Item 1.01 Entry into a Material Definitive Agreement.
Securities Purchase Agreement and Convertible Promissory
Note
On March 21, 2023 (the
“Issue Date”), Growlife, Inc. a Delaware corporation (the “Company”) entered into a Securities Purchase
Agreement (the “Purchase Agreement”) with Fourth Man LLC, a Nevada limited liability company (the
“Investor”), pursuant to which the Company sold Investor a Convertible Promissory Note (the “Note”) in the
principal aggregate amount of $125,000.00, which carries an original issue discount in the amount of $21,250.00, and $10,762.50 of
transactions costs accordingly the Company received $92,987.50 of the purchase price. Additionally under the Purchase Agreement the
Company agreed to issue 3,125,000 shares of Common Stock (the “Commitment Shares”) to the Investor as additional
consideration for the purchase of the Note, which shall be earned in full as of the Closing Date, March 23, 2023. The Purchase
Agreement and Note require the Company to pay interest on the unpaid Principal Amount at the rate of ten percent (10%) (the
“Interest Rate”) per annum (with the understanding that the first twelve months of interest (equal to $12,500.00) shall
be guaranteed and earned in full as of the Issue Date). The Note is due and payable, in full, as of the maturity date, which is
twelve (12) months from the Issue Date. Upon default, the Note provides the debt may be converted into shares of the Company. The
Conversion Price is $0.01 per share, subject to adjustment as provided for in the Note. Conversions are subject to adjustment for
any stock dividend, stock split, stock combination, rights offerings, reclassification, or similar transaction that proportionately
decreases or increases the common stock. The Note provides for standard and customary events of default such as failing to timely
make payments under the Note when due, the failure of the Company to timely comply with the Securities Exchange Act of 1934, as
amended, reporting requirements and the failure to maintain a listing on the OTC Markets. The Note also contains customary positive
and negative covenants.
Additionally and in connection
with the issuance of the Note, the Company issued the Commitment Shares (as defined in the Purchase Agreement) to Investor as a commitment
fee, provided, however, that 2,125,000 of the Commitment Shares (subject to equitable adjustments resulting any stock dividend, stock
split, stock combination, rights offerings, reclassification, or similar transaction that
proportionately decreases or increases the Common Stock) may be cancelled and extinguished if the Note is fully repaid and satisfied on
or prior to June 21, 2023.
Registration Rights Agreements
Pursuant to the terms of the Purchase
Agreement, the Company granted the Investor piggyback registration rights on any such shares covered by the Note and the Commitment Shares,
which are set forth in Exhibit B to the Purchase Agreement,.
The description of the Purchase
Agreement and the Note are not complete and are qualified in their entirety by the full text of the Securities Purchase Agreement the
Note filed herewith as Exhibits 10.1 and 10.2 respectively, which are incorporated by reference into this Item 1.01.