Item 1.01
Entry into a Material Definitive Agreement.
On March 29, 2023, (the “Issue
Date”), Growlife, Inc. a Delaware corporation (the “Company”) entered into a securities purchase agreement (the “Purchase
Agreement”) with ONE44 Capital LLC, (“ONE44”), pursuant to which ONE44 purchased a convertible promissory note (the
“Note”) from the Company in the aggregate principal amount of $150,000, such principal and the interest thereon convertible
into shares of the Company’s common stock at the option of ONE44. The transaction contemplated by the Purchase Agreement closed
on March 28, 2023. The Company intends to use the net proceeds ($128,250) from the Note for general working capital purposes. The Note
contains an original issue discount amount of $15,000 and legal fees paid therefrom of $6,750.00.
The maturity date of the Note
is March 28, 2024 (the “Maturity Date”). The Note shall bear interest at a rate of 10% per annum, which interest may be paid
by the Company to ONE44 in shares of common stock but shall not be payable until the Note becomes payable, whether at the Maturity Date
or upon acceleration or by prepayment, as described below. ONE44 is entitled, at its option, at any time after the 6th monthly
anniversary of this Note, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company’s
common stock (the “Common Stock”) at a price for each share of Common Stock equal to 60% of the lowest closing bid price of
the Common Stock as reported on the OTC Markets on which the Company’s shares are then traded or any exchange upon which the Common
Stock may be traded in the future, for the ten prior trading days including the day upon which a Notice of Conversion is received by the
Company. In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 50%
instead of 60% while that “Chill” is in effect. Notwithstanding the foregoing, ONE44 shall be restricted from effecting a
conversion if such conversion, along with other shares of the Company’s common stock beneficially owned by ONE44 and its affiliates,
exceeds 4.99% of the outstanding shares of the Company’s common stock.
The Note may be prepaid until
180 days from the issuance date. If the Note is prepaid within 60 days of the issuance date, then the prepayment premium shall be 110%
of the face amount plus any accrued interest, if prepaid after 61 days from the issuance date, but less than 90 days from the issuance
date, then the prepayment premium shall be 125% of the face amount plus any accrued interest, if prepaid after 91 days from the issuance
date, up to 120 from the issuance date, then the prepayment premium shall be 135% of the face amount plus any accrued interest, if prepaid
after 121 days from the issuance date, up to 150 from the issuance date, then the prepayment premium shall be 140% of the face amount
plus any accrued interest and if prepaid after 150 days from the issuance date, up to 180 from the issuance date, then the prepayment
premium shall be 145% of the face amount plus any accrued interest. Upon the occurrence and during the continuation of certain events
of default, the Note will accrue an interest rate of 24% or, if such rate is usurious or not permitted by current law, then at the highest
rate of interest permitted by law.
Other than as described above,
the Note contains certain events of default, including failure to timely issue shares upon receipt of a notice of conversion, as well
as certain customary events of default, including, among others, breach of covenants, representations or warranties, insolvency, bankruptcy,
liquidation, and failure by the Company to pay the principal and interest due under the Note.
The foregoing description of the
Note and the Purchase Agreement does not purport to be complete and is qualified in their entirety by reference to the full text of the
Note and the Purchase Agreement, which are filed as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K and are incorporated
herein by reference.