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An Open Letter from Sterling Scott, CEO, GrowLife, Inc., Regarding Proposed Changes to Share Structure

WOODLAND HILLS, Calif., Jan. 17, 2014 /PRNewswire/ -- GrowLife, Inc. (OTCBB: PHOT), a diversified company operating in the legal cannabis industry which develops, markets and deploys products and services of legal cannabis, is pleased to provide the following letter from Sterling Scott, Chairman of the Board and CEO.

Dear Investors,

From its humble beginnings with the Phototron product line, GrowLife has been publicly owned and operated by ordinary Americans with a passion for our unique industry.  For many of our shareholders PHOT has been one of their first public company investments.  Our base of support has grown tremendously over the past two years; at last count GrowLife has almost twenty thousand shareholders and that number is trending up, comprised in the main of those same ordinary American investors with a vision and a passion for our industry.  It is very satisfying to me personally and to all of the employees of our company that we have a good track record of increasing shareholder value and making money for our shareholders.   That the main beneficiary of GrowLife's leadership role in the industry is to ordinary American investors, and not just a select few on Wall Street, is I believe very important to us all.

In the same spirit that we have built and operated GrowLife, by the people and for the people, company management strongly urges shareholders to vote yes, and in the affirmative, to the pending proxy asking for an increase of our authorized shares of the Company.  Respectfully, we ask for your support for three interrelated reasons.

First, at this time in our very fast paced industry, and looking forward for the next several years, GrowLife needs more flexibility with our equity in order to realize our outsized ambitions as a company, which is why we have come to our shareholders and urged support of an increase in our authorized shares.  For companies under a billion dollars in market capitalization like GrowLife, especially for companies in a controversial industry segment such as that involving legal cannabis, acquiring growth capital is difficult at best, and it is a very distracting process to a Management team that is expected to be working 24/7 to build our business.  GrowLife has managed this process reasonably well in my estimation, but to realize our ambitions for the Company, we have determined that GrowLife would benefit greatly from access to a large pool of growth capital so that we can move quickly and without the risks and the slow pace of transaction by transaction hodgepodge funding that we have relied on in the past.  At this time in GrowLife's history, I feel very strongly that the CANX USA JV funding is the right move for our Company, and I urge your support of that move by and through shareholder endorsement of the necessary increase in our authorized shares.

That is the reason we have come to our shareholders and investors.  While it is possible to increase the authorized shares of the Company in many small steps instead of one big step, Management does not want the distraction of a piecemeal approach, which would almost certainly take our focus away from building a business that is second to none in our industry.

Second, in the considered opinion of the Directors and the Management Team of GrowLife, the CANX USA JV and the related increase in our authorized shares represents a very balanced approach to enable the Company to quickly and decisively bring enough money and talent into our company to propel the Company forward in its ambitions.   To the extent there is "dilution" under the CANX USA JV, the relationship is structured to allow GrowLife management a great deal of control and to incentivize only success-driven dilution that will benefit all shareholders large and small, complete with milestones and checks/balances.  Our CANX USA JV partners are engaged in a multi-year investment strategy with GrowLife that necessarily includes incentives for investments that are much larger in the amount of commitment and in vision than is typical of the OTC market.

Third, we urge our shareholders to resist the artificial force of fear in the marketplace that seek to make incremental profits by shorting and thereafter spreading misinformation to engender fear and instability.  GrowLife has a mission and a responsibility to our shareholders from which we will not be easily deterred.  We cannot, however, prevent negative rumors that are very personal and decidedly ill intentioned.  By way of example, a rumor was floated recently that I had suffered an untimely death over a weekend; the subliminal message was that GrowLife was in deep trouble.  (I can assure you that I am very much alive and as dedicated as ever to GrowLife.)  More recently, our CFO was subjected to an unfounded personal attack along with concerted market activity to attack GrowLife, if not the entire market sector.   In our free and open society, we must tolerate "fog of war" messaging and prevent it from distracting us from the good that we can achieve for many with our Company.   We view these attacks as graffiti and encourage others to do the same.  GrowLife Management will not allow misinformation to affect our investment and our mission.  

Similarly, certain forces would have our valued shareholders, new and old, believe that the authorized share request is simple dilution which will immediately flood the market with endless paper.  To the contrary, we have thoughtfully constructed the CANX USA JV and the requested shares with these important attributes:

  • Shares provided from the newly authorized, when approved, to CANX USA partners must be earned along with material benefits to the Company and GrowLife must agree at each step.  For example, the closing and funding of  GIFT transactions or acquisitions that would bring significant EBIDTA positive new revenue to GrowLife.
  • Our CANX JV partners are not in today and gone tomorrow partners;  it will likely take a considerable amount of time for our CANX partners to 'earn' their shares as they perform under our watch. And by definition, our CANX USA JV partners are subject to stringent rules and limitations as to how they might someday sell any future earned stock, somewhat similar to the restrictions on very large shareholders and Senior Management.
  • It is perhaps worth noting that by creating this access to capital under the most favorable terms of the CANX USA JV, GrowLife is effectively not in the market for any of the typical 'toxic' financings that are an ambient risk for investors in the small and microcap market.

In closing, I am proud of what we have accomplished, and extremely excited for the opportunities that lie in the future for the enterprise of GrowLife.  The JV with CANX USA is an important step in the right direction.  To fulfill our obligations and the promise of that joint venture, GrowLife needs the support of its shareholders with an affirmative vote to expand our authorized shares.  I urge you all to vote "yes" on the proxy and to continue to support your devoted Management in its mission.

A GrowLife Investor Presentation can be viewed online at http://growlifeinc.com/growlife-presentations-october-2013/

From time to time, GrowLife will provide market updates and news via its websites GrowLifeInc.com, Cannabis.org or the Company's Facebook page at https://www.facebook.com/tellthetruthfederalgovernment

About GrowLife, Inc.

GrowLife, Inc. (PHOT) (www.growlifeinc.com) develops, markets and deploys products and services addressing the needs of legal cannabis growing and retail operations, including hydroponic growing equipment and retail support software. The Company provides these solutions in our nationwide retail network, as well as online sites Greners.com, Phototron.com and 58Hydro.com. The Company also operates the political and social forum, Cannabis.org

Cautionary Language Concerning Forward-Looking Statements

This release contains "forward-looking statements" that include information relating to future events and future financial and operating performance.  The words "may," "would," "will," "expect," "estimate," "can," "believe," "potential" and similar expressions and variations thereof are intended to identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which that performance or those results will be achieved.  Forward-looking statements are based on information available at the time they are made and/or management's good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause these differences include, but are not limited to: fluctuations in demand for GrowLife's products, the introduction of new products, the Company's ability to maintain customer and strategic business relationships, the impact of competitive products and pricing, growth in targeted markets, the adequacy of the Company's liquidity and financial strength to support its growth, and other information that may be detailed from time-to-time in GrowLife's filings with the United States Securities and Exchange Commission. Examples of such forward-looking statements in this release include statements regarding future sales, costs and market acceptance of products as well as regulatory actions at the State or Federal level.  For a more detailed description of the risk factors and uncertainties affecting GrowLife, Inc. please refer to the Company's Securities and Exchange Commission filings, which are available at www.sec.gov.  GrowLife, Inc. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Investor Relations Contact:

Integrity Media
Kurt Divich (702) 396-1000
[email protected]

SOURCE GrowLife, Inc.

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