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
kurt@integrityir.com
SOURCE GrowLife, Inc.