GrowLife Inc (PHOT)

[justthefactsmam]

QUESTIONABLE BOD ACTION:

On December 11, 2013, the Company issued a warrant for 25,000,000 common shares to Hegyi, LLC, an entity controlled by Marco Hegyi, President of the Company. The warrants have a five-year term with an original exercise price of $0.08 per share. The warrants vest immediately and are exercisable in whole, or in part, at any time and from time to time on or after the issue date and on or before the termination date. The Company valued the warrants at the time of issuance using the Black-Scholes option pricing model using the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 88.81%; (iii) risk free rate of 0.02% and (iv) an expected term of three years. The Company expensed the entire $1,725,000 at the time of issuance because the warrants vested immediately and were also exercisable immediately.

On January 25, 2016, GrowLife, Inc. (the “Company”) approved a change in the Employment Agreement for Mr. Marco Hegyi, the Company’s President. The change reduced the Warrant price to $0.010 per share. The change was effective December 18, 2015.

so, instead of actually doing something to actually earn a profit from the warrants, the board just reduced the warrants from $.08 to $.01. not exactly what you would call being aligned with shareholder interests!!