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GrowLife's Commitment and Dedication to the Market: An Open Letter to Shareholders

WOODLAND HILLS, Calif., April 14, 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, has released an open letter to shareholders:

Dear Shareholders: 

The SEC determined on April 10, 2014 to impose a temporary trading halt in GrowLife stock that may extend through April 24, 2014.  This communication is to inform shareholders of the information available to the Company and to directly address, to the extent possible, several of the many questions that we have heard from shareholders and investors.

Did the Company have any advance notice of an impending SEC trading halt?

No, we did not have any advance knowledge, hint or warning.  GrowLife learned of the SEC's actions at the same time that the market did on April 10th. 

What caused the SEC to order a trading halt?

The answer is that we simply do not know and the SEC is not obligated to immediately provide information to GrowLife or its shareholders. 

GrowLife is actively engaged in outreach to the SEC in an effort to first understand and then address the concerns.  This is a normal process associated with informal SEC reviews and one for which GrowLife has retained specialized counsel in order to maintain communications with SEC.  GrowLife will not engage in speculation.  We will fully address any regulatory concerns when they are identified to us. 

All that said, GrowLife has no knowledge of any irregularities that may warrant a suspension of trading in our securities and the fact remains that the SEC ordered a trading halt. 

While the SEC review is ongoing, is the Company open and operating its businesses?

GrowLife is absolutely open for business in all of our stores and facilities.  The GrowLife team has been working tirelessly to maintain, without missing a beat, the extraordinary team dedication and customer service that has allowed GrowLife to expand our business's interests in our unique market sector.

Will the SEC halt have an adverse impact on the value of GrowLife shares in the marketplace, even after trading resumes?

If history is any guide, there is likely to be a negative impact to GrowLife shares when trading is allowed to resume.  GrowLife is a widely held security in our market sector and an industry leader.   The Company will do everything in its power to minimize impact to shareholders and all of our business relationships.   Most of all, we urge calm deliberate consideration by shareholders of information as it becomes available.  We understand that is very difficult.

GrowLife developed as an industry leader in part because the Company team has a solid combination of customer commitment and business fundamentals.   We do not welcome controversy;  but we are not quitters.  We are confident in who we are and what we do. The entire management team and Board of GrowLife is committed to continued transparency, addressing the concerns that we are made aware of and to continuing to build our extraordinary business.  As part of our commitment, you will see a new website, noting our leadership team and continued focus on addressing customer and shareholder concerns.

Have "insiders" sold stock in GrowLife following the filing of the Company's annual report on Form 10K?

Yes.  There is a very limited window of time after major regulatory filings where insiders are permitted to make controlled sales of stock.  This is a very highly regulated process for anyone that has any material non-public information and it is an obligation that the management of the company takes quite seriously, and always has.  

With any company that is publicly held, insiders may sell shares.  Insiders are shareholders too. The company has taken what we consider many more than the required steps to make sure that everyone knows the rules and, to the extent under the company's control, the rules are followed.

That said, shareholders and investors should understand that insiders have lives, taxes, debts, and families.  For example, company employees who received shares as part of their compensation in 2013 must under normal conditions address that tax obligation prior to April 15, 2014, creating for some the necessity to sell some of their shares. Unlike other shareholders, many of our officers and directors receive some if not all of their compensation in the form of stock.  It is not, I repeat not, improper for insiders to sell a portion of their shares in the available windows, which occur after major regulatory disclosure events such as the March 31, 2014 filing by GrowLife of its annual report.

Did Robert Hunt sell a portion of his share ownership in GrowLife?

Yes.  Management team member Robert Hunt sold a portion of his ownership in a manner that was known to the company and fully reported.  Mr. Hunt sold his hydroponic store business to GrowLife last year where a large payment was in stock, which carries significant tax consequences.  It is normal business practice for such obligations to be addressed by selling a portion of the acquired stock in a regulated manner.   Mr. Hunt rightly sold a portion of his shares in the limited time available to senior management is decidedly ordinary and normal.    We are not aware of any allegation that Mr. Hunt's stock sales were improper.

Did Elisabeth Wedam, wife to CEO and Chairman Sterling Scott, sell a portion of her ownership in GrowLife?

My wife (Elisabeth Wedam) and I invested upward of $2 million in SG Technologies and a good deal of time, more than two years ago now, before it was merged into what became GrowLife, Inc.   When that merger was completed, we received no cash but both my wife and I separately received shares in GrowLife.  Elisabeth and I have unfortunately been separated for many years but we remain married and her ownership in shares in her name is treated exactly as though they were mine.  We are modest well-intentioned people, like most of GrowLife's shareholders.   Elisabeth has dedicated most of her professional life to teaching, most recently English as a Second Language in public schools. 

In the very limited window during which our insiders may sell under specific limits after the GrowLife 10K was filed, my wife sold a portion of her shares that amounted to less than 5% of our ownership and less than 1% of the outstanding shares of GrowLife.  The process for my wife of actually preparing to even sell one share, began more than one year ago, and because I am CEO and Chairman, has always been very carefully scrutinized.  The timing was unfortunate given the SEC actions, but the transaction itself is normal and ordinary.  Of course the SEC knows that the Company had no knowledge of the surprise halt.  For the record, this was the first sale of any GrowLife stock by myself or my wife.

Have any lawsuits been filed against GrowLife arising from the SEC trade halt?

No lawsuits have been filed against GrowLife to our knowledge.  We understand that several plaintiff-oriented firms have issued press releases indicating that they have initiated an investigation of GrowLife.  The Company has had no direct contact with any of these firms.  Unfortunately, plaintiff law firm investigations, including class action efforts, are commonly raised whenever there has been an interruption in securities trading.  In due course, should lawsuits eventually be filed, the Company will address and respond to allegations.   

Conclusion and Commitment

I will remain 100% dedicated to getting to the bottom of SEC concerns and to keeping shareholders fully informed when we have reliable information.   In the meantime, we respectfully ask that our shareholders and investors maintain a measure of calm and patience notwithstanding frustrations that we all feel in this trying time for GrowLife. 

You have our assurances that when the SEC provides GrowLife with specific information on its concerns, that GrowLife will conduct itself with candor and full disclosure from the team at GrowLife.  

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 StealthGrow.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
(702) 396-1000
[email protected]

SOURCE GrowLife, Inc.

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