Attached files
EXHIBIT 99.1
FORM OF INSTRUCTIONS AS TO USE OF SUBSCRIPTION RIGHTS
CERTIFICATES
GROWLIFE, INC.
Please
consult the Information Agent, Direct Transfer LLC, or your bank or
broker as to any questions.
The
following instructions relate to a rights offering (the
“Rights Offering”) by GrowLife, Inc., a Delaware
corporation (the “Company”), to the holders of record
of its common stock, $0.0001 par value (the “Common
Stock”), as described in the Company’s prospectus dated
[______], 2018 (the “Prospectus”). As described in the
Prospectus, each holder of record of Common Stock at the close of
business on October 12, 2018 (the “Record Date”) will
receive, at no charge, non-transferable subscription rights (each a
“Subscription Right”) to subscribe for and purchase one
Unit for each share of Common Stock owned as of the Record Date.
Each Unit consists of one share of our Common Stock and one
Warrant. Each Warrant entitles the
holder to purchase one share of our Common Stock. The Common
Stock and Warrants comprising the Units will be separate upon the
closing of the Rights Offering and will be issued separately,
however, they may only be purchased as a Unit, and the Unit will
not trade as a separate security. The Subscription Rights will not
be tradeable.
Subscription
Rights exercisable into an aggregate of 500,000,000 Units of the
Company (each a “Unit”) are being distributed in
connection with the Rights Offering. Each Unit is comprised of one
share of Common Stock and one two ½ Warrants consisting of one
½ warrant which will be exercisable for one share of our
Common Stock at an exercise price of $0.018 and one ½ warrant
which with an exercise price of $0.024 per share, exercisable from
the date of issuance through the expiration three years from the
date of issuance, unless accelerated. Each whole Subscription Right
is exercisable, upon payment of $0.012 in cash (the
“Subscription Price”), to purchase one Unit (the
“Basic Subscription Right”). In addition, each
Subscription Right also carries the right to subscribe at the
Subscription Price for additional Units that are not purchased by
other holders pursuant to their Basic Subscription Right (to the
extent available, and subject to proration and ownership
limitations as described in the Prospectus) (the
“Over-Subscription Right”). A holder is entitled to
exercise an Over-Subscription Right only if the holder fully
exercises the Basic Subscription Right. See “The Rights
Offering” in the Prospectus. We will not issue fractional
shares of Common Stock or Warrants in the Rights
Offering.
The
Rights will expire at 6:00 p.m., Eastern Time, on November 12,
2018, unless the Company extends the Rights Offering period as
described in the Prospectus (such date and time, as it may be
extended, the "Expiration Date"). All exercises of the Rights are
irrevocable. You should read the Prospectus carefully before
deciding whether to exercise your Rights.
The
number of Subscription Rights to which you are entitled is printed
on the face of your Subscription Rights Certificate. You should
indicate your wishes with regard to the exercise of your
subscription rights by completing the appropriate section on the
back of your Subscription Rights Certificate and returning the
Subscription Rights Certificate with your payment to the
Subscription Agent in the envelope provided. The Warrants that are
issued as a component of the Unit entitle the holder to purchase
one share of Common Stock at an exercise price (subject to
adjustment) of $0.018 per share and $0.024 per share. For each Unit
subscribed for, Subscriber will receive 1 warrant; ½ of which
shall be exercisable at the $0.018 exercise price and ½ at the
$0.024 exercise price. The Warrants are exercisable for cash, or
solely during any period when a registration statement for the
exercise of the Warrants is not in effect, on a cashless basis. See
“Description of Securities” in the
Prospectus.
YOUR
SUBSCRIPTION RIGHTS CERTIFICATE MUST BE RECEIVED BY THE
SUBSCRIPTION AGENT ON OR BEFORE THE EXPIRATION DATE. PAYMENT OF THE
SUBSCRIPTION PRICE OF ALL SUBSCRIPTION RIGHTS EXERCISED, INCLUDING
SUBSCRIPTION RIGHTS PURSUANT TO THE OVER-SUBSCRIPTION RIGHT,
INCLUDING FINAL CLEARANCE OF ANY CHECKS, MUST BE RECEIVED BY THE
SUBSCRIPTION AGENT ON OR BEFORE THE EXPIRATION DATE. ONCE YOU
EXERCISE YOUR SUBSCRIPTION RIGHTS, YOU CANNOT REVOKE THE EXERCISE
OF SUCH SUBSCRIPTION RIGHTS. SUBSCRIPTION RIGHTS NOT VALIDLY
EXERCISED PRIOR TO THE EXPIRATION DATE OF THE RIGHTS OFFERING WILL
EXPIRE. IN CASE YOU HOLD SUBSCRIPTION RIGHTS THROUGH A BROKER OR
OTHER NOMINEE, YOU SHOULD VERIFY WITH YOUR BROKER OR NOMINEE BY
WHEN YOU MUST DELIVER YOUR INSTRUCTION.
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1.
Subscription Rights. To exercise Subscription Rights, complete your
Subscription Rights Certificate and send your properly completed
and executed Subscription Rights Certificate, together with payment
in full of the Subscription Price for each Unit subscribed for
pursuant to the Basic Subscription Right and the Over-Subscription
Right, to the Subscription Agent. PLEASE DO NOT SEND RIGHTS
CERTIFICATES OR PAYMENTS TO THE COMPANY. The method of delivery of
the Subscription Rights Certificate and the payment of the
Subscription Price to the Subscription Agent is at your election
and risk. Subscription Rights Certificates and payments must be
received by the Subscription Agent prior to the Expiration Date. If
you send your Subscription Rights Certificate and payment by mail,
then they should be sent by registered mail, properly insured, to
arrive before the Expiration Date.
If you
are a beneficial owner of shares that are registered in the name of
a broker, dealer, bank or other nominee, you should instruct your
nominee to exercise your subscription right on your behalf and
deliver all required documents and payment before the Expiration
Date.
2. Acceptance of Payments. Payments will be deemed to have been
received by the Subscription Agent only upon the (i) clearance of
an uncertified personal check drawn against a Regions bank payable
to “Issuer Direct Corporation, FBO GrowLife.,” (ii)
receipt of a certified check drawn against a Regions Bank payable
to “Issuer Direct Corporation, FBO GrowLife” (iii)
receipt of a U.S. Postal money order payable to “Issuer
Direct Corporation FBO GrowLife”; or (iv) receipt of a wire
transfer of immediately available funds directly to the account
maintained by Direct Transfer LLC, as Subscription Agent, for
purposes of accepting subscriptions in this Rights Offering at
Regions Bank, ABA, #
062005690,
Account # 0183141022 FBO
Growlife, Inc., with reference
to the name of the Subscription Rights holder. Funds paid by
uncertified personal check may take several business days to clear.
Accordingly, if you wish to pay the Subscription Price by
uncertified personal check, then you should make payment
sufficiently in advance of the Expiration Date to ensure its
receipt and clearance by that time. To avoid disappointment caused
by a failure of your subscription due to your payment not clearing
prior to the expiration date, the Company urges you to consider
payment by means of certified or cashier’s check, money order
or wire transfer. It is highly recommended that if you intend to
pay the Subscription Price by personal check, then your
subscription payment should be received by the Subscription Agent
well before the Expiration Date. If your personal check does not
clear before the Expiration Date, then you will not receive any
Units, and the Company’s only obligation will be to return
your subscription payment, without interest or
deduction.
3.
Contacting the Subscription Agent. The address and telephone number
of the Subscription Agent is shown below. Delivery to an address
other than shown below does not constitute valid
delivery.
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By mail:
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By hand or overnight courier:
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Direct
Transfer LLC
Attn:
Rights Offering
500
Perimeter Park Drive Suite D,
Morrisville
NC 27560
Tel:
(888)
301-2498
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Direct
Transfer LLC
Attn:
Rights Offering
500
Perimeter Park Drive Suite D,
Morrisville
NC 27560
Tel:
(888)
301-2498
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4.
Partial Exercises; Effect of Over- and Under-Payments. If you
exercise less than all of the subscription rights evidenced by your
Subscription Rights Certificate, the Subscription Agent will issue
to you a new Subscription Rights Certificate evidencing the
unexercised subscription rights upon request. However, if you
choose to have a new Subscription Rights Certificate sent to you,
you may not receive any such new Subscription Rights Certificate in
sufficient time to permit exercise of the Subscription Rights
evidenced thereby. If you do not indicate the number of Units to be
subscribed for on your Subscription Rights Certificate, or if you
indicate a number of Units that does not correspond with the
aggregate Subscription Price payment you delivered, you will be
deemed to have subscribed for the maximum number of Units that may
be subscribed for, under both the Basic Subscription Right and the
Over-Subscription Right, for the aggregate Subscription Price you
delivered. If the Subscription Agent does not apply your full
Subscription Price payment to your purchase of Units, then the
Subscription Agent will return the excess amount to you by mail,
without interest or deduction, as soon as practicable after the
Expiration Date. If you subscribe for fewer than all of the Units
represented by your Subscription Rights Certificate, then the
unexercised Subscription Rights will become null and void on the
Expiration Date.
5.
Deliveries to holders. The following deliveries and payments to you
will be made to the address shown on the face of your Subscription
Rights Certificate:
(a)
Basic Subscription Right. The basic subscription right gives our
stockholders the opportunity to purchase one Unit at a subscription
price of $0.012 per Unit. Each Unit consists of one share of our
Common Stock and two 1/2 Warrants, consisting of one 1/2 warrant
which will be exercisable for one share of our Common Stock at an
exercise price of $0.018 per share and one ½ warrant
exercisable for one share of our Common Stock at an exercise price
of $0.024. Each full Warrant will be exercisable for one share of
our Common Stock pursuant to the terms of the Warrant. The shares
of Common Stock and Warrants will be immediately separable upon
closing of the Rights Offering. You may exercise all or a portion
of your basic subscription right, or you may choose not to exercise
any subscription rights. However, if you exercise fewer than all of
your basic subscription right, you will not be entitled to purchase
any additional Units pursuant to the over-subscription right. No
fractional shares or warrants will be issued upon exercise of
subscription rights in the Rights Offering. If you subscribe for an
odd number of Units, you will receive that number of Common Stock
shares and the odd ½ warrant shall be issued at the $0.024
exercise price.
(b)
Over-Subscription Right. We do not expect all of our stockholders
to exercise all of such holder’s basic subscription right. If
you fully exercise your basic subscription right (other than those
subscription rights to acquire less than one whole Unit, which
cannot be exercised) and other stockholders do not fully exercise
their basic subscription right, you may also exercise an
over-subscription right to purchase additional Units that remain
unsubscribed at the expiration of the Rights Offering, subject to
availability, at the same subscription price of $0.012 per Unit. To
the extent the number of unsubscribed Units is insufficient to
satisfy all of the properly exercised over-subscription right
requests, the available Units will be prorated among those who
properly exercised over-subscription rights in proportion to their
respective basic subscription right. Any excess payments will be
returned without interest or penalty as soon as practicable after
the expiration of the Rights Offering.
(c)
Excess Payments. If you exercised your Over-Subscription Right and
are allocated less than all of the Units for which you wished to
oversubscribe, then your excess Subscription Price payment for
Units that were not allocated to you will be returned by the
Subscription Agent to you by mail, without interest or deduction,
as soon as practicable after the Expiration Date.
6.
Execution.
(a)
Execution by Registered Holder. The signature on the Subscription
Rights Certificate must correspond with the name of the registered
holder exactly as it appears on the face of the Subscription Rights
Certificate without any alteration or change whatsoever. Persons
who sign the Subscription Rights Certificate in a representative or
other fiduciary capacity must indicate their capacity when signing
and, unless waived by the Subscription Agent in its sole and
absolute discretion, must present to the Subscription Agent
satisfactory evidence of their authority so to act.
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(b)
Execution by Person Other Than Registered Holder. If you hold your
shares of Common Stock in the name of a broker, dealer, bank or
other nominee as record holder, then your broker, dealer, bank or
other nominee is the record holder of the shares you own or are
deemed to own and the record holder must exercise the subscription
rights on your behalf for the Units that you wish to purchase. If
you wish to participate in the Rights Offering and purchase Units,
contact your broker, dealer, bank or other nominee promptly. You
should complete and return to your nominee the form entitled
“Beneficial Owner Election Form.” You should receive
this form from your broker, dealer, bank or other nominee with the
other Rights Offering materials. You should contact your broker,
dealer, bank, or other nominee if you believe that you are entitled
to participate in the Rights Offering but have not received any
Rights Offering materials.
7.
Method of Delivery. The method of delivery of Subscription Rights
Certificates and payment of the Subscription Price to the
Subscription Agent will be at the election and risk of the
Subscription Rights holder. If sent by mail, it is recommended that
they be sent by registered mail, properly insured, with return
receipt requested, and that a sufficient number of days be allowed
to ensure delivery to and receipt by the Subscription Agent prior
to the Expiration Date.
8. No
Revocation. All exercises of subscription rights are irrevocable,
even if you later learn information that you consider to be
unfavorable to the exercise of your subscription right, or the
market price of Common Stock falls below the subscription price of
the Units, including during any extension of the subscription
period. However, if we amend the Rights Offering to make a material
change to the terms set forth in this prospectus, you may cancel
your subscription and receive a refund of any money you have
advanced. You should not exercise your subscription right unless
you are certain that you wish to purchase Units at the Subscription
Price.
9.
Special Provisions Relating to the Exercise of Subscription Rights
through the Depository Trust Company. In the case of Subscription
Rights that are held of record through The Depository Trust Company
(“DTC”), exercises of the Subscription Rights may be
effected by instructing DTC to transfer Subscription Rights from
the DTC account of such holder to the DTC account of the
Subscription Agent, together with certification as to the aggregate
number of Subscription Rights exercised pursuant to the
Subscription Right by each beneficial owner of Subscription Rights
on whose behalf such nominee is acting, and payment of the
Subscription Price for each Unit subscribed for. Banks, brokers and
other nominee holders of Subscription Rights who exercise the Basic
Subscription Right and the Over-Subscription Right on behalf of
beneficial owners of Subscription Rights will be required to
certify to the Subscription Agent and the Company as to the
aggregate number of Subscription Rights that have been exercised,
and the number of Units that are being subscribed for pursuant to
the Over-Subscription Right, by each beneficial owner of
Subscription Rights (including such nominee itself) on whose behalf
such nominee holder is acting. In the event such certification is
not delivered in respect of a Subscription Rights Certificate, the
Subscription Agent shall for all purposes (including for purposes
of any allocation in connection with the Over-Subscription Right)
be entitled to assume that such certificate is exercised on behalf
of a single beneficial owner.
10.
Questions and Request for Additional Materials. If you have any
questions about the Rights Offering, including questions about
subscription procedures and requests for additional copies of this
prospectus or other documents, please contact the Subscription
Agent, Direct Transfer LLC by telephone toll-free at (888) 301-2498 or
corporate-actions@issuerdirect.com or for additional
questions you can contact the company directly at 206-483-0059 or
investors@growlifeinc.com.
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