Item 1.01 Entry into a Material Definitive Agreement.
Securities Purchase Agreement and Convertible Promissory
Note
On January 11, 2023, Growlife, Inc. a Delaware corporation (the “Company”)
entered into a Securities Purchase Agreement (the “Purchase Agreement”) with 1800 Diagonal Lending LLC, a Virginia limited
liability company (the “Investor”), pursuant to which the Company sold 1800 Diagonal a promissory note in the principal amount
of $88,200 (the “Note”). The Note carries a one-time interest charge of twelve percent (12%) (the “Interest Rate”)
which was applied on the issuance date to the principal (22% upon the occurrence of an event of default) and has a maturity date of January
11, 2024. The Note included an original issue discount of $9,450 and transaction expenses of $3,750 and was purchased for an aggregate
of $75,000. The Note was funded by the Investor as on January 13, 2023.
The Note requires that the Company
make monthly payments for accrued interest and outstanding principal, which shall be paid in ten (10) payments each in the amount of $9,878.40
(a total payback to the Holder of $98,784.00). The first payment shall be due March 1, 2023, with nine (9) subsequent payments each month
thereafter. The Company shall have a five (5) day grace period with respect to each payment. The Company has right to accelerate payments
or prepay in full at any time with no prepayment penalty.
The Investor may in its option, at any time following an Event of Default,
as defined in the Note, convert all or any part of the outstanding and unpaid amount of this Note into fully paid and non-assessable shares
of Common Stock at a conversion price per share equal to 75% of the lowest daily volume weighted average price (“VWAP”) of
our common stock during the 10 trading days prior to the date of conversion. Additionally, the Company agreed to reserve five times the
number of shares of our common stock which may be always issuable upon conversion of the Note, or 14,700,000 shares of 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. At no time may the Note be converted into shares of our common stock
if such conversion would result in the Investor, or its affiliates owning an aggregate of more than 4.99% of the then outstanding shares
of our common stock.
The description of the Note and
Securities Purchase Agreement above is not complete and is qualified in its entirety by the full text of the Note and Securities Purchase
Agreement, filed herewith as Exhibits 10.1 and 10.2, respectively, which are incorporated by reference into this Item
1.01.