Item 1.01 Entry into a Material Definitive Agreement.
On June 2, 2022, GrowLife, Inc.,
a Delaware corporation (“Company” or “Purchaser”) entered into an Asset Purchase Agreement (the “Agreement”)
with Bridgetown Mushrooms, LLC, an Oregon limited liability company (“Seller”), and Trevor Huebert (“Executive”),
pursuant to which Company is purchasing and assuming, certain assets, properties, rights and interests relating to the Seller’s
business (“Assets”), which is the processing, marketing, storing, selling and distributing fresh and dried mushroom products
(“Business”), on the terms and subject to the conditions set forth in the Agreement.
Consideration
The total purchase price for the Assets shall be the
following: (i) $500,000 in cash (the “Cash Consideration”), (ii) 15,000,000 shares of Purchaser Stock (the “Consideration
Shares”, collectively, Cash Consideration and Consideration Shares, the “Purchase Price”) payable as follows:
(i) The Company has delivered
an Initial Deposit in the amount of $40,000 to the Seller on June 2, 2022.
(ii) At the Closing, Purchaser
shall pay to Seller:
(a) the Closing Cash
Consideration, as adjusted, in immediately available funds, less any extension fees; and,
(b) 15,000,000 restricted
common stock shares of Company, as adjusted, cost basis of approximately $.0233 per share, payable, to Executive at Closing which shall
be placed in an Escrow Account managed by the Escrow Agent. Distributions of any Consideration Shares from the Escrow Account shall be
governed by the terms and conditions of the Escrow Agreement with PNC Bank, which shall include, among other terms and conditions, the
release to Executive of (i) fifty percent (50%) of any Consideration Shares after any applicable offset, upon the one-year anniversary
of the Closing Date, and (ii) all Consideration Shares then-remaining in the Escrow Account, after any applicable offset, upon the two-year
anniversary of the Closing Date, provided, in each case, that Executive remains an employee in good standing with the Purchaser
from the Closing Date through each applicable Escrow Release Date, unless Executive’s employment is earlier terminated by Purchaser
without Cause.
Conditions to the Acquisition
The Parties have made customary representations and
warranties in the Agreement. The Agreement also contains customary covenants, agreements and conditions to close, including covenants
and agreements relating to the conduct of the Business between the date of the signing of the Agreement and the closing of the transactions
contemplated under the Agreement and that no Material Adverse Effect shall have occurred during this period. The conditions to close also
include, among others, the Purchaser will have financing sufficient to complete the transaction. The representations and warranties made
by the Company are qualified by disclosures made in its disclosure schedules and Securities and Exchange Commission ("SEC")
filings.
A copy of the Agreement is filed with this Current
Report on Form 8-K as Exhibit 2.1 and is incorporated herein by reference, and the foregoing description of the Agreement is
qualified in its entirety by reference thereto.