9. INVESTMENT IN VAPE HOLDINGS, INC.

6 Months Ended

Jun. 30, 2014

Notes to Financial Statements

INVESTMENT IN VAPE HOLDINGS, INC.

In May 2013, the Company made an investment in the amount of $1,160 in Vape Holdings, Inc., a Nevada corporation and received 200,428 shares.

Sterling Scott, the Company’s then Chief Executive Officer, owned 257,320 shares of Vape’s common stock. Furthermore, the former President of GrowLife, Inc. is currently the Chief Executive Officer of Vape. As a result of Mr. Scott’s ownership of Vape common stock, the Company has deemed Vape to be a related party and therefore has recorded its investment in Vape as an “Investment in a related party” on its balance sheet.

The value of the Company’s investment in Vape as of December 31, 2013 was $5.60 per share, or $1,122,397. As of June 30, 2014, the Company’s investment in Vape was valued at $412,882. The Company recorded the $709,515 loss in the value of its investment in Vape by decreasing its “Investment in a related party” balance sheet account while also recording a corresponding decrease to “Unrealized loss on investment in a related party” in the Stockholders’ deficit section of the Company’s balance sheet.

As of the date of this filing, the Company owns 200,428 shares of Vape’s common stock.