provide any person with general recommendations for a course of activity or specific actions to be taken by a person or client; (d) we do not provide any advice to our Readers or any other persons recommending allocation of certain percentages of assets to stocks, penny stocks, life insurance, high yielding bonds, mutual funds, or other securities; (e) we do not provide any of our Readers or any persons with tax or estate plans to their individual needs; (f) we do not provide financial programs for our Readers or any other persons because we do not engage in any of the foregoing activities. You should not interpret any of the Information even remotely as investment advice. Research Risks, Suitability and Price Targets Investing in micro cap and small cap securities is speculative and carries a high degree of risk. Investors can lose their entire investment. Investors should understand that statements regarding future prospects may not be realized. GRRD does not supervise any outside analyst and does not guarantee any commercial advertisement to be error-free or factually accurate. Commercial advertisements include forecasted valuations and forecasted price targets that are accepted securities analysis protocol in the academic community. There is no guarantee that the predicted business results for the Company will be met. Under NASD Rule 2711, GRRD is not defined as a financial analyst. Conclusions prepared by outside analysts are deemed to be reasonable at the time of issuance of the report. All decisions are made by the outside analyst and are independent of outside parties and third parties or influence. Neither the analysts compensation nor the compensation received by GRRD is related to the specific recommendations or views contained in this commercial advertisement or note, nor is it related to price performance or volume of shares traded in the referenced security. GRRD or its affiliates may from time to time perform consulting or other services for, or solicit consulting or other business from any entity mentioned in this commercial advertisement. Consulting agreements that GRRD may have with a given Company are not related to, linked or connected to commercial advertisements or their distribution. This commercial advertisement does not have regard to the specific investment objective, financial situation, suitability, and the particular need of any specific person who may receive this commercial advertisement. Investors should note that income from such securities, if any, may fluctuate and that each securitys price or value may rise or fall substantially. Accordingly, investors may receive back less than originally invested, or lose their entire investment. Past performance is not indicative of future performance. GRRD has not entered into a soft dollar agreement with the referred to Company. GRRD does not currently have an investment banking relationship or a finders fee agreement with the Company. The Private Securities Litigation Reform Act of 1995 The Private Securities Litigation Reform Act of 1995 provides investors a safe harbor in regard to forward-looking statements. GRRD cautions all investors that such forward-looking statements in this commercial advertisement are not guarantees of future performance. Unknown risk, including bankruptcy, uncertainties, fraud, stock manipulation as well as other uncontrollable or unknown factors may cause actual results to materially differ from the results, performance or expectations expressed or implied by such forward-looking statements. Smaller companies may have a higher likelihood of filing for bankruptcy. Investors are urged to do their own research regarding the dangers of a potential bankruptcy filing. The enclosed researched Company may have to raise additional capital to remain solvent and to meet forecasted valuation and price projections in this commercial advertisement. Investor awareness distribution programs can materially affect the price of the Companys stock. GRRD assumes no responsibility and no liability for any corporate Press Release or any third party promotion. GRRD performs and participates at times in investor awareness programs. When used, the words anticipate, believe, estimate, expect, and similar expressions as they relate to the Company or its management are intended to identify such forward-looking statements. The Companys actual results, performance or achievements could differ materially from the results expressed in, or implied by these forward looking statements. GRRD distributes its research reports through a research distribution network and by investor awareness commercial advertising programs to various types of investors. Recipients of such distribution may be short term investors such as day traders, traders, retail investors, institutions, and/or long term retail and institutional traders and investors. Recipients may create volatile trading prices. GRRD reserves the right, in its sole discretion, at any time, and without any obligation, to make improvements to, or correct any error or omission(s) in any portion of the service or the materials. The service and the materials are provided by GRRD on an as is basis. GRRD expressly disclaims any and all warranties, express or implied, including without limitation warranties or merchantability and fitness for a particular purpose, with respect to the service or any materials and products. Regulation GRRD complies with current securities laws, regulations and ethical standards as related to GRRDs compliance requirements. This commercial advertisement has been prepared in accordance with the SECs rules and amendments, Oct 23, 2000, regarding 17 CFR Parts, 240, 243 and 249, (Selective Disclosure and Insider Trading), Rules 27A of the Securities Act of 1993, Section 21E of the Securities Exchange Act of 1934, Regulation FD (Fair Disclosure), 10b5-1, 10b5-2, NASD Rules 2250, 2420, 2710 and 2711 and the Can-Spam Act of 2003. Compensation Because we receive compensation for GRRDs dissemination of the Information, our publicly disseminated publications should not be regarded in any manner whatsoever as independent. GRRD is sometimes paid for commercial advertisements and distribution in cash, stock, Rule 144 stock, warrants, options or other securities in lieu of or in addition to GRRDs stated compensation schedule. This compensation and ownership of securities of a clients
Grass Roots Research and Distribution, Inc. common stock constitutes a conflict of interest as to our ability to remain objective in our communication regarding our profiled companies. More information can be received from our client Companys website. The majority of our research assignments are for 30 days. We may research or promote a given Company on other occasions. The Company has paid 620,000 shares of Rule 144 common stock in compensation for this commercial advertisement. This document shall not be copied and is copyrighted by Grass Roots Research and Distribution, Inc. and D. Paul Cohen
Disclaimer: Price Targets Stock prices can be heavily influenced by investor awareness campaigns. In general, we observe the more money spent on such campaigns, the greater the possibility for short term price increases post our initiate coverage commercial advertisements. We also observe that our target prices may not be met unless client companies have enough cash or are able to raise capital to meet our forecasts. The Penny Stock Market is a highly risky market targeted at short term traders. Our reports often times recommend client companies as short term trades and long term investments if an investor believes a Company will raise the required capital to meet our valuations and price targets. Our historical performance statistics indicate that short term price increases often times occur after release of our initiate coverage reports. Thereafter, we note that the majority our stock recommendations go down significantly due to profit taking and other market factors beyond our control. The Cohen Price Target includes four components. Most reports assume capital will be raised for the majority of our client companies. Most micro cap/small cap companies need capital to reach our theoretical 5 year projections. The academic world justifies an analysts decision to forecast the three statements (Income Statement, Balance Sheet and Cash Flow Statements) for 5 years. We normally do so in three cases: Optimistic Case, Base Case and Pessimistic Case. However, in the practical/real world, buying a micro cap or small cap stock based on 5 year forecasting is highly risky. If smaller companies are able to raise capital, our theoretical price targets in a perfect world might be justified, providing the Company executes on its business model. At times our price targets may be significantly higher than the current price of a stock. This can happen in theory only if the Companys assets, with assumed capital raised, could theoretically create large sales and cash flow volumes over time, especially if the industry is a high growth industry. In the practical world, these price targets may appear to be unrealistic. However, we believe the academics of securities analysis of our calculations support the theory of these assumed price targets. While we do not give investment advice, the investor should consider the possibilities of a given Company being able to raise capital to execute its business model over 5 years. Few micro/small cap companies are able to raise enough capital and execute their master budget over an extended period of time. Our price targets are academic theory only and should not be relied upon. Investors should do their own research and consult with their financial consultants.

Grassroots Reseach - GrowLIfe, Inc Report

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GRASS ROOTS O RESE EARCH* AND D DISTRIBU UTION, INC.

#1 Small Ca ap Research* Firm, F Powerf ful Distributio on

GROW WLIFE, INC.

Cohen Price Index T Target

INVE ESTMENT T THESIS S AND RECOMMEN E NDATION NS

Grass Roots Research and Distribution, Inc.

SALES AND MARGINS ANALYSIS

THE COHEN PRICE TARGETTM SUMMARY

Grass Roots Research and Distribution, Inc.

Financial Highlights and Valuation

Grass Roots Research and Distribution, Inc.

WHY BUY GROWLIFE STOCK?

Grass Roots Research and Distribution, Inc.

Grass Roots Research and Distribution, Inc.

UNDERSTANDING LEGALIZATION OF MARIJUANA

Grass Roots Research and Distribution, Inc.

Impact of Legalization on Marijuana Companies

Impact of Legalization on Growlife

Grass Roots Research and Distribution, Inc.

ABOUT THE COMPANY

GrowLifes Business Strategy

WHOLESALE & MASS-MARKET

PRODUCT OR SERVICE ACQUISITIONS

BRICK-ANDMORTAR HYDRO STORES

Grass Roots Research and Distribution, Inc.

BULL AND BEAR CASE

Source: Industry Report, S&P, CNBC Analysis

Figure 7: Pharmaceutical Actions of Cannabis

Grass Roots Research and Distribution, Inc.

Grass Roots Research and Distribution, Inc.

COHEN GROWTH DRIVERS AND FINANCIAL FORECASTS

Grass Roots Research and Distribution, Inc.

Revenues - All Scenarios

Earnings per share - All Scenarios

(0.01) (0.01) (0.02)

Grass Roots Research and Distribution, Inc.

COMPANYS BUSINESS DIVISIONS AND SUBSIDIARIES

SGSensors Phototron Greners.com UrbanGarden

Channels Cannabis.org GrowLife Productions

Source: Cohen Research

Grass Roots Research and Distribution, Inc.

Source: Company Website

Grass Roots Research and Distribution, Inc.

Source: Company Website

Grass Roots Research and Distribution, Inc. Figure 14:

Source: Company Website

Distribution Channels GRENERS.COM

Grass Roots Research and Distribution, Inc.

Grass Roots Research and Distribution, Inc.

Grass Roots Research and Distribution, Inc.

High demand for industrial hemp and medical marijuana

Diversifed and Scallable Business Model

Business not reliant upon the Legalization of Marijuana

Excellent Retail Sale Channels; Strong Wholesale Relationships

Legalization of Marijuana likely to result in Huge Demand

Source: Cohen Research

Grass Roots Research and Distribution, Inc.

UNDERSTANDING THE DIFFERENT CANNABIS VARIETIES

Comparison of Hemp and Marijuana

Grass Roots Research and Distribution, Inc.

Grass Roots Research and Distribution, Inc.

Market Size ($ billion)

6.4 4.6 3.3 1.7 2.4

Rest of the US 24%