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COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
LIONEL Z. GLANCY (#134180)
MICHAEL GOLDBERG (#188669)
ROBERT V. PRONGAY (#270796)
ELAINE CHANG (#293937 )
GLANCY BINKOW & GOLDBERG LLP
1925 Century Park East, Suite 2100
Los Angeles, California 90067
Telephone: (310) 201-9150
Facsimile: (310) 201-9160
E-mail: info@glancylaw.com
lglancy@glancylaw.com
mmgoldberg@glancylaw.com
rprongay@glancylaw.com


Attorneys for Plaintiff Gerald Young
[Additional counsel on signature page]

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

GERALD YOUNG, Individually and on
Behalf of All Others Similarly Situated,

Plaintiff,

v.

GROWLIFE, INC., STERLING SCOTT,
and J OHN GENESI,
Defendants.
Case No.:

CLASS ACTION

CLASS ACTION COMPLAINT FOR
VIOLATIONS OF THE FEDERAL
SECURITIES LAWS


DEMAND FOR JURY TRIAL
Case 2:14-cv-03183 Document 1 Filed 04/25/14 Page 1 of 34 Page ID #:1
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COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
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Plaintiff Gerald Young (Plaintiff), by and through his attorneys, alleges
the following upon information and belief, except as to those allegations
concerning Plaintiff, which are alleged upon personal knowledge. Plaintiffs
information and belief is based upon, among other things, his counsels
investigation, which includes without limitation: (a) review and analysis of
regulatory filings made by GROWLIFE, INC. (GrowLife or the Company),
with the United States Securities and Exchange Commission (SEC); (b) review
and analysis of press releases and media reports issued by and disseminated by
GrowLife; and (c) review of other publicly available information concerning
GrowLife.
NATURE OF THE ACTION AND OVERVIEW
1. This is a class action on behalf of purchasers of GrowLifes securities
between November 14, 2013 and April 9, 2014, inclusive (the Class Period),
seeking to pursue remedies under the Securities Exchange Act of 1934 (the
Exchange Act).
2. GrowLife (formerly Phototron Holdings, Inc.) 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.
Case 2:14-cv-03183 Document 1 Filed 04/25/14 Page 2 of 34 Page ID #:2
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COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
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3. On April 10, 2014, the SEC temporarily suspended trading in the
common stock of GrowLife until April 25, 2014. According to the SEC, trading of
the Companys securities was suspended due to questions about accuracy of the
Companys SEC filings and potentially manipulative transactions in the
Companys common stock.
4. On this news, when trading of the Companys stock resumed on April
25, 2014, shares of GrowLife declined as much as $0.27 per share, or 54%, to
$0.23 per share during intraday trading.
5. Throughout the Class Period, Defendants made false and/or
misleading statements, as well as failed to disclose material adverse facts about the
Companys business, operations, and prospects. Specifically, Defendants made
false and/or misleading statements and/or failed to disclose: (1) that the Company
had provided inaccurate and/or inadequate information about its stock and engaged
in potentially manipulative transactions; (2) that the Company lacked adequate
internal and financial controls; and (3) that, as a result of the foregoing, the
Companys statements about GrowLifes business, operations, and prospects were
materially false and misleading at all relevant times.
6. As a result of Defendants wrongful acts and omissions, and the
precipitous decline in the market value of the Companys securities, Plaintiff and
other Class members have suffered significant losses and damages.
Case 2:14-cv-03183 Document 1 Filed 04/25/14 Page 3 of 34 Page ID #:3
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COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
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JURISDICTION AND VENUE
7. The claims asserted herein arise under Sections 10(b) and 20(a) of the
Exchange Act (15 U.S.C. 78j(b) and 78t(a)) and Rule 10b-5 promulgated
thereunder by the SEC (17 C.F.R. 240.10b-5).
8. This Court has jurisdiction over the subject matter of this action
pursuant to 28 U.S.C. 1331 and Section 27 of the Exchange Act (15 U.S.C.
78aa).
9. Venue is proper in this J udicial District pursuant to 28 U.S.C.
1391(b) and Section 27 of the Exchange Act (15 U.S.C. 78aa(c)). Substantial
acts in furtherance of the alleged fraud or the effects of the fraud have occurred in
this J udicial District. Many of the acts charged herein, including the preparation
and dissemination of materially false and/or misleading information, occurred in
substantial part in this J udicial District. Additionally, GrowLifes principle
executive offices are located within this J udicial District.
10. In connection with the acts, transactions, and conduct alleged herein,
Defendants directly and indirectly used the means and instrumentalities of
interstate commerce, including the United States mail, interstate telephone
communications, and the facilities of a national securities exchange.


Case 2:14-cv-03183 Document 1 Filed 04/25/14 Page 4 of 34 Page ID #:4
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COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
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PARTIES
11. Plaintiff Gerald Young, as set forth in the accompanying certification,
incorporated by reference herein, purchased GrowLife common stock during the
Class Period, and suffered damages as a result of the federal securities law
violations and false and/or misleading statements and/or material omissions alleged
herein.
12. Defendant GrowLife is a Delaware corporation with its principal
executive offices located at 20301 Ventura Blvd., Suite 126, Woodland Hills,
California 91364.
13. Defendant Sterling Scott (Scott) was, at all relevant times, Chief
Executive Officer (CEO) and a director of GrowLife.
14. Defendant J ohn Genesi (Genesi) was, at all relevant times, Chief
Financial Officer (CFO) of GrowLife.
15. Defendants Scott and Genesi are collectively referred to hereinafter as
the Individual Defendants. The Individual Defendants, because of their
positions with the Company, possessed the power and authority to control the
contents of GrowLifes reports to the SEC, press releases and presentations to
securities analysts, money and portfolio managers and institutional investors, i.e.,
the market. Each defendant was provided with copies of the Companys reports
and press releases alleged herein to be misleading prior to, or shortly after, their
Case 2:14-cv-03183 Document 1 Filed 04/25/14 Page 5 of 34 Page ID #:5
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COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
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issuance and had the ability and opportunity to prevent their issuance or cause
them to be corrected. Because of their positions and access to material non-public
information available to them, each of these defendants knew that the adverse facts
specified herein had not been disclosed to, and were being concealed from, the
public, and that the positive representations which were being made were then
materially false and/or misleading. The Individual Defendants are liable for the
false statements pleaded herein, as those statements were each group-published
information, the result of the collective actions of the Individual Defendants.
SUBSTANTIVE ALLEGATIONS
Background

16. GrowLife (formerly Phototron Holdings, Inc.) 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.
Materially False and Misleading
Statements Issued During the Class Period
17. The Class Period begins on November 14, 2013. On this day, the
Company issued a press release entitled, GrowLife Releases Year to Date and Q3
Financials and Reports Year to Date Revenues of $2,939,026, up 278% versus
Comparable Period 2012. Therein, the Company, in relevant part, stated:


Case 2:14-cv-03183 Document 1 Filed 04/25/14 Page 6 of 34 Page ID #:6
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COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
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Third Quarter Gross Revenue Rises to $1.3 million

GrowLife, Inc. (OTCBB: PHOT), a diversified company operating in
the legal cannabis industry which develops, markets and deploys
products and services addressing the needs of legal cannabis growing
and retail operations, including hydroponic growing equipment, is
pleased to announce the timely filing of its Third Quarter, 2013,
financial results for the quarter ending September 30, 2013. The full
10Q filing is available at www.GrowLifeInc.com or on the SECs
website http://edgar.sec.gov/.

Year-to-date 2013 revenue from sales increased to $2,939,026 from
the $776,125 recorded in the comparable period in 2012. For the
quarter ended September 30, 2013, revenue was $1,313,399, an
increase of $837,529, or almost two times, the $475,870 in revenues
recorded for the same period in 2012. (This growth in 2013 is
primarily attributable to GrowLifes (1) strategic acquisitions, (2)
product expansion, (3) business alliances, and (4) continually
improving market conditions.

Highlights and Milestones from the beginning of the period to present
include:

GrowLife Opens 7th Retail Store in Santa Rosa, CA
GrowLife Expands Cannabis Presence to Include GrowLife
Infrastructure Funding & Technology program (GIFT)
GrowLife Launches Cannabis.org
GrowLife Provides Open Letter from Sterling Scott, CEO,
GrowLife, Inc., Regarding the Department of J ustice Position
Change Regarding Marijuana
GrowLifes Phototron Featured and Recommended in
November Issue of High Times

All the above events can be read in their entirety by looking under the
news feed for GrowLife (OTCBB: PHOT).

Our Company has much to be excited about going into the last
financial quarter of the year and 2014. At the same time that
GrowLife is successfully integrating acquisitions and organic
Case 2:14-cv-03183 Document 1 Filed 04/25/14 Page 7 of 34 Page ID #:7
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COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
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expansion into cohesive and complementary marketing and sales
operations, we are becoming more effective as an enterprise entering
related verticals of the cannabis industry that align with our core
strengths and our conservative approach, stated GrowLife CEO,
Sterling Scott. Legal cannabis is a very powerful and profitable
industry in the USA; GrowLife is a growing force at the center of the
industry with intentions to be a major brand for the decades after the
end of prohibition.

18. On November 14, 2013, the Company also filed with the SEC a
Quarterly Report on Form 10-Q for the 2013 fiscal third quarter. The Form 10-Q
was signed by Defendants Scott and Genesi, and reaffirmed the Companys
financial results and financial position previously announced that day. The
Companys Form 10-Q also contained required Sarbanes-Oxley certifications,
signed by Defendants Scott and Genesi, who certified:
1. I have reviewed this report on Form 10-Q of GrowLife, Inc.;

2. Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this report;

3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this
report;

4. The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
Case 2:14-cv-03183 Document 1 Filed 04/25/14 Page 8 of 34 Page ID #:8
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COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
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a. Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which
this report is being prepared;

b. Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;

c. Evaluated the effectiveness of the registrants disclosure
controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation;
and

d. Disclosed in this report any change in the registrants
internal control over financial reporting that occurred during the
registrants most recent fiscal quarter (the registrants fourth fiscal
quarter in the case of an annual report) that has materially affected, or
is reasonably likely to materially affect, the registrants internal
control over financial reporting; and

5. The registrants other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrants auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent
functions):

a. All significant deficiencies and material weaknesses in
the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrants ability
to record, process, summarize and report financial information; and

Case 2:14-cv-03183 Document 1 Filed 04/25/14 Page 9 of 34 Page ID #:9
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COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
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b. Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal control over financial reporting.

19. With respect to the issuance of common stock for services rendered,
the Companys Form 10-Q, in relevant part, stated:
During the nine month period ended September 30, 2013, the
Company issued 32,822,333 shares of its common stock for services
rendered and wages to its employees. These shares were valued at
$1,173,747 and are detailed as follows:

20. However, with respect to Board Member compensation, the
Companys Form 10-Q also stated:
During the nine-month period ended September 30, 2013, the
Company recorded $45,000 in compensation to members of its Board
of Directors, all of which was non-cash and paid via the issuance of
shares of the Companys common stock.

21. Additionally, the Companys Form 10-Q, in relevant part, stated:
On September 30, 2013, the Company issued 1,000,000 shares of its
common stock to its two (2) independent members of the Companys
Board of Directors. These shares were issued on a non-cash basis and
were compensation for services rendered during the April J une 2013
period. These shares were valued at $20,000 in the aggregate and
$0.02 per share.

Case 2:14-cv-03183 Document 1 Filed 04/25/14 Page 10 of 34 Page ID #:10
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COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
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22. On April 8, 2014, the Company issued a press release entitled,
GrowLife Releases Annual Report, Posts $1.9 Million in Q4 Revenue, $4.8
Million in Annual Sales. Therein, the Company, in relevant part, stated:
GrowLife, Inc. (OTCBB: PHOT), a diversified company operating in
the legal cannabis industry which develops, markets and deploys
products and services of legal cannabis, is pleased to announce the
timely filing of its Annual Report and financial results for the fiscal
year ending December 31, 2013. The full 10k filing is available in its
entirety at www.GrowLifeInc.com or on the SECs website
http://edgar.sec.gov/.

GrowLife revenues for 2013 revenue from sales increased to
$4,858,976 from $1,450,745, an increase of $3,408,231 or 235%
compared against audited revenues in 2012. For the quarter ended
December 31, 2013, Q4, revenue was $1,912,311, an increase of
$1,237,691, an 183% increase compared to the $674,620 in revenues
recorded for the same period in 2012.

As the Company describes in detail in the full regulatory filing the
improved results in 2013 were primarily attributable to GrowLifes
(1) strategic acquisitions, (2) product expansion, (3) business
alliances, and (4) continually improving market conditions. The
Companys reported results reflect costs of certain important
initiatives including GIFT transactions, GrowLife reintroduction and
expansion of private label products under the Stealth Grow product
line as well as other recent initiatives the Company has developed but
as yet not derived revenue to date.

The rapid growth of the company in 2013, combined with our focus
on market share and expansion has resulted in some margin
compression, which the Company believes is temporary. Moreover,
the Companys financial results also include substantial non-cash, one
time charges related to warrants that were issued by the company in
2013 and expensed by the company in accordance with GAAP
requirements. The reported net loss of the Company for 2013, on a
non-GAAP basis, exclusive of non-cash one-time charges, was
$2,038,907.
Case 2:14-cv-03183 Document 1 Filed 04/25/14 Page 11 of 34 Page ID #:11