GrowLife (PHOT) 10-K 14 Apr 16 2015 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2015	Apr. 14, 2016	Jun. 30, 2015
Document And Entity Information
Entity Registrant Name	GrowLife, Inc.
Entity Central Index Key	1,161,582
Document Type	10-K
Document Period End Date	Dec. 31, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	No
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 16,793,431
Entity Common Stock, Shares Outstanding		1,099,143,981
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2,015

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($)	Dec. 31, 2015	Dec. 31, 2014
CURRENT ASSETS:
Cash and cash equivalents	$ 60,362	$ 286,238
Inventory, net	398,439	883,350
Prepaid expenses	0	41,791
Deposits	16,754	33,584
Total Current Assets	475,555	1,244,963
EQUIPMENT, NET	10,327	24,042
OTHER ASSETS
Intangible assets, net	243,604	353,752
Goodwill	739,000	739,000
TOTAL ASSETS	1,468,486	2,361,757
CURRENT LIABILITIES:
Accounts payable - trade	1,272,572	1,129,130
Accounts payable - related parties	71,920	0
Accrued expenses	121,765	276,225
Accrued expenses - related parties	53,287	0
Derivative liability	1,377,175	2,100,915
Current portion of convertible notes payable	2,287,868	887,272
Deferred revenue	25,000	108,799
Total current liabilities	5,209,587	4,502,341
LONG TERM LIABILITIES:
Convertible notes payable	0	98,333
COMMITMENTS AND CONTINGENCIES	2,000,000	0
MEZZANINE EQUITY:
Contingently redeemable common stock-15,000,000 shares issued and outstanding at 12/31/15 and 12/31/14, respectively	300,000	0
Stockholders' Deficit
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding, Series B Convertible Preferred stock - $0.0001 par value, 150,000 shares authorized, 150,000 shares issued and outstanding at 12/31/2015 and 12/31/2014, respectively, Series C Convertible Preferred stock - $0.0001 par value, 51 shares authorized, 51 shares issued and outstanding at 12/31/2015 and 12/31/2014, respectively	0	0
Common stock - $0.0001 par value, 3,000,000,000 shares authorized, 891,116,496 and 879,343,771 shares issued and outstanding at 12/31/15 and 12/31/14, respectively	89,098	87,936
Additional paid-in capital	110,585,434	108,699,950
Accumulated deficit	(116,715,648)	(111,026,803)
Total stockholders' deficit	(6,041,101)	(2,238,917)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	1,468,486	2,361,757
Series B Preferred Stock
Stockholders' Deficit
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding, Series B Convertible Preferred stock - $0.0001 par value, 150,000 shares authorized, 150,000 shares issued and outstanding at 12/31/2015 and 12/31/2014, respectively, Series C Convertible Preferred stock - $0.0001 par value, 51 shares authorized, 51 shares issued and outstanding at 12/31/2015 and 12/31/2014, respectively	15	0
Series C Preferred Stock
Stockholders' Deficit
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding, Series B Convertible Preferred stock - $0.0001 par value, 150,000 shares authorized, 150,000 shares issued and outstanding at 12/31/2015 and 12/31/2014, respectively, Series C Convertible Preferred stock - $0.0001 par value, 51 shares authorized, 51 shares issued and outstanding at 12/31/2015 and 12/31/2014, respectively	$ 0	$ 0

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2015	Dec. 31, 2014
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred Stock, Authorized	10,000,000	10,000,000
Preferred Stock, Issued	0	0
Preferred stock, outstanding shares	0	0
Common Stock par value	$ 0.0001	$ 0.0001
Common Stock, Authorized	3,000,000,000	3,000,000,000
Common Stock, Issued	891,116,496	879,343,771
Common Stock, Outstanding	891,116,496	879,343,771
Series B Preferred Stock
Preferred stock, par value	$ .0001	$ 0.0001
Preferred Stock, Authorized	150,000	150,000
Preferred Stock, Issued	150,000	150,000
Preferred stock, outstanding shares	150,000	150,000
Series C Preferred Stock
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred Stock, Authorized	51	51
Preferred Stock, Issued	51	51
Preferred stock, outstanding shares	51	51

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Statement [Abstract]
NET REVENUE	$ 3,499,642	$ 8,537,676
COST OF GOODS SOLD	2,980,503	7,172,376
GROSS PROFIT	519,139	1,365,300
GENERAL AND ADMINISTRATIVE EXPENSES	2,684,107	7,851,370
OPERATING LOSS	(2,164,968)	(6,486,070)
OTHER INCOME (EXPENSE):
Change in fair value of derivative	1,678,541	(16,252,823)
Interest expense, net	(1,118,635)	(64,073,997)
Other expense, primarily related to TCA Global Credit Master Fund LP funding	(2,002,533)	0
Loss on class action lawsuit settlements	(2,081,250)	0
Realized gain on sale of investment	0	186,791
Total other (expense)	(3,523,877)	(80,140,029)
(LOSS) BEFORE INCOME TAXES	(5,688,845)	(86,626,099)
Income taxes - current benefit	0	0
NET (LOSS)	$ (5,688,845)	$ (86,626,099)
Basic and diluted (loss) per share	$ (0.01)	$ (0.10)
Weighted average shares of common stock outstanding- basic and diluted	884,348,627	834,503,868

Consolidated Statements of Stoc

Consolidated Statements of Stockholders' Deficit - USD ($)	Series B Preferred Stock	Series C Preferred Stock	Common Stock [Member]	Unrealized gain on investment in related party	Additional Paid-In Capital	Accumulated Deficit	Total
Begining balance at Dec. 31, 2013	$ 0	$ 0	$ 75,571	$ 1,121,237	$ 17,359,932	$ (24,400,704)	$ (5,843,964)
Begining balance, shares at Dec. 31, 2013	0	0	755,694,870
Exercise of options, amount			$ 235		44,438		44,673
Exercise of options, shares			2,351,187
Cashless exercise of options, amount			$ 357		(357)		0
Cashless exercise of options, shares			3,570,455
Conversion of notes, amount			$ 10,251		1,875,684		1,885,935
Conversion of notes, shares			102,507,839
Shares issued for debt conversion, shares			102,507,839
Shares issued for services rendered, amount			$ 1,522		2,720,078		2,721,600
Shares issued for services rendered, shares			15,219,420
Stock based compensation for stock options					724,267		724,267
Unrealized gain (loss) on investment in related party				(1,121,237)			(1,121,237)
Change in fair value of derivative liability					23,475,908		23,475,908
Value of warrants expensed (issued to CANX and Hegyi, LLC)					62,500,000		62,500,000
Net loss						(86,626,099)	(86,626,099)
Ending balance at Dec. 31, 2014	$ 0	$ 0	$ 87,936	0	108,699,950	(111,026,803)	(2,238,917)
Ending balance, shares at Dec. 31, 2014	0	0	879,343,771
Conversion of notes, shares			7,772,725
Shares issued for debt conversion, amount			$ 777		170,223		171,000
Shares issued for debt conversion, shares			7,772,725
Shares issued for services rendered, amount			$ 400		39,600		40,000
Shares issued for services rendered, shares			4,000,000
Stock based compensation for stock options					175,661		175,661
Issuance of Series B Convertible Preferred Stock, amount	$ 15		$ (15)		1,500,000		1,500,000
Issuance of Series B Convertible Preferred Stock, shares	150,000
Issuance of Series C Convertible Preferred Stock, amount		$ 0					0
Issuance of Series C Convertible Preferred Stock, shares		51
Net loss						(5,688,845)	(5,688,845)
Ending balance at Dec. 31, 2015	$ 15	$ 0	$ 89,098	$ 0	$ 110,585,434	$ (116,715,648)	$ (6,041,101)
Ending balance, shares at Dec. 31, 2015	150,000	51	891,116,496

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (5,688,845)	$ (86,626,099)
Adjustments to reconcile net loss to net cash (used in) operating activities:
Depreciation and amortization	13,715	33,641
Amortization of intangible assets	106,548	106,548
Change in inventory reserve	0	12,711
Stock based compensation	175,661	724,267
Preferred shares issued for services	300,000	0
Common stock issued for services	210,985	2,721,600
Amortization of debt discount	(158,237)	1,363,847
Change in fair value of derivative liability	(723,740)	16,252,823
Expense related to warrant	0	62,500,000
Accrued interest on convertible notes payable	310,500	183,214
Loss on class action lawsuit settlements	2,000,000	0
Issuance of Series B Convertible Preferred Stock	1,500,000	0
Write-off of patent expenses	3,600	0
Excess and obsolete inventory	20,215	0
Realized gain on sale of investment	0	(186,791)
Changes in assets and liabilities:
Restricted Cash	0	46,400
Accounts receivable	0	183,678
Inventory	464,696	357,660
Prepaid expenses	41,791	(24,790)
Other receivable	0	3,666
Deposits	16,830	12,589
Accounts payable	215,362	33,926
Accrued expenses	(209,972)	209,421
Deferred revenue	25,000	(30,888)
CASH (USED IN) OPERATING ACTIVITIES	(1,375,891)	(2,122,577)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash proceeds from shares in Vape Holdings, Inc.	0	187,951
Capital expenditures	0	(3,925)
NET CASH PROVIDED BY INVESTING ACTIVITIES:	0	184,026
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of convertible notes	1,150,000	350,000
Series B Convertible Preferred Stock	15	0
Proceeds from options exercised	0	44,673
Payments of notes payable - related party	0	(1,160)
NET CASH PROVIDED BY FINANCING ACTIVITIES	1,150,015	393,513
NET (DECREASE) IN CASH AND CASH EQUIVALENTS	(225,876)	(1,545,038)
CASH AND CASH EQUIVALENTS, beginning of period	286,238	1,831,276
CASH AND CASH EQUIVALENTS, end of period	60,362	286,238
Supplemental disclosures of cash flows information:
Cash paid for interest	10,500	0
Cash paid for income taxes	0	0
NON-CASH TRANSACTIONS
Six percent Senior secured convertible notes converted into common stock	0	62,025
Seven percent Senior secured convertible notes converted into common stock	0	1,384,207
Twelve percent Senior secured convertible notes converted into common stock	0	439,688
Common stock issued for cashless exercise of options	0	357
Common stock issued for conversion of accounts payable	$ 171,000	$ 0

1. DESCRIPTION OF BUSINESS AND

1. DESCRIPTION OF BUSINESS AND ORGANIZATION	12 Months Ended
	Dec. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
DESCRIPTION OF BUSINESS AND ORGANIZATION	GrowLife, Inc. (“GrowLife” or the “Company”) is incorporated under the laws of the State of Delaware and is headquartered in Seattle, Washington. The Company was founded in 2012 with the Closing of the Agreement and Plan of Merger with SGT Merger Corporation. The Company’s goal of becoming the nation’s largest cultivation facility service provider for the production of organics, herbs and greens and plant-based medicines has not changed. The Company’s mission is to best serve more cultivators in the design, build-out, expansion and maintenance of their facilities with products of high quality, exceptional value and competitive price. Through a nationwide network of knowledgeable representatives, regional centers and its e-commerce website, GrowLife provides essential and hard-to-find goods including media (i.e., farming soil), industry-leading hydroponics equipment, organic plant nutrients, and thousands more products to specialty grow operations across the United States. The Company primarily sells through its wholly owned subsidiary, GrowLife Hydroponics, Inc. In addition to the promotion and sales of GrowLife owned brands, GrowLife companies distribute and sell over 3,000 products through its e-commerce distribution channel, Greners.com, and through our regional retail storefronts. GrowLife and its business units are organized and directed to operate strictly in accordance with all applicable state and federal laws. Past Merger and Acquisition Transactions On June 7, 2013, GrowLife Hydroponics completed the purchase of Rocky Mountain Hydroponics, LLC, a Colorado limited liability company (“RMC”), and Evergreen Garden Center, LLC, a Maine limited liability company (“EGC”). The effective date of the purchase was June 7, 2013. The Company purchased all of the assets and liabilities of the RMH and EGC Companies, and their retail hydroponics stores, which are located in Vail and Boulder, Colorado and Portland, Maine. The Company purchased RMC and EGC from Rob Hunt, who was appointed to the then Company’s Board of Directors and President of GrowLife Hydroponics, Inc. On July 23, 2012, the Company completed the purchase of substantially all of the assets of Donna Klauenburch and Tao Klauenburch related to the online retail business Greners.com. On October 24, 2012, the Company’s wholly owned subsidiary GrowLife Hydroponics, Inc., a Delaware corporation, completed the purchase of all of the shares of Soja, Inc. dba Urban Garden Supplies (the “Urban Garden”) from Richard Melograno, Michael Cook, and Scott Glass (collectively the “UG Sellers”). The Company acquired all of the assets and liabilities of Urban Garden which included the inventory of the store located at 22516 Ventura Blvd., Woodland Hills, CA 91364. Agreement and Plan of Merger with SGT Merger Corporation On March 21, 2012, the Company entered into an Agreement and Plan of Merger with SGT Merger Corporation, a Nevada corporation and the Company’s wholly-owned subsidiary, SG Technologies Corp, a Nevada corporation (“SGT”), Sterling C. Scott, and W-Net Fund I, L.P., a Delaware limited partnership and current holder of the Company’s common stock. The transaction closed on April 5, 2012. At the Closing, (i) The Merger Corporation was merged with and into SGT; (ii) SGT became the Company’s wholly-owned subsidiary; and (iii) all SGT shares of common stock were exchanged for shares of our common stock and shares of a new series of our preferred stock, which was designated Series A Preferred Stock. At the Closing, the Company issued to SGT’s former stockholders 157,000,000 shares of the Company’s common stock and 3,000,000 shares of Series A Preferred Stock in exchange for the 200 shares of SGT’s common stock outstanding immediately prior to the Merger. Sterling C. Scott was appointed to the then Company’s Board of Directors and Chief Executive Officer. After the Merger, former holders of SGT’s common stock owned in excess of 50% of our fully-diluted shares of common stock, and as a result of certain other factors, including that all members of our executive management are members of SGT’s management, SGT is deemed to be the acquiring company and the Company was deemed to be the legal acquirer for accounting purposes, and the Merger was accounted for as a reverse merger and a recapitalization in accordance with GAAP. The consolidated financial statements of GrowLife and its subsidiaries reflect the historical activity of SGT, and the historical stockholders’ equity of SGT has been retroactively restated for the equivalent number of shares received in the exchange. Suspension of Trading of the Company’s Securities On April 10, 2014, the Company received notice from the SEC that trading of the Company’s common stock on the OTCBB was to be suspended from April 10, 2014 through April 24, 2014. The SEC issued its order pursuant to Section 12(k) of the Securities Exchange Act of 1934. According to the notice received by us from the SEC: “It appears to the Securities and Exchange Commission that the public interest and the protection of investors require a suspension of trading in the securities of GrowLife, Inc. because of concerns regarding the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in GrowLife’s common stock.” The Company did not receive notice from the SEC that it was being formally investigated. The suspension of trading eliminated the Company’s market makers, resulted in our trading on the grey sheets, resulted in legal proceedings and restricted the Company’s access to capital. On April 25, 2014, shares of the Company’s common stock resumed trading on the “grey sheets” and were not formally quoted or listed on any stock exchange as of December 31, 2015. SEC Charges of Manipulating Our Securities On August 5, 2014, the SEC charged four promoters with ties to the Pacific Northwest for manipulating the Company’s open market and conducted pre-arranged, manipulative matched orders and wash trades to create the illusion of an active market in these stocks. The promoters then sold their shares in coordination with aggressive promotional campaigns that urged investors to buy the stocks because the prices were on the verge of rising substantially. On July 9, 2015, the SEC entered into settlements with two of the promoters. In connection with the settlement of their SEC action, the two men are liable for disgorgement of approximately $2.1 million and $306,000 in illicit profits, respectively. Earlier this year the two men were also sentenced to five and three years in prison, respectively, for their participation in the scheme. Resumed Trading of our Common Stock On February 18, 2016, the Company’s common stock resumed unsolicited quotation on the OTC Bulletin Board after receiving clearance from the Financial Industry Regulatory Authority (“FINRA”) on our Form 15c2-11. The Company is currently taking the appropriate steps to uplist to the OTCQB Exchange and resume priced quotations with market makers as soon as it is able.

2. GOING CONCERN

2. GOING CONCERN	12 Months Ended
	Dec. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
GOING CONCERN	The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company incurred net losses of $5,688,845 and $86,626,099 for the years ended December 31, 2015 and 2014, respectively. Our net cash used in operating activities was $1,375,891 and $2,122,577 and the years ended December 31, 2015 and 2014, respectively. The Company anticipates that it will record losses from operations for the foreseeable future. As of December 31, 2015, our accumulated deficit was $116,715,648. The Company has experienced recurring operating losses and negative operating cash flows since inception, and has financed its working capital requirements during this period primarily through the recurring issuance of convertible notes payable and advances from a related party. The audit report prepared by our independent registered public accounting firm relating to our financial statements for the year ended December 31, 2015 and filed with the SEC on April 14, 2016 includes an explanatory paragraph expressing the substantial doubt about our ability to continue as a going concern. Continuation of the Company as a going concern is dependent upon obtaining additional working capital. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

3. SIGNIFICANT ACCOUNTING POLIC

3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS	12 Months Ended
	Dec. 31, 2015
Accounting Policies [Abstract]
SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS	Basis of Presentation - Principles of Consolidation Cash and Cash Equivalents Accounts Receivable and Revenue - Inventories - Property and Equipment - Goodwill and Intangible Assets - The Company amortizes the cost of other intangible assets over their estimated useful lives, which range up to ten years, unless such lives are deemed indefinite. Intangible assets with indefinite lives are tested in the fourth quarter of each fiscal year for impairment, or more often if indicators warrant. Equity Investments – The Company classifies all highly-liquid investments with stated maturities of greater than three months from the date of purchase and remaining maturities of less than one year as short-term investments. Investments with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such investments are viewed as being available to support current operations. The Company classifies and accounts for short-term investments as available-for-sale and reflect realized gains and losses using the specific identification method. Changes in market value, if any, excluding other-than-temporary impairments, are reflected under stockholders’ deficit as unrealized gain/loss on related party investment. Long Lived Assets Fair Value Measurements and Financial Instruments - Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The carrying value of cash, accounts receivable, investment in a related party, accounts payables, accrued expenses, due to related party, notes payable, and convertible notes approximates their fair values due to their short-term maturities. Derivative financial instruments - As of December 31, 2015 and 2014, the Company had outstanding 7% convertible notes for $500,000 that the Company determined were a derivative liability due to the “reset” clause associated with the note’s conversion price. The Company valued the derivative liability of these notes at $105,515 and $1,278,878, respectively, using the Black-Scholes-Merton option pricing model. As of December 31, 2015 and 2014, the Company had outstanding 6% convertible notes for $350,000 that the Company determined were a derivative liability due to the “reset” clause associated with the note’s conversion price. The Company valued the derivative liability of these notes at $54,377 and $822,037, respectively using the Black-Scholes-Merton option pricing model. As of December 31, 2015, the Company had outstanding 18% convertible notes for $1,150,000 that the Company determined were a derivative liability due to the “reset” clause associated with the note’s conversion price. The Company valued the derivative liability of these notes at $1,217,283 using the Black-Scholes-Merton option pricing model. Sales Returns - Shipping and Handling Fees and Cost - Stock Based Compensation Advertising Costs - Net (Loss) Per Share - Dividend Policy Use of Estimates - Reclassifications Recent Accounting Pronouncements A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, management has not determined whether implementation of such proposed standards would be material to our consolidated financial statements. In August 2014, FASB issued ASU 2014-15—Presentation of Financial Statements—Going Concern (ASC Subtopic 205-40): “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. In May 2014, FASB issued ASU 2014-09—Revenue from Contracts with Customers (Topic 606): “Section A—Summary and Amendments That Create Revenue from Contracts with Customers, (Topic 606) and Other Assets and Deferred Costs—Contracts with Customers (Subtopic 340-40), Section B—Conforming Amendments to Other Topics and Subtopics in the Codification and Status Tables, Section C—Background Information and Basis for Conclusions”. In July 2013, FASB issued ASU 2013-11—Income Taxes (ASC Topic 740): “ Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists New Accounting Standards Issued but Not Yet Adopted In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”)

4. PURCHASE - ROCKY MOUNTAIN HY

4. PURCHASE - ROCKY MOUNTAIN HYDROPONICS and EVERGREEN GARDEN CENTER	12 Months Ended
	Dec. 31, 2015
ROCKY MOUNTAIN HYDROPONICS and EVERGREEN GARDEN CENTER
PURCHASE - ROCKY MOUNTAIN HYDROPONICS and EVERGREEN GARDEN CENTER	On June 7, 2013, GrowLife Hydroponics completed the purchase of Rocky Mountain Hydroponics, LLC, a Colorado limited liability company (“RMC”), and Evergreen Garden Center, LLC, a Maine limited liability company (“EGC”). The effective date of the purchase was June 7, 2013. The purchase included all of the assets and liabilities of the RMH and EGC Companies, and their retail hydroponics stores, which are located in Vail and Boulder, Colorado and Portland, Maine. The Company purchased RMC and EGC from Rob Hunt, who was appointed to the Company’s Board of Directors and was appointed President of GrowLife Hydroponics, Inc. The Company paid the former owners of the RMH and EGC Companies $550,000 in cash, $800,000 in 12% Secured Convertible Notes, and $275,000 (7,857,141 shares at $0.035/share) in shares of the Company’s common stock. The purchase price was allocated to specific identifiable tangible and intangible assets at their fair value at the date of the purchase in accordance with Accounting Standards Codification 805, “Business Combinations”, as follows: Allocation $ Assets $ 907,614 Intangible assets 366,000 Goodwill 739,000 Total 2,012,614 Less fair value of liabilities (387,614 ) Purchase price $ 1,625,000 The Company is amortizing the $366,000 of intangible assets at the rate of $6,100 per month over 5 years, with the Company recording $106,548 of non-cash amortization expense related to these intangible assets during the years ended December 31, 2015 and 2014. The Company consolidated the results from operations from June 7, 2013.

5. TRANSACTIONS WITH CANX USA,

5. TRANSACTIONS WITH CANX USA, LLC AND LOGIC WORKS LLC	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
TRANSACTIONS WITH CANX USA, LLC AND LOGIC WORKS LLC	Transactions with CANX, LLC and Logic Works LLC On July 10, 2014, the Company closed a Waiver and Modification Agreement, Amended and Restated Joint Venture Agreement, Secured Credit Facility and Secured Convertible Note with CANX, and Logic Works LLC, a lender and shareholder of the Company. The Agreements require the filing of a registration statement on Form S-1 within 10 days of the filing of the Company’s Form 10-Q for the period ended June 30, 2014. Due to the Company’s grey sheet trading status and other issues, the Company did not file the registration statement. Previously, the Company entered into a Joint Venture Agreement with CANX USA LLC, a Nevada limited liability company. Under the terms of the Joint Venture Agreement, the Company and CANX formed Organic Growth International, LLC (“OGI”), a Nevada limited liability company, for the purpose of expanding the Company’s operations in its current retail hydroponic businesses and in other synergistic business verticals and facilitating additional funding for commercially financeable transactions of up to $40,000,000. In connection with the closing of the Agreement, CANX agreed to provide a commitment for funding in the amount of $1,300,000 for a GrowLife Infrastructure Funding Technology program transaction and provided additional funding under a 7% Convertible Note instrument for $1,000,000, including $500,000 each from Logic Works and China West III Investments LLC, entities that are unaffiliated with CANX and operate as separate legal entities. The Company initially owned a non-dilutive forty five percent (45%) share of OGI and the Company may acquire a controlling share of OGI as provided in the Joint Venture Agreement. In accordance with the Joint Venture Agreement, the Company and CANX entered into a Warrant Agreement whereby the Company delivered to CANX a warrant to purchase 140,000,000 shares of the Company common stock at a maximum strike price of $0.033 per share. Also in accordance with the Joint Venture Agreement, the Company issued an additional warrant to purchase 100,000,000 shares of the Company’s common stock at a maximum strike price of $0.033 per share on February 7, 2014. On April 10, 2014, as a result of the suspension in the trading of the Company’s securities, the Company went into default on its 7% Convertible Notes Payable for $500,000 each from Logic Works and China West III. As a result, the Company accrued interest on these notes at the default rate of 24% per annum. Furthermore, as a result of being in default on these notes, the Holders could have, at their sole discretion, called these notes. Waiver and Modification Agreement The Company entered into a Waiver and Modification Agreement dated June 25, 2014 with Logic Works LLC whereby the 7% Convertible Note with Logic Works dated December 20, 2013 was modified to provide for (i) a waiver of the default under the 7% Convertible Note; (ii) a conversion price which is the lesser of (A) $0.025 or (B) twenty percent (20%) of the average of the three (3) lowest daily VWAPs occurring during the twenty (20) consecutive Trading Days immediately preceding the applicable Conversion Date on which the Holder elects to convert all or part of this Note; (iii) the filing of a registration statement on Form S-1 within 10 days of the filing of the Company’s Form 10-Q for the period ended June 30, 2014; and (iv) continuing interest of 24% per annum. China West III converted its Note into common stock on June 4, 2014. Due to the Company’s grey sheet trading status and other issues, the Company did not file the registration statement. This 20% of the average should be 70% and the Parties are working to resolve this issue. Amended and Restated Joint Venture Agreement The Company entered into an Amended and Restated Joint Venture Agreement dated July 1, 2014 with CANX whereby the Joint Venture Agreement dated November 19, 2013 was modified to provide for (i) up to $12,000,000 in conditional financing subject to review by GrowLife and approval by OGI for business growth development opportunities in the legal cannabis industry for up to nine months, subject to extension; (ii) up to $10,000,000 in working capital loans, with each loaning requiring approval in advance by CANX; (iii) confirmed that the five year warrants, subject to extension, at $0.033 per share for the purchase of 140,000,000 and 100,000,000 were fully earned and were not considered compensation for tax purposes by the Company; (iv) granted CANX five year warrants, subject to extension, to purchase 300,000,000 shares of common stock at the fair market price of $0.033 per share as determined by an independent appraisal; (v) warrants as defined in the Agreement related to the achievement of OGI milestones; (vi) a four year term, subject to adjustment and (vi) the filing of a registration statement on Form S-1 within 10 days of the filing of the Company’s Form 10-Q for the period ended June 30, 2014. Due to the Company’s grey sheet trading status and other issues, the Company did not file the registration statement. Secured Convertible Note and Secured Credit Facility The Company entered into a Secured Convertible Note and Secured Credit Facility dated June 25, 2014 with Logic Works whereby Logic Works agreed to provide up to $500,000 in funding. Each funding requires approval in advance by Logic Works, provides for interest at 6% with a default interest of 24% per annum and requires repayment by June 26, 2016. The Note is convertible into common stock of the Company at the lesser of $0.0070 or (B) twenty percent (20%) of the average of the three (3) lowest daily VWAPs occurring during the twenty (20) consecutive Trading Days immediately preceding the applicable conversion date on which Logic Works elects to convert all or part of this 6% Convertible Note, subject to adjustment as provided in the Note. The 6% Convertible Note is collateralized by the assets of the Company. On July 10, 2014, the Company closed a Waiver and Modification Agreement, Amended and Restated Joint Venture Agreement, Secured Credit Facility and Secured Convertible Note with CANX, and Logic Works LLC, a lender and shareholder of the Company. As of December 31, 2014, the Company has borrowed $350,000 under the Secured Convertible Note and Secured Credit Facility dated June 25, 2014 with Logic Works. OGI was incorporated on January 7, 2014 in the State of Nevada and had no business activities as of December 31, 2015.

6. INVENTORY

6. INVENTORY	12 Months Ended
	Dec. 31, 2015
Inventory Disclosure [Abstract]
INVENTORY	Inventory as of December 31, 2015 and December 31, 2014 consists of the following: December 31, 2015 December 31, 2014 (Audited) (Audited) Finished goods $ 418,439 $ 923,565 Inventory reserve (20,000 ) (40,215 ) Total $ 398,439 $ 8 Finished goods inventory relates to product at the Company’s retail stores, which is product purchased from distributors, and in some cases directly from the manufacturer, and resold at our stores. The Company reviews its inventory on a periodic basis to identify products that are slow moving and/or obsolete, and if such products are identified, the Company records the appropriate inventory impairment charge at such time.

7. INVESTMENT IN VAPE HOLDINGS,

7. INVESTMENT IN VAPE HOLDINGS, INC.	12 Months Ended
	Dec. 31, 2015
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 C. Scott, the Company’s then Chief Executive Officer, also owned 257,320 shares of Vape’s common stock. Furthermore, the former President of GrowLife, Inc., Kyle Tracey, was the Chief Executive Officer of Vape. As a result, the Company deemed Vape to be a related party and therefore has recorded the Company’s 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. The Company sold 200,428 shares of Vape’s common stock during the year ended December 31, 2014 for net proceeds of $186,791 which was recorded as “other income” in the statement of operations. As of December 31, 2014, the Company recorded a $1,122,397 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.

8. INTANGIBLE ASSETS

8. INTANGIBLE ASSETS	12 Months Ended
	Dec. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
INTANGIBLE ASSETS	Intangible assets as of December 31, 2015 consisted of the following: Intangible Assets: Estimated Useful Lives Cost Accumulated Amortization Net Book Value RMH/EGC acquisition- customer contracts 5 years $ 366,000 $ (189,100 ) $ 176,900 Greners acquisition- customer contracts 5 years 230,000 (163,296 ) 66,704 Phototron acquisition- customer contracts 5 years 215,000 (215,000 ) - Soja, Inc. (Urban Garden Supply) acquisition- customer contracts 5 years 60,000 (60,000 ) - Total intangible assets $ 871,000 $ (627,396 ) $ 243,604 The fair value of the assets acquired detailed above, estimated by using a discounted cash flow approach based on future economic benefits associated with agreements with customers, or through expected continued business activities with its customers. In summary, the estimate was based on a projected income approach and related discounted cash flows over five years, with applicable risk factors assigned to assumptions in the forecasted results.

9. DERIVATIVE LIABILITY

9. DERIVATIVE LIABILITY	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
DERIVATIVE LIABILITY	In April 2008, the FASB issued a pronouncement that provides guidance on determining what types of instruments or embedded features in an instrument held by a reporting entity can be considered indexed to its own stock for the purpose of evaluating the first criteria of the scope exception in the pronouncement on accounting for derivatives. This pronouncement was effective for financial statements issued for fiscal years beginning after December 15, 2008. The adoption of these requirements can affect the accounting for warrants and many convertible instruments with provisions that protect holders from a decline in the stock price (or “down-round” provisions). For example, warrants or conversion features with such provisions are no longer recorded in equity. Down-round provisions reduce the exercise price of a warrant or convertible instrument if a company either issues equity shares for a price that is lower than the exercise price of those instruments or issues new warrants or convertible instruments that have a lower exercise price. 7% Convertible Notes As of December 31, 2013, the Company had outstanding 7% convertible notes for $1,850,000 that the Company determined were a derivative liability due to the “reset” clause associated with the note’s conversion price. The Company had valued the derivative liability of these notes at $9,324,000 using the Black-Scholes-Merton option pricing model. As of December 31, 2014, the Company had outstanding 7% convertible notes for $500,000 that the Company determined were a derivative liability due to the “reset” clause associated with the note’s conversion price. The Company valued the derivative liability of these notes at $1,278,878 using the Black-Scholes-Merton option pricing model, which approximates the Monte Carlo and other binomial valuation techniques. As of December 31, 2015, the Company had outstanding 7% convertible notes for $500,000 that the Company determined were a derivative liability due to the “reset” clause associated with the note’s conversion price. The Company valued the derivative liability of these notes at $105,515 using the Black-Scholes-Merton option pricing model, which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions (i) dividend yield of 0%; (ii) expected volatility of 133.2%; (iii) risk free rate of .001%, (iv) stock price of $.005, (v) per share conversion price of $0.007, and (vi) expected term of .25 years, as the Company estimates that these notes will be converted by March 31, 2016. 6% Convertible Notes As of December 31, 2014, the Company had outstanding 6% convertible notes for $350,000 that the Company determined were a derivative liability due to the “reset” clause associated with the note’s conversion price. The Company valued the derivative liability of these notes at $822,037 using the Black-Scholes-Merton option pricing model, which approximates the Monte Carlo and other binomial valuation techniques. As of December 31, 2015, the Company had outstanding unsecured 6% convertible notes for $350,000 that the Company determined were a derivative liability due to the “reset” clause associated with the note’s conversion price. The Company valued the derivative liability of these notes at $54,377 using the Black-Scholes-Merton option pricing model. which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions (i) dividend yield of 0%; (ii) expected volatility of 133.2%; (iii) risk free rate of 0.34%, (iv) stock price of $.005, (v) per share conversion price of $0.007, and (vi) expected term of .56 years. Secured Convertible Debenture Transaction with TCA Global Credit Master Fund LP On July 9, 2015, the Company closed a Securities Purchase Agreement and related agreements with TCA Global Credit Master Fund LP, an accredited investor, whereby the Company agreed to sell and TCA agreed to purchase up to $3,000,000 of senior secured convertible redeemable debentures, of which $700,000 was purchased on July 9, 2015 and up to $2,300,000 may be purchased in additional closings. The closing of the Transaction occurred on July 9, 2015. On July 9, 2015, the Company valued the conversion feature as a derivative liability of this senior secured convertible redeemable debenture at $888,134 and discounted debt by $700,000 and recorded interest expense of $188,134. The Company valued the derivative liability of this debenture at $888,134 using the Black-Scholes-Merton option pricing model. which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions (i) dividend yield of 0%; (ii) expected volatility of 160.0%; (iii) risk free rate of 0.25%, (iv) stock price of $0.02, (v) per share conversion price of $0.011, and (vi) expected term of 1.0 years. Committed Equity Facility Transaction with TCA Global Credit Master Fund LP On August 6, 2015, the Company closed a Securities Purchase Agreement and related agreements with TCA Global Credit Master Fund LP, whereby the Company agreed to sell and TCA agreed to purchase a $100,000 senior secured convertible redeemable debenture and the Company agreed to issue and sell to TCA, from time to time, and TCA agreed to purchase from the Company up to $3,000,000 of the Company’s common stock pursuant to a Committed Equity Facility. The closing of the Transaction occurred on August 6, 2015. On August 6 2015, the Company valued the conversion feature as a derivative liability of this senior secured convertible redeemable debenture at $66,668 and discounted debt by $66,668. The Company valued the derivative liability of this debenture at $66,668 using the Black-Scholes-Merton option pricing model. which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions (i) dividend yield of 0%; (ii) expected volatility of 160.0%; (iii) risk free rate of 0.25%, (iv) stock price of $0.02, (v) per share conversion price of $0.018, and (vi) expected term of 1.0 years. Amended and Restated Securities Purchase Agreement with TCA Global Credit Master Fund LP On October 27, 2015, the Company entered into an Amended and Restated Securities Purchase Agreement and related agreements with TCA Global Credit Master Fund LP whereby we agreed to sell, and TCA agreed to purchase $350,000 of senior secured convertible, redeemable debentures. The Company and TCA previously entered into a Securities Purchase Agreement dated as of April 30, 2015 and effective as of July 9, 2015 to purchase up to $3,000,000 in Debentures. To date, the Company has sold $1,050,000 in Debentures to TCA and up to $1,950,000 in Debentures remains for sale by the Company. The closing of the transaction occurred on October 27, 2015. The Company valued the conversion feature as a derivative liability at $340,924 and discounted debt by $340,924. The company value the derivative liability of this debenture using the Black-Scholes-Merton option pricing model which approximates the Monte Carlo and other binomial valuation techniques, with the following assumption (i) dividend yield of 0%, (ii) expected volatility of 160.0%; (iii) risk free rate of 0.25%, (iv) stock price of $0.007, (v) per share conversion price of $0.0065, and (vi) expected term of 1.0 years. The risk-free rate of return reflects the interest rate for the United States Treasury Note with similar time-to-maturity to that of the warrants. Fair Value Measurements Using Inputs Carrying Amount at September 30, Financial Instruments Level 1 Level 2 Level 3 2015 Liabilities: Derivative Instruments - Warrants $ - $ 1,377,175 $ - $ 1,377,175 Total $ - $ 1,377,175 $ - $ 1,377,175 For the year ended December 31, 2015, the Company recorded non-cash income of $723,740 related to the “change in fair value of derivative” expense related to its 6%, 7% and 18% convertible notes. Fair Value Measurements Using Inputs Carrying Amount at December 31, Financial Instruments Level 1 Level 2 Level 3 2014 Liabilities: Derivative Instruments - Warrants $ - $ 2,100,915 $ - $ 2,100,915 Total $ - $ 2,100,915 $ - $ 2,100,915

10. RELATED PARTY TRANSACTIONS

10. RELATED PARTY TRANSACTIONS AND CERTAIN RELATIONSHIPS	12 Months Ended
	Dec. 31, 2015
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS AND CERTAIN RELATIONSHIPS	Since January 1, 2014, the Company engaged in the following reportable transactions with our directors, executive officers, holders of more than 5% of our voting securities, and affiliates or immediately family members of our directors, executive officers and holders of more than 5% of our voting securities. Certain Relationships Please see the transactions with CANX, LLC and Logic Works LLC in Note 5 and TCA Global Credit Master Fund LP as discussed in Note 11 and 12. Transaction with Marco Hegyi Mr. Hegyi warrant to purchase up to twenty five million shares of the Company’s common stock at an exercise price of $0.08 per share was reduced to $0.01 per share on December 18, 2015. The reduction in exercise price resulted in no additional compensation expense at December 31, 2015. Transaction with an Entity Controlled by Mark E. Scott An entity controlled by Mr. Scott received an option to purchase sixteen million shares of the Company’s common stock at an exercise price of $0.07 per share was reduced to $0.01 per share on December 18, 2015. The reduction in exercise price resulted in no additional compensation expense at December 31, 2015. Two million shares vested on August 17, 2015 with the Company’s resolution of the class action lawsuits. Loans and Advances from Sterling C. Scott Sterling Scott, our former CEO, advanced various amounts to us. As of December 31, 2011, the amount due the former CEO was $183,103, and additional advances of $98,897 were made to us through April 5, 2012. On April 5, 2012, Mr. Scott converted $282,000 of these advances into a 6% senior convertible note. Mr. Scott made further advances during the year ended December 31, 2012 which were converted into the 6% senior convertible note. As of December 31, 2013, total amount owed to Mr. Scott was $453,932, which consisted of $413,680 in principal and $40,252 in accrued interest. As of September 10, 2014, the outstanding principal balance on Mr. Scott’s 6% convertible note was $413,680 and accrued interest were sold to two parties not related to us. Investment in Vape Holdings, Inc. Please see the transactions with Vape Holding, Inc. as discussed in Note 7.

11. CONVERTIBLE NOTES PAYABLE,

11. CONVERTIBLE NOTES PAYABLE, NET	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
CONVERTIBLE NOTES PAYABLE, NET	Convertible notes payable as of December 31, 2015 consists of the following: Accrued Debt Balance As of December 31, Principal Interest Discount 2015 6% Senior secured convertible notes (2012) $ 413,680 $ 172,494 $ - $ 586,174 6% Secured convertible note (2014) 350,000 30,641 (83,924 ) 296,717 7% Convertible note ($850,000) 250,000 104,137 - 354,137 7% Convertible note ($1,000,000) 250,000 134,469 - 384,469 18% Senior secured redeemable convertible debenture ($1,050,000) 1,150,000 68,510 (552,139 ) 666,371 $ 2,413,680 $ 510,251 $ (636,063 ) $ 2,287,868 6% Senior Secured Convertible Notes Payable (2012) On September 28, 2012, the Company entered into an Amendment and Exchange Agreement (“Exchange Agreement”) with investors, including Sterling Scott, our then CEO. The Exchange Agreement provided for the issuance of new 6% Senior Secured Convertible Notes that replaced the 6% Senior Secured Convertible Notes that were previously issued during 2012. The 6% Notes accrued interest at the rate of 6% per annum and had a maturity date of April 15, 2015. No cash payments were required; however, accrued interest is due at maturity. In the event of a default the investors may declare the entire principal and accrued interest to be due and payable. Default interest accrued at the rate of 12% per annum. The 6% Notes were secured by substantially all of the assets of the Company and are convertible into common stock at the rate of $0.007 per share. The Company determined that the conversion feature was a beneficial conversion feature. As of September 10, 2014, the outstanding principal balance on Mr. Scott’s 6% convertible note was $413,680 and accrued interest were sold to two parties not related to us. On April 27, 2015, the Company entered into Amendment One of the Amended and Restated 6% Senior Secured Convertible Note, which increased the interest rate to 12% effective April 8, 2014 and extended the maturity to September 15, 2015. On July 9, 2015, the two investors each entered into Amendment Two of the Amended and Restated 6% Senior Secured Convertible Note which provide for an increase in the interest rate from 6% to 10% and the default interest rate from 12% to 20% on the 6% Senior Secured Convertible Notes for so long as the Company remains in technical default on said notes due to its delisting from its Primary Trading Market April 2014. The Company further agreed that said 20% default interest will be applied to the date of default on April 10, 2014 and continuing through the present. During the year ended December 31, 2014, the Company recorded interest expense of $66,568 and $81,609 of non-cash interest expense related to the amortization of the debt discount associated with these 6% convertible notes, respectively. As of December 31, 2014, the outstanding principal on these 6% convertible notes was $413,680, accrued interest was $71,669, and unamortized debt discount was $20,486, which results in a net amount of $464,683. The Company accrued interest on these notes at the default rate of 12% from April 10, 2014 to July 10, 2014. During the year ended December 31, 2015, the Company recorded interest expense of $100,825 and $20,486 of non-cash interest expense related to the amortization of the debt discount associated with these 6% convertible notes, respectively. As of December 31, 2015, the outstanding principal on these 6% convertible notes was $413,680, accrued interest was $172,494, and unamortized debt discount was $0, which results in a net amount of $586,174. 6% Secured Convertible Note and Secured Credit Facility (2014) The Company entered into a Secured Convertible Note and Secured Credit Facility dated June 25, 2014 with Logic Works whereby Logic Works agreed to provide up to $500,000 in funding. Each funding requires approval in advance by Logic Works, provides for interest at 6% with a default interest of 24% per annum and requires repayment by June 26, 2016. The Note is convertible into common stock of the Company at the lesser of $0.0070 or (B) twenty percent (20%) of the average of the three (3) lowest daily VWAPs occurring during the twenty (20) consecutive Trading Days immediately preceding the applicable conversion date on which Logic Works elects to convert all or part of this 6% Convertible Note, subject to adjustment as provided in the Note. The 6% Convertible Note is collateralized by the assets of the Company. On July 10, 2014, the Company closed a Waiver and Modification Agreement, Amended and Restated Joint Venture Agreement, Secured Credit Facility and Secured Convertible Note with CANX, and Logic Works LLC, a lender and shareholder of the Company. As of December 31, 2014, the Company has borrowed $350,000 under the Secured Convertible Note and Secured Credit Facility, accrued interest was $9,641 and the unamortized debt discount was $261,308, which results in a net amount of $98,333. During the year ended December 31, 2015, the Company recorded interest expense of $21,000 and $177,384 of non-cash interest expense related to the amortization of the debt discount associated with these 6% convertible notes, respectively. As of December 31, 2015, the Company has borrowed $350,000 under the Secured Convertible Note and Secured Credit Facility, accrued interest was $30,641 and the unamortized debt discount was $83,924, which results in a net amount of $296,717. 7% Convertible Notes Payable On October 11, 2013, the Company issued 7% Convertible Notes in the aggregate amount of $850,000 to investors, including Forglen LLC. The principal balance due to Forglen as of December 31, 2014 and 2015 is $250,000 was due September 30, 2015. The current annual rate of interest is 24% per annum. The conversion price is $0.007 per share. The Company determined that the conversion feature was a beneficial conversion feature. On July 14, 2014, the Board of Directors approved a Settlement Agreement and Waiver of Default dated June 19, 2014 with Forglen related to the 7% Convertible Note. The Company cancelled the April 9, 2014 conversion as a result of the SEC suspension in the trading of the Company’s securities and Forglen has $250,000 of principal and interest outstanding on its note payable. On December 20, 2013, the Company issued 7% Convertible Notes for $1,000,000, including $500,000 from Logic Works LLC. The principal balance due to Logic Works as of December 31, 2014 and 2015 is $250,000 was due September 30, 2015. The current annual rate of interest is 24% per annum. The conversion price is $0.007 per share. The Company determined that the conversion feature was a beneficial conversion feature. During the year ended December 31, 2014, the Company recorded interest expense of $136,980 and $1,502,260 of non-cash interest expense related to the amortization of the debt discount associated with these 7% convertible notes, respectively. As of December 31, 2014, the outstanding principal on these 7% convertible notes was $500,000, accrued interest was $118,441, and unamortized debt discount was $196,032, which results in a net amount of $422,409. During the year ended December 31, 2015, the Company recorded interest expense of $120,165 and $196,032 of non-cash interest expense related to the amortization of the debt discount associated with these 7% convertible notes, respectively. As of December 31, 2015, the outstanding principal on these 7% convertible notes was $500,000, accrued interest was $238,606, and unamortized debt discount was $0, which results in a net amount of $738,606. Secured Convertible Debenture Transaction with TCA Global Credit Master Fund LP On July 9, 2015, the Company closed a Securities Purchase Agreement and related agreements with TCA Global Credit Master Fund LP, an accredited investor, whereby the Company agreed to sell and TCA agreed to purchase up to $3,000,000 of senior secured convertible redeemable debentures, of which $700,000 was purchased on July 9, 2015 and up to $2,300,000 may be purchased in additional closings. The closing of the Transaction occurred on July 9, 2015. Securities Purchase Agreement As set forth above, the Company entered into the Securities Purchase Agreement on July 9, 2015 with the Purchaser whereby the Purchaser agreed to purchase up to $3,000,000 of the Debentures of which $700,000 was purchased at Closing. In connection with the Securities Purchase Agreement, the Company, at the discretion of Purchaser, may request in writing at any time after the Closing that Purchaser purchase additional Debentures at agreed upon time periods and amounts. The Securities Purchase Agreement also provides that the Company shall, within ninety days of Closing, file any and all periodic reports with the SEC required under the Exchange Act to become current with the Company’s reporting requirements under the Securities Exchange Act of 1934 and shall use its best efforts to obtain approval for the listing and quotation of the Company’s common stock on the OTC Bulletin Board, or another Principal Trading Market more senior and established than the OTC Pink Sheets and approved by Purchaser, and to have such Common Stock trading in such Principal Trading Market. In consideration for advisory services provided by Purchaser to the Company prior to the Closing, the Company paid to Purchaser a fee by issuing to Purchaser 10,000,000 shares of Common Stock at $0.02 per share equal to $200,000. The Advisory Fee Shares were valued at a price equal to the lowest volume weighted average price for the Common Stock for the five (5) Business Days immediately prior to the Effective Date, as reported by Bloomberg (the “VWAP”). The Advisory Fee Shares are subject to adjustment as provided in the Securities Purchase Agreement. If the Advisory Fee Shares are still in possession of the holder at twelve months the holder may require the Company to redeem that number of shares for cash, not to exceed $200,000. As the common stock is conditionally redeemable, the Company has recorded the common stock as mezzanine equity in the accompanying consolidated balance sheet. The Company also paid certain transaction, due diligence and document review and legal fees to the Purchaser in connection with the Transaction. Senior Secured, Convertible, Redeemable Debenture The Company entered into an initial Debenture dated July 9, 2015 with the Purchaser whereby the Purchaser purchased $700,000 in senior secured, convertible, redeemable debentures in exchange for $700,000 in immediately available and lawful money of the United States of America. The Company promised to pay Purchaser, by no later than October 9, 2016 the outstanding principal together with interest on the outstanding principal amount under the Debenture, at the rate of 18% per annum simple interest. The Company shall make monthly payments of principal and interest on the Debenture to Purchaser, while this Debenture is outstanding, until the Maturity Date, based on the payment, amortization and redemption premium schedule attached as Schedule A to the Debenture. The indebtedness evidenced by this Debenture is also secured by a first priority lien and security interest in all of the assets and property of the Company and various other instruments as set forth in the Transaction Documents, subject to the terms and conditions of the Intercreditor Agreement described below. At any time while the Debenture is outstanding on or after the Closing, (i) if mutually agreed upon by the parties or (ii) at the sole option of the Purchaser upon the occurrence of an Event of Default, the Purchaser may convert all or any portion of the outstanding principal, accrued and unpaid interest redemption premium and any other sums due and payable hereunder or under any of the other Transaction Documents into shares of Common Stock of the Company at a price equal to: (i) the Conversion Amount (the numerator); divided by Security Agreement(s) In connection with the Securities Purchase Agreement and Debenture, the Company entered into a Security Agreement dated July 9, 2015 with the Purchaser whereby the Company agreed to grant to Purchaser an unconditional and continuing, first priority security interest in all of the assets and property of the Company to secure the prompt payment, performance and discharge in full of all of Company’s obligations under the Debentures, the Purchase Agreement and the other Transaction Documents, subject to the terms and conditions of the Intercreditor Agreement set forth below. In addition, each of the Company’s operating subsidiaries also agreed to grant to Purchaser an unconditional and continuing, first priority security interest in all of the assets and property of each of the subsidiaries to further secure the prompt payment, performance and discharge in full of all of Company’s obligations under the Debentures, the Purchase Agreement and the other Transaction Documents. Guaranty Agreement(s) In connection with the Securities Purchase Agreement and Debenture, each of the Company’s operating subsidiaries entered into Guaranty Agreements dated July 9, 2015 with the Purchaser whereby the subsidiaries agreed to guarantee and become surety to Purchaser for the full, prompt and unconditional payment of the Liabilities and payment and performance of the Company’s obligations and the full, prompt and unconditional performance of each term and condition to be performed by Company under the Debentures and the other Transaction Documents. Pledge Agreement(s) In connection with the Securities Purchase Agreement and Debenture, the Company entered into Pledge Agreements dated July 9, 2015 with the Purchaser whereby the Company agreed to pledge to Purchaser its shares in each of its operating subsidiaries as further security for the payment and performance of the Company’s obligations and the full, prompt and unconditional performance of each term and condition to be performed by Company under the Debentures and the other Transaction Documents. Intercreditor Agreement and Related Creditor Documentation On July 9, 2015, the Company, each of its subsidiaries, Purchaser and Logic Works LLC (an existing senior secured creditor) entered into an Intercreditor Agreement whereby Purchaser and Logic Works agreed that their outstanding senior secured loans to the Company be secured on a pari passu pari passu In addition, the Company, each of its subsidiaries, Purchaser and Jordan Scott and Andrew Gentile, respectively, each entered into Subordination Agreements dated July 9, 2015 whereby Scott and Gentile agreed to subordinate their existing 6% Senior Secured Convertible Notes, dated March 16, 2012, as amended, all of their indebtedness, obligations and security interests to the Purchaser’s security interests as more fully set forth in the Transaction Documents. On July 9, 2015, Jordan Scott and Andrew Gentile each entered into Amendment Two of the Amended and Restated 6% Senior Secured Convertible Note which provide for an increase in the interest rate from 6% to 10% and the default interest rate from 12% to 20% on the 6% Senior Secured Convertible Notes for so long as the Company remains in technical default on said notes due to its delisting from its Primary Trading Market April 2014. The Company further agreed that said 20% default interest will be applied to the date of default on April 10, 2014 and continuing through the present. On July 9, 2015, the Company valued the derivative liability of this senior secured convertible redeemable debenture at $888,134 and reduced debt by $700,000 and recorded interest expense of $188,134. Committed Equity Facility Transaction with TCA Global Credit Master Fund LP On August 6, 2015, the Company closed a Securities Purchase Agreement and related agreements with TCA Global Credit Master Fund LP, whereby the Company agreed to sell and TCA agreed to purchase a $100,000 senior secured convertible redeemable debenture and the Company agreed to issue and sell to TCA, from time to time, and TCA agreed to purchase from the Company up to $3,000,000 of the Company’s common stock pursuant to a Committed Equity Facility. The closing of the Transaction occurred on August 6, 2015. In consideration for advisory services provided by Purchaser to the Company prior to the, the Company paid to Purchaser a fee by issuing to Purchaser 5,000,000 shares of Common Stock at $0.02 per share equal to $100,000. The Advisory Fee Shares were valued at price equal to the lowest volume weighted average price for the Common Stock for the five (5) Business Days immediately prior to the issuance. The Advisory Fee Shares are subject to adjustment as provided in the Securities Purchase Agreement. If the Advisory Fee Shares are still in possession of the holder at twelve months, the holder may require the Company to redeem that number of shares for cash, not to exceed $100,000. As the common stock is conditionally redeemable, the Company has recorded the common stock as mezzanine equity in the accompanying consolidated balance sheet. The Company also paid certain transaction, due diligence and document review and legal fees in connection with the Transaction. The Company entered into a Debenture dated August 6, 2015 with the Purchaser whereby the Purchaser purchased $100,000 in a senior secured, convertible, redeemable debenture from the Company in exchange for $100,000. The Company promised to pay Purchaser, by no later than August 6, 2016 the outstanding principal together with interest on the outstanding principal amount under the Debenture, at the rate of 18% per annum simple interest. The Debenture is convertible only at the option of Purchaser upon an event of default at a conversion price of 90% of the lowest of the average daily volume weighted average price of the Company’s Common Stock during the 5 trading days immediately prior to the conversion date. In addition, the Company entered into a Committed Equity Facility, dated August 6, 2015, with the Purchaser in which the Company agreed to issue and sell to the Purchaser, from time to time, and the Purchaser agreed to purchase from the Company up to $3,000,000 of the Company’s common stock. At any time during the duration of the agreement and after the Company has an effective registration statement outstanding, the Company can require the Purchaser to purchase shares of its common stock which will be sold by Purchaser with the net proceeds provided to the Company, subject to the terms and conditions set forth in the Committed Equity Facility. To facilitate the Committed Equity Facility, the Company has granted the Purchaser certain registration rights pursuant to a Registration Rights Agreement dated August 6, 2015 whereby the Company filed a registration statement to facilitate the purchase and sale of the common stock under the Committed Equity Facility. The Company’s obligation to repay the Debenture disclosed herein as well as the Debenture entered into by and between the Company and Purchaser on July 9, 2015, are secured by security agreements, guaranty agreements and pledge agreements previously disclosed on the Company’s Current Report on Form 8-K filed July 16, 2015 and incorporated herein by reference. The Company has additionally entered into an Authorization Agreement, dated August 6, 2015, with Purchaser whereby scheduled re-payments to the Purchaser will be debited from the Company’s account according to the payment schedule of both the Debenture disclosed herein and the Debenture previously entered into on July 9, 2015. On August 6, 2015, the Company valued the derivative liability of this senior secured convertible redeemable debenture at $66,668 and reduced debt by $66,668. Amended and Restated Securities Purchase Agreement with TCA Global Credit Master Fund LP On October 27, 2015, the Company entered into an Amended and Restated Securities Purchase Agreement and related agreements with TCA Global Credit Master Fund LP whereby we agreed to sell, and TCA agreed to purchase $350,000 of senior secured convertible, redeemable debentures. The Company previously entered into a Securities Purchase Agreement dated as of April 30, 2015 and effective as of July 9, 2015 to purchase up to $3,000,000 in Debentures. As of October 27, 2015, the Company sold $1,050,000 in Debentures to TCA and up to $1,950,000 in Debentures remains for sale by us. The closing of the transaction occurred on October 27, 2015. In addition, TCA has advanced the Company an additional $100,000 for a total of $1,150.000. Also, on October 21, 2015 the Company issued 150,000 Series B Preferred Stock at a stated value equal to $10.00 per share to TCA that is convertible into the Company’s common stock. On October 21, 2015, the Company also issued 51 shares of Series C Preferred Stock at $0.0001 par value per share to TCA that is not convertible into the Company’s common stock. In the event of a default under the Amended and Restated TCA Transaction Documents, TCA can exercise voting control over the Company’s common stock with their Series C Preferred Stock voting rights. Amended and Restated Securities Purchase Agreement As set forth above, the Company entered into the Amended and Restated Securities Purchase Agreement on October 27, 2015 with the Purchaser whereby the Purchaser agreed to purchase $350,000 of the Debentures. In addition, in consideration for advisory services provided by Purchaser to the Company prior to the closing (the “Second Closing Advisory Fee”), the Company paid to Purchaser a fee by issuing to Purchaser 150,000 Series B Preferred Stock valued at $1,500,000 and convertible into common stock of the Company. Purchaser was also granted 51 shares of Series C Preferred Stock as further security for the Company’s completion of post-closing obligations under the Amended and Restated Transaction Documents as further discussed below. Series B Preferred Stock Designation In connection with the Amended and Restated Securities Purchase Agreement, the Board of Directors, on October 21, 2015, approved the authorization of a Series B Preferred Stock as provided in the Company’s Certificate of Incorporation, as amended. The Series B Preferred Stock has authorized 150,000 shares with a stated value equal to $10.00 per share. Dividends payable to other classes of stock are restricted until repayment of the aggregate value of Series B Preferred Stock. Upon liquidation or dissolution of the Company, Series B Preferred Stock has no priority or preference with respect to distributions of any assets of the Company. The Series B Preferred Stock is convertible into common stock by dividing the stated value of the shares being converted by 100% of the average of the five (5) lowest closing bid prices for the common stock during the ten (10) consecutive trading days immediately preceding the conversion date as quoted by Bloomberg, LP. The Purchaser was issued 150,000 shares of Series B Preferred Stock. However, in no event will Purchaser be entitled to hold in excess of 4.99% of the outstanding shares of common stock of the Company. Series C Preferred Stock Designation In connection with the Amended and Restated Securities Purchase Agreement, the Board of Directors, on October 21, 2015, approved the authorization of a Series C Preferred Stock as provided in the Company’s Certificate of Incorporation, as amended, and the issuance of 51 shares of Series C Preferred Stock. These shares only have voting rights in the event of a default by the Company under the Amended and Restated Transaction Documents. The Series C Preferred Stock Designation authorizes 51 shares of Series C Preferred Stock. Series C Preferred Stock is not entitled to dividend or liquidation rights and is not convertible into common stock of the Company. In the event of a default under the Amended and Restated Transaction Documents, each share of Series C Preferred Stock shall have voting votes equal to 0.019607 multiplied by the total issued and outstanding common stock and preferred stock eligible to vote divided by .49 minus the numerator. For example, if the total issued and outstanding common stock eligible to vote is 5,000,000, the voting rights of one share of Series C Preferred Stock shall be equal to 102,036 (e.g. ((0.019607 x 5,000,000/0.49) – (0.019607 x 5,000,000) = 102,036). Amended and Restated Senior Secured, Convertible, Redeemable Debenture In connection with the Amended and Restated Securities Purchase Agreement, the Company, on October 27, 2015, also entered into the Amended and Restated Debenture which was amended to increase the balance of the original Debenture from $700,000 to $1,050,000 as a result of the additional $350,000 advanced. As of April 14, 2016, the Company is in default on our repayment obligations in its Agreements with TCA and owes TCA approximately $254,000 in principal and interest payments. The Company is working to resolve these issues. During the year ended December 31, 2015, the Company recorded interest expense of $68,510 and $552,139 of non-cash interest expense related to the amortization of the debt discount associated with the senior secured convertible redeemable debentures, respectively. As of December 31, 2015, the Company has borrowed $1,150,000 under the senior secured convertible redeemable debentures, accrued interest was $68,510 and the unamortized debt credit was $552,139, which results in a net amount of $666,371.

12. EQUITY

12. EQUITY	12 Months Ended
	Dec. 31, 2015
Equity [Abstract]
EQUITY	Authorized Capital Stock The Company has voting common stock of 3,000,000,000 shares at $0.0001 par value and 10,000,000 shares of non-voting preferred stock with a par value of $0.0001 as authorized by the shareholders. In addition, on October 21, 2015 the Company issued 150,000 Series B Preferred Stock at a stated value equal to $10.00 per share and convertible into our common stock. On October 21, 2015, the Company also issued 51 shares of Series C Preferred Stock at $0.0001 par value per share that have certain voting rights but are not convertible into our common stock Non-Voting Preferred Stock Under the terms of our articles of incorporation, the Company’s board of directors is authorized to issue shares of non-voting preferred stock in one or more series without stockholder approval. The Company’s board of directors has the discretion to determine the rights, preferences, privileges and restrictions, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of non-voting preferred stock. The purpose of authorizing the Company’s board of directors to issue non-voting preferred stock and determine its rights and preferences is to eliminate delays associated with a stockholder vote on specific issuances. The issuance of non-voting preferred stock, while providing flexibility in connection with possible acquisitions, future financings and other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or could discourage a third party from seeking to acquire, a majority of our outstanding voting stock. Other than the Series B and C Preferred Stock discussed below, there are no shares of non-voting preferred stock presently outstanding and the Company no present plans to issue any shares of preferred stock. Series B Preferred Stock Designation In connection with the Amended and Restated Securities Purchase Agreement, the Board of Directors, on October 21, 2015, approved the authorization of a Series B Preferred Stock as provided in our Certificate of Incorporation, as amended. The Series B Preferred Stock has authorized 150,000 shares with a stated value equal to $10.00 per share. Dividends payable to other classes of stock are restricted until repayment of the aggregate value of Series B Preferred Stock. Upon our liquidation or dissolution, Series B Preferred Stock has no priority or preference with respect to distributions of any assets by us. The Series B Preferred Stock is convertible into common stock by dividing the stated value of the shares being converted by 100% of the average of the five lowest closing bid prices for the common stock during the ten consecutive trading days immediately preceding the conversion date as quoted by Bloomberg, LP. TCA was issued 150,000 shares of Series B Preferred Stock. However, in no event will Purchaser be entitled to hold in excess of 4.99% of the outstanding shares of common stock of the Company. Series C Preferred Stock Designation In connection with the Amended and Restated Securities Purchase Agreement, the Board of Directors, on October 21, 2015, approved the authorization of a Series C Preferred Stock as provided in our Certificate of Incorporation, as amended, and the issuance of 51 shares of Series C Preferred Stock. These shares only have voting rights in the event of a default by us under the Amended and Restated Transaction Documents. The Series C Preferred Stock is cancelled with the repayment of the TCA debt. The Series C Preferred Stock Designation authorizes 51 shares of Series C Preferred Stock. Series C Preferred Stock is not entitled to dividend or liquidation rights and is not convertible into our common stock. In the event of a default under the Amended and Restated Transaction Documents, each share of Series C Preferred Stock shall have voting votes equal to 0.019607 multiplied by the total issued and outstanding common stock and preferred stock eligible to vote divided by .49 minus the numerator. For example, if the total issued and outstanding common stock eligible to vote is 5,000,000, the voting rights of one share of Series C Preferred Stock shall be equal to 102,036 (e.g. ((0.019607 x 5,000,000/0.49) – (0.019607 x 5,000,000) = 102,036). Common Stock Unless otherwise indicated, all of the following sales or issuances of Company securities were conducted under the exemption from registration as provided under Section 4(2) of the Securities Act of 1933 (and also qualified for exemption under 4(5), formerly 4(6) of the Securities Act of 1933, except as noted below). All of the shares issued were issued in transactions not involving a public offering, are considered to be restricted stock as defined in Rule 144 promulgated under the Securities Act of 1933 and stock certificates issued with respect thereto bear legends to that effect. The Company has compensated consultants and service providers with restricted common stock during the development of our business and when our capital resources were not adequate to provide payment in cash. During the year ended December 31, 2015, the Company had had the following sales of unregistered sales of equity securities: On June 16, 2015, the Company issued 7,772,725 shares of its common stock to Horwitz + Armstrong LLP pursuant a conversion of debt for $171,000. The shares were valued at the fair market price of $0.022 per share. On December 18, 2015, the Company issued 2,000,000 shares to two if its former independent Board Directors. The Company valued the 4,000,000 shares at $0.01 per share or $40,000. During the year ended December 31, 2014, the Company had had the following sales of unregistered sales of equity securities: On January 3, 2014, the Company issued 4,700,196 shares of its common stock to Carla Badaracco related to the conversion of $30,000 of principal and $2,901 of accrued interest at a per share conversion price of $0.007 of the Company’s 6% Senior Secured Convertible Notes Payable. On January 31, 2014, the Company issued 12,562,518 shares of its common stock related to the conversion of $408,000 of principal and $31,688 of accrued interest at a per share conversion price of $0.035 of the Company’s 12% Senior Secured Convertible Notes Payable. On January 31, 2014, the Company issued 2,351,187 shares of its common stock to Doug Braun related to the exercise of a stock option granted in fiscal year 2011. The Company received $44,673 or $0.019 per share. On February 13, 2014, the Company issued 29,420 shares of its common stock to Alby Segall, a third party consultant and non-accredited investor, as payment in full for services rendered. The shares were valued at the fair market price of $0.3399 per share. On February 16, 2014, the Company issued 1,250,000 shares of its common stock to Integrity Media, Inc. related to a November 16, 2013 Service Agreement for investor relations. The shares were valued at the fair market price of $0.38 per share. On March 7, 2014, the Company issued 2,000,000 shares of its common stock to Adam Liebross related to the conversion of $50,000 of principal at a per share conversion price of $0.025 of the Company’s 7% Convertible Notes Payable. On March 18, 2014, the Company issued 22,727,668 shares of its common stock to Adam Liebross (8,300,260 shares), Myli Burger Holdings LLC (4,122,248 shares) and Europa International Inc. (10,304,800 shares) related to the total conversion of $550,000 of principal and $18,192 of accrued and interest at a per share conversion price of $0.025 of the Company’s 7% Convertible Notes Payable. On March 20, 2014, the Company issued 2,775,000 shares of its common stock to Doug Braun related to the cashless exercise of a stock option granted in fiscal year 2011 to purchase 4,500,000 shares of the Company’s common stock at $0.23 per share. On March 31, 2014, the Company issued 500,000 shares to each of its four independent Board Directors, The Company valued the 2,000,000 shares at $0.58 per share which was the closing price of the Company’s common stock on March 31, 2014. The Company recorded stock based compensation of $1,160,000 during the three months ended March 31, 2014. On April 25, 2014, the Company entered into four Restricted Stock Cancellation Agreements with the four independent members of the Company’s Board of Directors, pursuant to which the Directors agreed to each cancel 500,000 shares of the Company’s restricted common stock granted to each Director on March 31, 2014. The Company recorded a reduction in common stock and an increase in additional paid in capital of $200 during the year ended December 31, 2014 are related to cancellation of the Restricted Stock Agreements. On April 9, 2014, the Company issued 5,347,032 shares of its common stock to Forglen LLC related to the conversion of $125,000 of principal and $8,676 of accrued interest at a per share conversion price of $0.025 of the Company’s 7% Convertible Notes Payable. On July 14, 2014, the Board of Directors approved a Settlement Agreement and Waiver of Default dated June 19, 2014 with Forglen related to the 7% Convertible Note. The Company cancelled the April 9, 2014 conversion as a result of the SEC suspension in the trading of the Company’s securities. On June 4, 2014, the Company issued 20,640,548 shares of the Company’s common stock to China West III Investments LLC related to the conversion of $500,000 of principal and $16,014 of accrued interest at a per share conversion price of $0.033 of the Company’s 7% Convertible Notes Payable. On July 1, 2014, Horwitz and Armstrong LLP converted debt of $100,000 debt into 500,000 shares of the Company’s common stock at a per share conversion price of $0.11 and a cash payment of $35,000. On July 3, 2014, Sterling Scott exercised his option on a cashless basis and was issued 795,455 shares of restricted common stock at $.085 per share. Mr. Scott was awarded a stock option grant on November 3, 2013 for 12,000,000 shares and had vested 3,500,000 shares as of his resignation on May 19, 2014. The shares were valued at the fair market price of $0.085 per share. On July 3, 2014, Robert Shapero, a Holder of the Company’s 6% Convertible Notes Payable, converted $25,000 of principal and $4,136 of accrued interest into 4,162,623 shares of the Company’s common stock at a per share conversion price of $0.007. On July 15, 2014, the Company entered into a Severance Agreement with Mr. Genesi whereby Mr. Genesi resigned as Chief Financial Officer and the Parties cancelled the Executive Employment Agreement dated November 3, 2013. The Company agreed to issue 6,000,000 shares of restricted common stock. The shares were valued at the fair market price of $0.08 per share. On July 31, 2014, Logic Works, a Holder of the Company’s 7% Convertible Notes Payable, converted $250,000 of principal into 35,714,286 shares of the Company’s common stock at a per share conversion price of $0.007. On August 1, 2014, the Company issued 300,000 shares of its common stock to Joseph Barnes pursuant to a Manager Services Agreement with Mr. Barnes dated August 1, 2013. The shares were valued at the fair market price of $0.08 per share. On August 15, 2014, the Company issued 300,000 shares of its common stock to Dennis Kuznetsov pursuant to an Employment Agreement with Mr. Kuznetsov dated August 15, 2013. The shares were valued at the fair market price of $0.06 per share. On August 27, 2014, the Company issued 5,000,000 shares of its common stock to D. Weckstein and Co., Inc. pursuant to an Investment Banking Letter. The shares were valued at the fair market price of $0.08 per share. On September 15, 2014, the Company issued 80,000 shares of its common stock to Josh Nash pursuant to an Employment Agreement with Mr. Nash dated September 15, 2013. The shares were valued at the fair market price of $0.07 per share. On October 1, 2014, the Company issued 100,000 shares of its common stock to Jeremy Belmont pursuant to an Employment Agreement with Mr. Belmont dated October 1, 2013. The shares were valued at the fair market price of $0.06 per share. On October 8, 2014, Fifth Avenue Law Group PLLP converted debt of $68,000 debt into 1,360,000 shares of the Company’s common stock at a per share conversion price of $0.05. On October 31, 2014, the Company issued 100,000 shares of its common stock to Frank Hariton pursuant to a Legal Agreement with Mr. Hariton dated August 14, 2014. The shares were valued at the fair market price of $0.05 per share. On December 10, 2014, the Company issued 200,000 shares of its common stock to Velomedia, Inc. pursuant to a debt conversion. The shares were valued at the fair market price of $0.05 per share. Warrants On November 19, 2013, the Company issued a warrant for 140,000,000 common shares to CANX or its assignees in accordance with the Joint Venture Agreement. The warrants have a five-year term with an original exercise price of $0.033 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 24.82%; (iii) risk free rate of 0.05% and (iv) an expected term of one year. The Company expensed the entire $5,040,000 at the time of issuance because the warrants vested immediately and were also exercisable immediately. On February 7, 2014, the Company issued a warrant for 100,000,000 common shares to CANX or its assignees in accordance with the Joint Venture Agreement. The warrants have a five-year term with an original exercise price of $0.033 per share The warrant was earned by CANX upon completion of the Company’s increase in the number of authorized common shares from 1 billion to 3 billion shares. This increase in authorized shares was effective with the shareholder approval on February 7, 2014. 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 200%; (iii) risk free rate of 0.78% and (iv) an expected term of five years. The Company expensed the entire $33,700,000 at the time of issuance because the warrants vested immediately and were also exercisable immediately. The Company entered into an Amended and Restated Joint Venture Agreement dated July 1, 2014 with CANX and granted on July 10, 2014 CANX five year warrants, subject to extension, to purchase 300,000,000 shares of common stock at the fair market price of $0.033 per share as determined by an independent appraisal; 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 161.0%; (iii) risk free rate of 0.78% and (iv) an expected term of five years. The Company expensed the entire $28,800,000 at the time of issuance because the warrants vested immediately and were also exercisable immediately. 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. On December 18, 2015, the Company reduced the warrant exercise price to $0.01 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. A summary of the warrants issued as of December 31, 2015 were as follows: December 31, 2015 Weighted Average Exercise Shares Price Outstanding at beginning of period 565,000,000 $ 0.032 Issued - - Exercised - - Forfeited - - Expired - - Outstanding at end of period 565,000,000 $ 0.032 Exerciseable at end of period 565,000,000 A summary of the status of the warrants outstanding as of December 31, 2015 is presented below: December 31, 2015 Number of Weighted Average Remaining Weighted Average Exercise Shares Weighted Average Exercise Warrants Life Price Exerciseable Price 540,000,000 3.31 $ 0.033 540,000,000 $ 0.033 25,000,000 2.94 0.010 25,000,000 0.010 565,000,000 3.30 $ 0.032 565,000,000 $ 0.032

13. STOCK OPTIONS

13. STOCK OPTIONS	12 Months Ended
	Dec. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
STOCK OPTIONS	Description of Stock Option Plan In fiscal year 2011, the Company authorized a Stock Incentive Plan whereby a maximum of 18,870,184 shares of the Company’s common stock could be granted in the form of Non-Qualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, and Other Stock-Based Awards. On April 18, 2013, the Company’s Board of Directors voted to increase to 35,000,000 the maximum allowable shares of the Company’s common stock allocated to the 2011 Stock Incentive Plan. The Company has outstanding unexercised stock option grants totaling 29,020,000 shares as of December 31, 2015. All grants are non-qualified as the plan was not approved by the shareholders within one year of its adoption. Determining Fair Value under ASC 505 The Company records compensation expense associated with stock options and other equity-based compensation using the Black-Scholes-Merton option valuation model for estimating fair value of stock options granted under our plan. The Company amortizes the fair value of stock options on a ratable basis over the requisite service periods, which are generally the vesting periods. The expected life of awards granted represents the period of time that they are expected to be outstanding. The Company estimates the volatility of our common stock based on the historical volatility of its own common stock over the most recent period corresponding with the estimated expected life of the award. The Company bases the risk-free interest rate used in the Black Scholes-Merton option valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award. The Company has not paid any cash dividends on our common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero in the Black-Scholes-Merton option valuation model and adjusts share-based compensation for changes to the estimate of expected equity award forfeitures based on actual forfeiture experience. The effect of adjusting the forfeiture rate is recognized in the period the forfeiture estimate is changed. Stock Option Activity During the year ended December 31, 2015, the Company had the following stock option activity: Mr. Adam Edwards resigned July 11, 2015 and an option to purchase four million five hundred thousand shares of the Company’s common stock under the Company’s 2011 Stock Incentive Plan at $0.05 per shares expired on October 10, 2015. Ms. Tina Qunell resigned July 2, 2015 and an option to purchase seven million shares of the Company’s common stock under the Company’s 2011 Stock Incentive Plan at $0.05 per share expired on October 1, 2015. Resigned employees forfeited options to purchase 200,000 shares of the Company’s common stock under the Company’s 2011 Stock Incentive Plan at $0.05 per share expired during the year ended December 31, 2015. On July 31, 2014, the Company’s Board of Directors granted Mr. Scott an option to purchase 16,000,000 shares of the Company’s common stock under the Company’s 2011 Stock Incentive Plan at an exercise price of $0.07 per share, the fair market price on July 31, 2014. On December 18, 2015, the Company reduced the exercise price to $0.01 per share. Two million shares vested immediately upon the Company’s resolution of the class action lawsuits on of August 17, 2015). As of December 31, 2015, there are 29,020,000 options to purchase common stock at an average exercise price of $0.028 per share outstanding under the 2011 Stock Incentive Plan. The Company recorded $175,661 and $724,267 of compensation expense, net of related tax effects, relative to stock options for the years ended December 31, 2015 and 2014 in accordance with ASC 505. Net loss per share (basic and diluted) associated with this expense was approximately ($0.00). As of December 31, 2015, there is $244,011 of total unrecognized costs related to employee granted stock options that are not vested. These costs are expected to be recognized over a period of approximately 3.85 years. Stock option activity for the years ended December 31, 2015 and 2014 is as follows: Weighted Average Options Exercise Price $ Granted 49,720,000 $ 0.075 $ 3,706,000 Exercised (5,126,187 ) (0.133 ) (682,922 ) Forfeitures (44,725,000 ) (0.092 ) (4,132,751 ) Outstanding as of December 31, 2014 40,720,000 0.058 2,356,000 Granted - - (960,000 ) Exercised - - - Forfeitures (11,700,000 ) (0.050 ) (585,000 ) Outstanding as of December 31, 2015 29,020,000 $ 0.028 $ 811,000 The following table summarizes information about stock options outstanding and exercisable at December 31, 2015: Range of Exercise Number Weighted Average Remaining Life In Weighted Average Exercise Price Number Weighted Average Exercise Price Prices Outstanding Years Exerciseable Exerciseable Exerciseable $ 0.05 13,020,000 4.00 $ 0.050 7,120,000 $ 0.050 0.01 16,000,000 3.77 0.010 7,833,333 0.010 29,020,000 3.85 $ 0.028 14,953,333 $ 0.043 Stock option grants totaling 29,020,000 shares of common stock have an intrinsic value of $0 as of December 31, 2015.

14. COMMITMENTS, CONTINGENCIES

14. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS	12 Months Ended
	Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS	Legal Proceedings The Company is involved in the disputes and legal proceedings described below. In addition, as a public company, the Company is also potentially susceptible to litigation, such as claims asserting violations of securities laws. Any such claims, with or without merit, if not resolved, could be time-consuming and result in costly litigation. The Company accrues any contingent liabilities that are likely. Class Actions Alleging Violations of Federal Securities Laws Beginning on April 18, 2014, three class action lawsuits alleging violations of federal securities laws were filed against the Company in United States District Court, Central District of California (the “Court”). At a hearing held on July 21, 2014, the three class action lawsuits were consolidated into one case with Lawrence Rosen as the lead plaintiff (the “Consolidated Class Action,” styled Romero et al. vs. GrowLife et al.). On May 15, 2014 and August 4, 2014, respectively two shareholder derivative lawsuits were filed against the Company with the Court (the “Derivative Actions”). On October 20, 2014, AmTrust North America, the Company’s insurer, filed a lawsuit contesting insurance coverage on the above legal proceedings. The Company made a general appearance in this action. On January 20, 2015, the Court ordered all of the above actions stayed pending completion of mediation of the dispute. The parties then worked diligently to finalize settlement documentation on the above actions. On April 27, 2015, the Court preliminarily approved the proposed settlement of the Consolidated Class Action. On June 1, 2015, the Court preliminarily approved the proposed settlement of the Derivative Actions pursuant to a proposed stipulated settlement agreement. On August 3, 2015, the Court entered a Final Order and Judgment resolving the Consolidated Class Action litigation in its entirety. The Consolidated Class Action was thereby dismissed in its entirety with prejudice and without costs. On August 10, 2015, pursuant to a settlement by and between the Company and AmTrust North America, AmTrust’s lawsuit contesting insurance coverage of the Consolidated Class Action and Derivative Actions was dismissed in its entirety with prejudice pursuant to a Stipulation for Dismissal of Entire Action with Prejudice executed by and between AmTrust and the Company. On August 17, 2015, the Court entered a Final Order and Judgment resolving the Derivative Actions in their entirety. The Derivative Actions were thereby dismissed in their entirety with prejudice. As a result of the foregoing, all litigation discussed herein is resolved in full at this time. The Company issued $2 million in common stock or 115,141,048 shares of the Company’s common stock on April 6, 2016 pursuant to the settlement of the Consolidated Class Action and Derivative Action lawsuits alleging violations of federal securities laws that were filed against the Company in United States District Court, Central District of California. The Company accrued $2,000,000 as loss on class action lawsuits and contingent liabilities during the year ending December 31, 2015. Sales and Payroll Tax Liabilities As of December 31, 2015, the Company owes approximately $102,000 in sales tax and $20,000 in payroll taxes. The Company is currently negotiating or operating under payment plans on these liabilities. Other Legal Proceedings The Company is in default on our Portland, Maine, Boulder, Colorado and Plaistow, New Hampshire store leases for non-payment of lease payments and the Company is negotiating with the landlords. The Company is currently subject to legal actions with various vendors. It is possible that additional lawsuits may be filed and served on the Company. Operating Leases Current Operating Leases Upon the Company’s acquisition of Rocky Mountain Hydroponics, LLC and Evergreen Garden Center, LLC, the Company assumed the lease for the RMH/EGC retail hydroponics store located in Portland, Maine. The lease commencement date was May 1, 2013 with an expiration date of April 30, 2016. The monthly rent for year one of the lease was $4,917, with monthly rent of $5,065 in year two, and monthly rent of $5,217 in year three of the lease. The Company has an option to extend the lease for two three year terms as long it is not in default under the lease. On October 21, 2013, the Company entered into a lease agreement for retail space for its hydroponics store in Avon (Vail), Colorado. The lease expires on September 30, 2018. Monthly rent for year one of the lease is $2,606 and increases 3.5% per year thereafter through the end of the lease. The Company does not have an option to extend the lease. On June 18, 2014, the Company rented space at 500 Union Street, Suite 810, Seattle, Washington for its corporate office. The Company rents the space on a month to month basis for $1,700 per month. Terminated Operating Leases In May 2011, the Company entered into a lease for our Phototron business unit to rent a warehouse facility in Gardena, California. The terms of the lease provide for monthly rental expense of $4,065 with annual rent increases through the expiration of the lease on May 31, 2014. During the last twelve months of the lease the monthly rent was $4,313. The Company terminated this lease as of May 31, 2014. Upon the Company’s acquisition of Rocky Mountain Hydroponics, LLC and Evergreen Garden Center, the Company assumed the lease for the RMH/EGC retail hydroponics store located in Plaistow, New Hampshire. The lease commencement date was May 1, 2013 with an expiration date of January 31, 2016. The monthly rent throughout the term of the lease is $2,105. The Company vacated this store and terminated this lease during 2015. On June 5, 2013, the Company entered into a lease to rent office space in Woodland Hills, California for the Company’s corporate headquarters. The landlord was 20259 Ventura Blvd LP, which was a previous affiliate of a stockholder of our company. The term was for ninety days and can be renewed, or terminated, by either party with thirty days written notice. The monthly rent was $6,758. The Company terminated this lease as of June 30, 2014. On May 30, 2013, the Company entered into a lease to rent retail space in Woodland Hills, California for its Urban Garden Supply (Soja, Inc.) hydroponics store. The term was for ninety days and can be renewed, or terminated, by either party with ninety days written notice. The monthly rent was $3,257. The Company terminated this lease as of June 1, 2015. On August 26, 2013, the Company entered into a lease agreement for warehouse and retail space for its Greners (Business Bloom, Inc.) business unit in Santa Rosa, California. The lease commencement date was September 1, 2013 with an expiration date of August 31, 2015. The monthly rent is $3,000. The Company terminated this lease as of November 25, 2014. On September 23, 2013, the Company entered into an Assignment and Assumption and Amendment of Lease Agreement for the Company’s retail hydroponics store in Peabody, Massachusetts. The original lease between the landlord and Evergreen Garden Center, LLC was assigned from Evergreen Garden Center, LLC to GrowLife Hydroponics, Inc. In addition, the term of the lease was extended from the original expiration date of October 31, 2013 to October 31, 2014. The monthly rent remained at $4,500 through October 31, 2014. The Company’s lease expired on October 31, 2014. On January 23, 2014, the Company entered into a lease agreement for retail space for its hydroponics store in Boulder, Colorado. The lease commenced on February 1, 2014 and expires on May 31, 2017. Monthly rent for year one of the lease was $4,051, with monthly rent of $4,173 in year two, $4,298 in year three, and $4,427 for month 37 through 39. The Company had an option to extend the lease for one three year terms as long it is not in default under the lease. The Company vacated the retail space as of November 30, 2015. The landlord has filed a collection claim for $179,920 against GrowLife Hydroponics. The Company expects to contest this claim. The Company is in default on our Portland, Maine, Boulder, Colorado and Plaistow, New Hampshire store leases for non-payment of the lease payments and is negotiating with the landlords. The aggregate future minimum lease payments under operating leases, to the extent the leases have early cancellation options and excluding escalation charges, are as follows: Years Ended December 31, Total 2016 $ 76,929 2017 34,675 2018 28,365 2019 0 2020 - Beyond - Total $ 139,969 Employment and Consulting Agreements Employment Agreement with Marco Hegyi On December 4, 2013, the Company entered into an Employment Agreement with Marco Hegyi pursuant to which the Company engaged Mr. Hegyi as its President from December 4, 2013 through December 4, 2016 to provide consulting and management services. Per the terms of the Hegyi Agreement, Mr. Hegyi established an office in Seattle, Washington while also maintaining operations in the Southern California area. Mr. Hegyi’s annual compensation is $150,000 for the first year of the Hegyi Agreement; $250,000 for the second year; and $250,000 for the third year. Mr. Hegyi is also entitled to receive an annual bonus equal to four percent (4%) of the Company’s EBITDA for that year. The annual bonus shall be paid no later than 31 days (i.e., by January 31st) following the end of each calendar year. Mr. Hegyi’s first annual bonus will be calculated based on the Company’s EBITDA for calendar year 2014, with such bonus payable on or before January 31, 2015. If Mr. Hegyi’s employment is terminated for any reason prior to the expiration of the Term, as applicable, his annual bonus will be prorated for that year based on the number of days worked in that year. At the commencement of Mr. Hegyi’s employment, an entity affiliated with Mr. Hegyi received a Warrant to purchase up to 25,000,000 shares of common stock of the Company at an exercise price of $0.08 per share. The Hegyi Warrant is exercisable for five years. On June 20, 2014, the Company and Mr. Hegyi reduced the warrant life from ten to five years. On January 25, 2016, the Company reduced the warrant exercise price to $0.01 per share effective December 18, 2015. Mr. Hegyi was entitled to participate in all group employment benefits that are offered by the Company to the Company’s senior executives and management employees from time to time, subject to the terms and conditions of such benefit plans, including any eligibility requirements. In addition, the Company is required to purchase and maintain during the Term a “key manager” insurance policy on Mr. Hegyi’s life in the amount of $4,000,000, paid as $2,000,000 payable to Mr. Hegyi’s named heirs or estate as the beneficiary, and $2,000,000 payable to the Company. The Company and Mr. Hegyi waived this $2,000,000 key manager insurance. If, prior to the expiration of the Term, the Company terminates Mr. Hegyi’s employment for “Cause”, or if Mr. Hegyi voluntarily terminates his employment without “Good Reason”, or if Mr. Hegyi’s employment is terminated by reason of his death, then all of the Company’s obligations hereunder shall cease immediately, and Mr. Hegyi will not be entitled to any further compensation beyond any pro-rated base salary due and bonus amounts earned through the effective date of termination. Mr. Hegyi will also be reimbursed for any expenses incurred prior to the date of termination for which he was not previously reimbursed. If the Company terminates Mr. Hegyi’s employment at any time prior to the expiration of the Term without Cause, or if Mr. Hegyi terminates his employment at any time for “Good Reason” or due to a “Disability”, Mr. Hegyi will be entitled to receive (i) his base salary amount through the end of the Term; and (ii) his annual bonus amount for each year during the remainder of the Term, which bonus amount shall be equal to the greater of (A) the annual bonus amount for the immediately preceding year, or (B) the bonus amount that would have been earned for the year of termination, absent such termination. If there has been a “Change in Control” and the Company (or its successor or the surviving entity) terminates Mr. Hegyi’s employment without Cause as part of or in connection with such Change in Control (including any such termination occurring within one (1) month prior to the effective date of such Change in Control), then in addition to the benefits set forth above, Mr. Hegyi will be entitled to (i) an increase of $300,000 in his annual base salary amount (or an additional $25,000 per month) through the end of the Term; plus (ii) a gross-up in the annual base salary amount each year to account for and to offset any tax that may be due by Mr. Hegyi on any payments received or to be received by Mr. Hegyi under this Agreement that would result in a “parachute payment” as described in Section 280G of the Internal Revenue Code of 1986, as amended. If the Company (or its successor or the surviving entity) terminates Mr. Hegyi’s employment without Cause within twelve (12) months after the effective date of any Change in Control, or if Mr. Hegyi terminates his employment for Good Reason within twelve (12) months after the effective date of any Change in Control, then in addition to the benefits set forth above, Mr. Hegyi will be entitled to (i) an increase of $300,000 in his annual base salary amount (or an additional $25,000 per month), which increased annual base salary amount shall be paid for the remainder of the Term or for two (2) years following the Change in Control, whichever is longer; (ii) a gross-up in the annual base salary amount each year to account for and to offset any tax that may be due by Mr. Hegyi on any payments received or to be received by Mr. Hegyi under this Letter Agreement that would result in a “parachute payment” as described in Section 280G of the Internal Revenue Code of 1986, as amended; (iii) payment of Mr. Hegyi’s annual bonus amount as set forth above for each year during the remainder of the Term or for two (2) years following the Change in Control, whichever is longer; and (iv) health insurance coverage provided for and paid by the Company for the remainder of the Term or for two (2) years following the Change in Control, whichever is longer. Consulting Chief Financial Officer Agreement with an Entity Controlled by Mark E. Scott On July 31, 2014, the Company entered into a Consulting Chief Financial Officer Letter with an entity controlled by Mark E. Scott pursuant to which the Company engaged Mr. Scott as its Consulting CFO from July 1, 2014 through September 30, 2014, and continuing thereafter until either party provides sixty day notice to terminate the Letter or Mr. Scott enters into a full-time employment agreement. Per the terms of the Scott Agreement, Mr. Scott’s compensation is $150,000 on an annual basis for the first year of the Scott Agreement. Mr. Scott is also entitled to receive an annual bonus equal to two percent of the Company’s EBITDA for that year. The Company’s Board of Directors granted Mr. Scott an option to purchase sixteen million shares of the Company’s Common Stock under the Company’s 2011 Stock Incentive Plan at an exercise price of $0.07 per share, the fair market price on July 31, 2014. On December 18, 2015, the Company reduced the exercise price to $0.01 per share. The shares vest as follows: i Two million shares vest immediately upon securing a market maker with an approved 15c2-11 resulting in the Company’s relisting on OTCBB (earned as of February 18, 2016); ii Two million shares vest immediately upon the successful approval and effectiveness of the Company’s S-1 (not earned as of December 31, 2015); iii Two million shares vest immediately upon the Company’s resolution of the class action lawsuits (earned as of August 17, 2015); and, iv Ten million shares will vest on a monthly basis over a period of three years beginning on the July 1, 2014. All options will have a five-year life and allow for a cashless exercise. The stock option grant is subject to the terms and conditions of the Company’s Stock Incentive Plan, including vesting requirements. In the event that Mr. Scott’s continuous status as consultant to the Company is terminated by the Company without Cause or Mr. Scott terminates his employment with the Company for Good Reason as defined in the Scott Agreement, in either case upon or within twelve months after a Change in Control as defined in the Company’s Stock Incentive Plan except for CANX USA, LLC, then 100% of the total number of shares shall immediately become vested. Mr. Scott will be entitled to participate in all group employment benefits that are offered by the Company to the Company’s senior executives and management employees from time to time, subject to the terms and conditions of such benefit plans, including any eligibility requirements. In addition, the Company is required to purchase and maintain an insurance policy on Mr. Scott’s life in the amount of $2,000,000 payable to Mr. Scott’s named heirs or estate as the beneficiary. Finally, Mr. Scott is entitled to twenty days of vacation annually and also has certain insurance and travel employment benefits. If, prior to the expiration of the Term, the Company terminates Mr. Scott’s employment for Cause, or if Mr. Scott voluntarily terminates his employment without Good Reason, or if Mr. Scott’s employment is terminated by reason of his death, then all of the Company’s obligations hereunder shall cease immediately, and Mr. Scott will not be entitled to any further compensation beyond any pro-rated base salary due and bonus amounts earned through the effective date of termination. Mr. Scott will also be reimbursed for any expenses incurred prior to the date of termination for which he was not previously reimbursed. Mr. Scott may receive severance benefits and the Company’s obligation under a termination by the Company without Cause or Mr. Scott terminates his employment for Good Reason are discussed above. Promotion Letter with Joseph Barnes On October 10, 2014, the Company entered into a Promotion Letter with Joseph Barnes which was effective October 1, 2014 pursuant to which the Company engaged Mr. Barnes as its Senior Vice-President of Business Development from October 1, 2014 on an at will basis. This Promotion Letter supersedes and canceled the Manager Services Agreement with Mr. Barnes dated August 1, 2013. Per the terms of the Barnes Agreement, Mr. Barnes’s compensation is $90,000 on an annual basis. Mr. Barnes received a bonus of $6,500 and is also entitled to receive a quarterly bonus based on growth of the Company’s growth margin dollars. No quarterly bonuses were earned under this Promotion Letter. Mr. Barnes was granted an option to purchase eight million shares of the Company’s common stock under the Company’s 2011 Stock Incentive Plan at an exercise price on the date of grant. The shares vest as follows: i Two million shares vested immediately; iv Six million shares vest on a monthly basis over a period of three years beginning on the date of grant. All options will have a five-year life and allow for a cashless exercise. The stock option grant is subject to the terms and conditions of the Company’s Stock Incentive Plan, including vesting requirements. In the event that Mr. Barnes’s continuous status as employee to the Company is terminated by the Company without Cause or Mr. Barnes terminates his employment with the Company for Good Reason as defined in the Barnes Agreement, in either case upon or within twelve months after a Change in Control as defined in the Company’s Stock Incentive, then 100% of the total number of shares shall immediately become vested. Mr. Barnes was entitled to participate in all group employment benefits that are offered by the Company to the Company’s senior executives and management employees from time to time, subject to the terms and conditions of such benefit plans, including any eligibility requirements. Finally, Mr. Barnes is entitled to fifteen days of vacation annually and also has certain insurance and travel employment benefits. Mr. Barnes may receive severance benefits and the Company’s obligation under a termination by the Company without Cause or Mr. Barnes terminates his employment for Good Reason are discussed above. Agreements with Robert Hunt On June 7, 2013, the Company entered into an Executive Services Agreement with Robert Hunt, pursuant to which the Company engaged Mr. Hunt, from June 8, 2013 through June 7, 2015 to provide consulting and management services as the President of GrowLife Hydroponics, Inc. On May 30, 2014, the Company announced the resignation of Robert Hunt effective May 23, 2014 as Executive Vice President of GrowLife, Inc., President of GrowLife Hydroponics. On June 3, 2014, the Board of Directors accepted the resignation of Robert Hunt effective June 2, 2014 as a Director of the Company. On October 17, 2014, the Company entered into a Settlement Agreement and Release with Mr. Robert Hunt, whereby the Parties cancelled the Executive Services Agreement ("ESA") dated June 7, 2013 and his stock option grant for 12,000,000 shares. The Company agreed to issue 6,000,000 shares of restricted common stock under certain conditions that have not been met (issuance not triggered as of December 31, 2015), paid cash severance totaling $50,000 monthly over five month starting October 25, 2014 and reimbursed Mr. Hunt for health insurance benefits and other expenses monthly over five months starting October 25, 2014. The Parties entered into a release agreement. Promotion Letter with Jeremy Belmont On October 10, 2014, the Company entered into a Promotion Letter with Jeremy Belmont which was effective October 1, 2014 pursuant to which the Company engaged Mr. Belmont as Vice President of Sales from October 1, 2014 on an at will basis. This Promotion Letter superseded and canceled the Manager Services Agreement with Mr. Belmont dated October 1, 2013. Per the terms of the Belmont Agreement, Mr. Belmont’s compensation was $72,000 on an annual basis. Mr. Belmont received a bonus of $6,500 and is also entitled to receive a quarterly bonus based on growth of the Company’s growth margin dollars. No quarterly bonuses were earned under this Promotion Letter. Mr. Barnes was granted an option to purchase five million shares of the Company’s common stock under the Company’s 2011 Stock Incentive Plan at an exercise price on the date of grant. The Shares vest as follows: i One million four hundred thousand shares vested immediately; iv Three million six hundred thousand shares will vest on a monthly basis over a period of three years beginning on the date of grant. All options had a five-year life and allow for a cashless exercise. The stock option grant is subject to the terms and conditions of the Company’s Stock Incentive Plan, including vesting requirements. In the event that Mr. Belmont’s continuous status as employee to the Company is terminated by the Company without Cause or Mr. Belmont terminates his employment with the Company for Good Reason as defined in the Belmont Agreement, in either case upon or within twelve months after a Change in Control as defined in the Company’s Stock Incentive, then 100% of the total number of Shares shall immediately become vested. Mr. Belmont was entitled to participate in all group employment benefits that are offered by the Company to the Company’s senior executives and management employees from time to time, subject to the terms and conditions of such benefit plans, including any eligibility requirements. Finally, Mr. Belmont was entitled to fifteen days of vacation annually and also had certain insurance and travel employment benefits. Mr. Belmont may receive severance benefits and the Company’s obligation under a termination by the Company without Cause or Mr. Belmont terminated his employment for Good Reason are discussed above. Mr. Belmont resigned January 13, 2016. Promotion Letter with Adam Edwards On October 10, 2014, the Company entered into a Promotion Letter with Adam Edwards which was effective October 1, 2014 pursuant to which the Company engaged Mr. Edwards as Vice President of Sales from October 1, 2014 on an at will basis. Per the terms of the Edwards Agreement, Mr. Edwards’s compensation is $72,000 on an annual basis. Mr. Edwards received a bonus of $6,500 and was also entitled to receive a quarterly bonus based on growth of the Company’s growth margin dollars. No quarterly bonuses were earned under this Promotion Letter. Mr. Edwards was granted an option to purchase four million five hundred thousand shares of the Company’s common stock under the Company’s 2011 Stock Incentive Plan at an exercise price on the date of grant. The shares vested quarterly over thirty six months. All options had a five-year life and allow for a cashless exercise. The stock option grant is subject to the terms and conditions of the Company’s Stock Incentive Plan, including vesting requirements. In the event that Mr. Edwards’s continuous status as employee to the Company is terminated by the Company without Cause or Mr. Edwards terminates his employment with the Company for Good Reason as defined in the Edwards Agreement, in either case upon or within twelve months after a Change in Control as defined in the Company’s Stock Incentive, then 100% of the total number of shares shall immediately become vested. Mr. Edwards was entitled to participate in all group employment benefits that are offered by the Company to the Company’s senior executives and management employees from time to time, subject to the terms and conditions of such benefit plans, including any eligibility requirements. Finally, Mr. Edwards was entitled to fifteen days of vacation annually and also has certain insurance and travel employment benefits. Mr. Edwards may receive severance benefits and the Company’s obligation under a termination by the Company without Cause or Mr. Edwards terminated his employment for Good Reason are discussed above. Mr. Edwards resigned July 11, 2015. Offer Letter with Tina Qunell On November 20, 2014, the Company entered into an Offer Letter with Tina Qunell which was effective November 24, 2014 pursuant to which the Company engaged Ms. Qunell as Vice President of Marketing on an at will basis. Per the terms of the Qunell Agreement, Ms. Qunell’s compensation was $72,000 on an annual basis. Ms. Qunell was granted an option to purchase seven million shares of the Company’s common stock under the Company’s 2011 Stock Incentive Plan at an exercise price on the date of grant. One million of the shares vested immediately and six million vest quarterly over thirty six months. All options had a five-year life and allow for a cashless exercise. The stock option grant was subject to the terms and conditions of the Company’s Stock Incentive Plan, including vesting requirements. In the event that Ms. Qunell’s continuous status as employee to the Company was terminated by the Company without Cause or Mr. Qunell terminates her employment with the Company for Good Reason as defined in the Qunell Agreement, in either case upon or within twelve months after a Change in Control as defined in the Company’s Stock Incentive, then 100% of the total number of shares shall immediately become vested. Ms. Qunell was entitled to participate in all group employment benefits that are offered by the Company to the Company’s senior executives and management employees from time to time, subject to the terms and conditions of such benefit plans, including any eligibility requirements. Finally, Ms. Qunell was entitled to fifteen days of vacation annually and also has certain insurance and travel employment benefits. Ms. Qunell may receive severance benefits and the Company’s obligation under a termination by the Company without Cause or Ms. Qunell terminated her employment for Good Reason are discussed above. Ms. Qunell resigned July 2, 2015. Investment Banking Letter with D. Weckstein and Co. Inc. On August 27, 2014, the Company issued 5,000,000 shares of its common stock to D. Weckstein and Co., Inc. pursuant to an Investment Banking Letter. The shares were valued at the fair market price of $0.08 per share.

15. INCOME TAXES

15. INCOME TAXES	12 Months Ended
	Dec. 31, 2015
Income Tax Disclosure [Abstract]
INCOME TAXES	The Company has incurred losses since inception, which have generated net operating loss carryforwards. The net operating loss carryforwards arise from United States sources. Pretax losses arising from United States operations were approximately $5,700,000 and $87,000,000 and for the years ended December 31, 2015 and 2014, respectively. The Company has net operating loss carryforwards of approximately $17,000,000, which expire in 2023-2033. Because it is not more likely than not that sufficient tax earnings will be generated to utilize the net operating loss carryforwards, a corresponding valuation allowance of approximately $6,700,000 was established as of December 31, 2015. Additionally, under the Tax Reform Act of 1986, the amounts of, and benefits from, net operating losses may be limited in certain circumstances, including a change in control. Section 382 of the Internal Revenue Code generally imposes an annual limitation on the amount of net operating loss carryforwards that may be used to offset taxable income when a corporation has undergone significant changes in its stock ownership. There can be no assurance that the Company will be able to utilize any net operating loss carryforwards in the future. For the year ended December 31, 2015, the Company’s effective tax rate differs from the federal statutory rate principally due to net operating losses, warrants issued for services, change in fair value of derivative and debt discount. The principal components of the Company’s deferred tax assets at December 31, 2015 and 2014 are as follows: 2015 2014 2013 U.S. operations loss carry forward and state at statutory rate of 40% $ 6,713,538 $ 5,038,976 $ 3,612,736 Less valuation allowance (6,713,538 ) (5,038,976 ) (3,612,736 ) Net deferred tax assets - - - Change in valuation allowance $ (6,713,538 ) $ (5,038,976 ) $ (3,612,736 ) 2015 2014 Federal statutory rate -34.0 % -34.0 % State income tax rate -6.0 % -6.0 % Change in valuation allowance 40.0 % 40.0 % Effective tax rate 0.0 % 0.0 % The Company’s tax returns for 2010 to 2014 are open to review by the Internal Revenue Service.

16. SUBSEQUENT EVENTS

16. SUBSEQUENT EVENTS	12 Months Ended
	Dec. 31, 2015
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	The Company evaluates subsequent events, for the purpose of adjustment or disclosure, up through the date the financial statements are available. Subsequent to December 31, 2015, the following material transactions occurred: Resumed Trading of our Common Stock On February 18, 2016, our common stock resumed unsolicited quotation on the OTC Bulletin Board after receiving clearance from the Financial Industry Regulatory Authority (“FINRA”) on our Form 15c2-11. The Company is currently taking the appropriate steps to uplist to the OTCQB Exchange and resume priced quotations with market makers as soon as it is able. Equity Issuances On January 4, 2016, the Company issued 3,000,000 shares of its common stock to an entity affiliated with Mark E. Scott, the Company’s Chief Financial Officer, pursuant to a conversion of debt for $30,000. The shares were valued at the fair market price of $0.01 per share. On January 16, 2016, the Company issued 1,400,000 shares of its common stock to a former consultant pursuant a conversion of debt for $40,000. The shares were valued at the fair market price of $0.01 per share. On January 27, 2016, the Company issued 1,500,000 shares of its common stock to Michael E. Fasci, a Board Director, pursuant to a service award for $15,000. The shares were valued at the fair market price of $0.01 per share. During March 2016, Holder of the Company’s Convertible Notes Payables, converted principal and accrued interest of $608,905 into 86,986,437 shares of the Company’s common stock at a per share conversion price of $0.007. The Company issued $2 million in common stock or 115,141,048 shares of the Company’s common stock on April 6, 2016 pursuant to the settlement of the Consolidated Class Action and Derivative Action lawsuits alleging violations of federal securities laws that were filed against the Company in United States District Court, Central District of California. The Company accrued $2,000,000 as loss on class action lawsuits and contingent liabilities during the year ending December 31, 2015. Stock Option Vesting On February 18, 2016, an entity affiliated with Mark E. Scott, the Company’s Chief Financial Officer, had a two million share stock option grant issued at $0.01 per share vest immediately upon the Company securing a market maker with an approved 15c2-11 resulting in the Company’s relisting on OTCBB. Dissolution of Certain Non-Operating Subsidiaries The Company determined that certain wholly-owned subsidiaries were unnecessary for the ongoing operations of the Company’s business and elected to dissolve these entities and/or surrender their foreign status in certain jurisdictions for the purpose of reducing unnecessary compliance costs. The Company is dissolving SG Technologies Corp., a Nevada corporation, and is surrendering its qualification to do business in California due to the fact that the Company no longer operates any business under this wholly-owned subsidiary. The Company is dissolving Phototron, Inc. and GrowLife Productions, Inc., all California corporations, due to the fact that the Company no longer operates any business under these wholly-owned subsidiaries. The Company is dissolving Business Bloom, Inc., a California corporation, and is withdrawing its foreign entity status in Colorado due to the fact that the Company no longer operates any business under this wholly-owned subsidiary. The Company is surrendering its qualification to do business in California due to the fact that the Company has moved its headquarters to Seattle, Washington and is no longer required to register as a foreign entity in California. Potential Convertible Note Defaults Several of the Company’s convertible promissory notes remain outstanding beyond their respective maturity dates. This may trigger an event of default under the respective agreements. The Company is working with these noteholders to convert their notes into common stock and intends to resolve these outstanding issues as soon as practicable. Enactment of Heightened Corporate Governance Measures Pursuant to Derivative Action Settlement In connection with the settlement of the Derivative Actions related to alleged violations of federal securities laws, the Company agreed to expansive corporate governance measures. During 2015 and 2016, the Company has enacted and continues to enact heightened corporate governance measure pursuant to the Derivative Action Settlement. The Company plans to hold a special shareholder meeting in the coming months to further implement measures associated with the Derivative Action Settlement. Employment and Consulting Agreements Defaults The Company owes Marco Hegyi approximately $53,287 in payroll and expenses as of December 31, 2015 and is in default under the Employment Agreement with Mr. Hegyi. The Company owes Mark Scott approximately $71,537 in payroll and expenses as of December 31, 2015 and is in default under the Consulting Agreement with Mr. Scott. Expiration of Stock Option Grants Mr. Belmont resigned January 13, 2016 and an option to purchase five million shares of the Company’s common stock under the Company’s 2011 Stock Incentive Plan expired on April 13, 2016. Entry into Securities Purchase Agreement On April 5, 2016, the Company entered into and closed a Securities Purchase Agreement and related agreements (the “Transaction Documents”) with an accredited investor (the “Purchaser”) whereby the Company agreed to sell, and the Purchaser agreed to purchase an unsecured convertible promissory note in the original principal amount of $2,755,000 (the “Note”) (collectively, the “Transaction”). In connection with the Transaction, the Company was provided $350,000 in cash as well as a series of twelve Secured Investor Notes for a total Purchase Price of $2,500,000. The Note carries an Original Issue Discount (“OID”) of $250,000 and the Company agreed to pay $5,000 to cover Purchaser’s legal fees, accounting costs and other transaction expenses. The Secured Investor Notes are payable as follows: 1) $50,000 upon filing of a Registration Statement on Form S-1 (the “Registration Statement”), 2) $100,000 upon effectiveness of the Registration Statement, and 3) up to $200,000 per month over the 10 months following effectiveness at the sole discretion of the Company, subject to certain conditions. The Company shall file the Registration Statement within forty-five (45) days of the Closing and will register shares of its common stock for the benefit of Purchaser in exchange for the payments under the Secured Investor Notes. The Purchaser has the option to convert the Note at 65% of the average of the three (3) lowest volume weighted average prices in the twenty (20) Trading Days immediately preceding the applicable conversion (the “Conversion Price”). However, in no event will the Conversion Price be less than $0.02 or greater than $0.09. In addition, beginning on the date that is the earlier of six (6) months or five (5) days after the Registration Statement becomes effective, and on the same day of each month thereafter, the Company will re-pay the Note in monthly installments in cash, or, subject to certain Equity Conditions, in the Company’s common stock at 65% of the average of the three (3) lowest volume weighted average prices in the twenty (20) Trading Days immediately preceding the applicable conversion (the “Installment Conversion Price”).

3. SIGNIFICANT ACCOUNTING POL23

3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS (Policies)	12 Months Ended
	Dec. 31, 2015
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation -
Principles of Consolidation	Principles of Consolidation
Cash and Cash Equivalents	Cash and Cash Equivalents
Accounts Receivable and Revenue	Accounts Receivable and Revenue -
Inventories	Inventories -
Property and Equipment	Property and Equipment -
Goodwill and Intangible Assets	Goodwill and Intangible Assets - The Company amortizes the cost of other intangible assets over their estimated useful lives, which range up to ten years, unless such lives are deemed indefinite. Intangible assets with indefinite lives are tested in the fourth quarter of each fiscal year for impairment, or more often if indicators warrant.
Equity Investments	Equity Investments – The Company classifies all highly-liquid investments with stated maturities of greater than three months from the date of purchase and remaining maturities of less than one year as short-term investments. Investments with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such investments are viewed as being available to support current operations. The Company classifies and accounts for short-term investments as available-for-sale and reflect realized gains and losses using the specific identification method. Changes in market value, if any, excluding other-than-temporary impairments, are reflected under stockholders’ deficit as unrealized gain/loss on related party investment.
Long Lived Assets	Long Lived Assets
Fair Value Measurements and Financial Instruments	Fair Value Measurements and Financial Instruments - Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The carrying value of cash, accounts receivable, investment in a related party, accounts payables, accrued expenses, due to related party, notes payable, and convertible notes approximates their fair values due to their short-term maturities.
Derivative Financial Instruments	Derivative financial instruments - As of December 31, 2015 and 2014, the Company had outstanding 7% convertible notes for $500,000 that the Company determined were a derivative liability due to the “reset” clause associated with the note’s conversion price. The Company valued the derivative liability of these notes at $105,515 and $1,278,878, respectively, using the Black-Scholes-Merton option pricing model. As of December 31, 2015 and 2014, the Company had outstanding 6% convertible notes for $350,000 that the Company determined were a derivative liability due to the “reset” clause associated with the note’s conversion price. The Company valued the derivative liability of these notes at $54,377 and $822,037, respectively using the Black-Scholes-Merton option pricing model. As of December 31, 2015, the Company had outstanding 18% convertible notes for $1,150,000 that the Company determined were a derivative liability due to the “reset” clause associated with the note’s conversion price. The Company valued the derivative liability of these notes at $1,217,283 using the Black-Scholes-Merton option pricing model.
Sales Returns	Sales Returns -
Shipping and Handling Fees and Cost	Shipping and Handling Fees and Cost -
Stock Based Compensation	Stock Based Compensation
Advertising Costs	Advertising Costs -
Net (Loss) Per Share	Net (Loss) Per Share -
Dividend Policy	Dividend Policy
Use of Estimates	Use of Estimates -
Reclassifications	Reclassifications
Recent Accounting Pronouncements	A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, management has not determined whether implementation of such proposed standards would be material to our consolidated financial statements. In August 2014, FASB issued ASU 2014-15—Presentation of Financial Statements—Going Concern (ASC Subtopic 205-40): “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. In May 2014, FASB issued ASU 2014-09—Revenue from Contracts with Customers (Topic 606): “Section A—Summary and Amendments That Create Revenue from Contracts with Customers, (Topic 606) and Other Assets and Deferred Costs—Contracts with Customers (Subtopic 340-40), Section B—Conforming Amendments to Other Topics and Subtopics in the Codification and Status Tables, Section C—Background Information and Basis for Conclusions”. In July 2013, FASB issued ASU 2013-11—Income Taxes (ASC Topic 740): “ Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists New Accounting Standards Issued but Not Yet Adopted In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”)

4. PURCHASE - ROCKY MOUNTAIN 24

4. PURCHASE - ROCKY MOUNTAIN HYDROPONICS and EVERGREEN GARDEN CENTER (Tables)	12 Months Ended
	Dec. 31, 2015
ROCKY MOUNTAIN HYDROPONICS and EVERGREEN GARDEN CENTER
Purchase Price for tangible and intangible Assets	Allocation $ Assets $ 907,614 Intangible assets 366,000 Goodwill 739,000 Total 2,012,614 Less fair value of liabilities (387,614 ) Purchase price $ 1,625,000

6. INVENTORY (Tables)

6. INVENTORY (Tables)	12 Months Ended
	Dec. 31, 2015
Inventory Disclosure [Abstract]
Schedule of Inventory	December 31, 2015 December 31, 2014 (Audited) (Audited) Finished goods $ 418,439 $ 923,565 Inventory reserve (20,000 ) (40,215 ) Total $ 398,439 $ 8 83,350

8. INTANGIBLE ASSETS (Tables)

8. INTANGIBLE ASSETS (Tables)	12 Months Ended
	Dec. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
INTANGIBLE ASSETS	Intangible Assets: Estimated Useful Lives Cost Accumulated Amortization Net Book Value RMH/EGC acquisition- customer contracts 5 years $ 366,000 $ (189,100 ) $ 176,900 Greners acquisition- customer contracts 5 years 230,000 (163,296 ) 66,704 Phototron acquisition- customer contracts 5 years 215,000 (215,000 ) - Soja, Inc. (Urban Garden Supply) acquisition- customer contracts 5 years 60,000 (60,000 ) - Total intangible assets $ 871,000 $ (627,396 ) $ 243,604

9. DERIVATIVE LIABILITY (Tables

9. DERIVATIVE LIABILITY (Tables)	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
Fair Value of Derivative Liability	Fair Value Measurements Using Inputs Carrying Amount at September 30, Financial Instruments Level 1 Level 2 Level 3 2015 Liabilities: Derivative Instruments - Warrants $ - $ 1,377,175 $ - $ 1,377,175 Total $ - $ 1,377,175 $ - $ 1,377,175 Fair Value Measurements Using Inputs Carrying Amount at December 31, Financial Instruments Level 1 Level 2 Level 3 2014 Liabilities: Derivative Instruments - Warrants $ - $ 2,100,915 $ - $ 2,100,915 Total $ - $ 2,100,915 $ - $ 2,100,915

11. CONVERTIBLE NOTES PAYABLE28

11. CONVERTIBLE NOTES PAYABLE, NET (Tables)	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
Convertible notes summarized	Accrued Debt Balance As of December 31, Principal Interest Discount 2015 6% Senior secured convertible notes (2012) $ 413,680 $ 172,494 $ - $ 586,174 6% Secured convertible note (2014) 350,000 30,641 (83,924 ) 296,717 7% Convertible note ($850,000) 250,000 104,137 - 354,137 7% Convertible note ($1,000,000) 250,000 134,469 - 384,469 18% Senior secured redeemable convertible debenture ($1,050,000) 1,150,000 68,510 (552,139 ) 666,371 $ 2,413,680 $ 510,251 $ (636,063 ) $ 2,287,868

12. EQUITY (Tables)

12. EQUITY (Tables)	12 Months Ended
	Dec. 31, 2015
Equity [Abstract]
Warrants	A summary of the warrants issued as of December 31, 2015 were as follows: December 31, 2015 Weighted Average Exercise Shares Price Outstanding at beginning of period 565,000,000 $ 0.032 Issued - - Exercised - - Forfeited - - Expired - - Outstanding at end of period 565,000,000 $ 0.032 Exerciseable at end of period 565,000,000 A summary of the status of the warrants outstanding as of December 31, 2015 is presented below: December 31, 2015 Number of Weighted Average Remaining Weighted Average Exercise Shares Weighted Average Exercise Warrants Life Price Exerciseable Price 540,000,000 3.31 $ 0.033 540,000,000 $ 0.033 25,000,000 2.94 0.010 25,000,000 0.010 565,000,000 3.30 $ 0.032 565,000,000 $ 0.032

13. STOCK OPTIONS (Tables)

13. STOCK OPTIONS (Tables)	12 Months Ended
	Dec. 31, 2015
Stock Options Tables
Stock options	Stock option activity for the years ended December 31, 2015 and 2014 is as follows: Weighted Average Options Exercise Price $ Granted 49,720,000 $ 0.075 $ 3,706,000 Exercised (5,126,187 ) (0.133 ) (682,922 ) Forfeitures (44,725,000 ) (0.092 ) (4,132,751 ) Outstanding as of December 31, 2014 40,720,000 0.058 2,356,000 Granted - - (960,000 ) Exercised - - - Forfeitures (11,700,000 ) (0.050 ) (585,000 ) Outstanding as of December 31, 2015 29,020,000 $ 0.028 $ 811,000 The following table summarizes information about stock options outstanding and exercisable at December 31, 2015: Range of Exercise Number Weighted Average Remaining Life In Weighted Average Exercise Price Number Weighted Average Exercise Price Prices Outstanding Years Exerciseable Exerciseable Exerciseable $ 0.05 13,020,000 4.00 $ 0.050 7,120,000 $ 0.050 0.01 16,000,000 3.77 0.010 7,833,333 0.010 29,020,000 3.85 $ 0.028 14,953,333 $ 0.043

14. COMMITMENTS, CONTINGENCIE31

14. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS (Tables)	12 Months Ended
	Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract]
Schedule of Future minimum rental payments	Years Ended December 31, Total 2016 $ 76,929 2017 34,675 2018 28,365 2019 0 2020 - Beyond - Total $ 139,969

15. INCOME TAXES (Tables)

15. INCOME TAXES (Tables)	12 Months Ended
	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Deferred tax assets	2015 2014 2013 U.S. operations loss carry forward and state at statutory rate of 40% $ 6,713,538 $ 5,038,976 $ 3,612,736 Less valuation allowance (6,713,538 ) (5,038,976 ) (3,612,736 ) Net deferred tax assets - - - Change in valuation allowance $ (6,713,538 ) $ (5,038,976 ) $ (3,612,736 )
Income tax reconciliation	2015 2014 Federal statutory rate -34.0 % -34.0 % State income tax rate -6.0 % -6.0 % Change in valuation allowance 40.0 % 40.0 % Effective tax rate 0.0 % 0.0 %

3. SIGNIFICANT ACCOUNTING POL33

3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Accumulated deficit	$ (116,715,648)	$ (111,026,803)
Shipping and handling revenue	95,455	128,351
Advertising costs	637	141,369
Inventory reserve	$ 20,000	$ 40,215

4. PURCHASE - ROCKY MOUNTAIN 34

4. PURCHASE - ROCKY MOUNTAIN HYDROPONICS and EVERGREEN GARDEN CENTER (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014	Jun. 30, 2013
Goodwill	$ 739,000	$ 739,000
ROCKY MOUNTAIN HYDROPONICS and EVERGREEN GARDEN CENTER
Assets			$ 907,614
Intangible assets			366,000
Goodwill			739,000
Total Assets			2,012,614
Less fair value of liabilities assumed			(387,614)
Purchase price			$ 1,625,000

4. PURCHASE - ROCKY MOUNTAIN 35

4. PURCHASE - ROCKY MOUNTAIN HYDROPONICS and EVERGREEN GARDEN CENTER (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Amortization expense	$ 106,548	$ 106,548
ROCKY MOUNTAIN HYDROPONICS and EVERGREEN GARDEN CENTER
Amortization period	5 years
Amortization expense	$ 106,548	$ 106,548

6. INVENTORY (Details)

6. INVENTORY (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Notes to Financial Statements
Finished goods	$ 418,439	$ 923,565
Inventory reserve	(20,000)	(40,215)
Total inventory	$ 398,439	$ 883,350

7. INVESTMENT IN VAPE HOLDING37

7. INVESTMENT IN VAPE HOLDINGS, INC. (Details Narrative)	12 Months Ended
	Dec. 31, 2014USD ($)
Investment In Vape Holdings Inc. Details Narrative
Loss in the value of its investment	$ 1,122,397

8. INTANGIBLE ASSETS (Details)

8. INTANGIBLE ASSETS (Details)	12 Months Ended
	Dec. 31, 2015USD ($)
Intangible assets, gross	$ 871,000
Accumulated Amortization	(627,396)
Intangible assets, net	243,604
RMH/EGC acquisition - customer contracts
Intangible assets, gross	366,000
Accumulated Amortization	(189,100)
Intangible assets, net	$ 176,900
Estimated Useful Lives	5 years
Greners acquisition - customer contracts
Intangible assets, gross	$ 230,000
Accumulated Amortization	(163,296)
Intangible assets, net	$ 66,704
Estimated Useful Lives	5 years
Phototron acquisition - customer contracts
Intangible assets, gross	$ 215,000
Accumulated Amortization	(215,000)
Intangible assets, net	$ 0
Estimated Useful Lives	5 years
Soja, Inc. (Urban Garden Supply) acquisition - customer contracts
Intangible assets, gross	$ 60,000
Accumulated Amortization	(60,000)
Intangible assets, net	$ 0
Estimated Useful Lives	5 years

8. INTANGIBLE ASSETS (Details N

8. INTANGIBLE ASSETS (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Intangible Assets Details Narrative
Amortization expense	$ 106,548	$ 106,548

9. DERIVATIVE LIABILITY (Detail

9. DERIVATIVE LIABILITY (Details) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Derivative Instruments - Warrants	$ 1,377,175	$ 2,100,915
Derivative liability	1,377,175	2,100,915
Level 1
Derivative Instruments - Warrants	0	0
Derivative liability	0	0
Level 2
Derivative Instruments - Warrants	1,377,175	2,100,915
Derivative liability	1,377,175	2,100,915
Level 3
Derivative Instruments - Warrants	0	0
Derivative liability	$ 0	$ 0

11. CONVERTIBLE NOTES PAYABLE41

11. CONVERTIBLE NOTES PAYABLE, NET (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Long-term convertible notes payable	$ 0	$ 98,333
6% Senior Secured Convertible Notes
Principal amount due	413,680
Accrued Interest	172,494
Debt discount	0
Long-term convertible notes payable	586,174
6% Secured convertible note (2014)
Principal amount due	350,000
Accrued Interest	30,641
Debt discount	(83,924)
Long-term convertible notes payable	296,717
7% Convertible Notes (850,000)
Principal amount due	250,000
Accrued Interest	104,137
Debt discount	0
Long-term convertible notes payable	354,137
7% Convertible Notes (1,000,000)
Principal amount due	250,000
Accrued Interest	134,469
Debt discount	0
Long-term convertible notes payable	384,469
18% Senior secured redeemable convertible debenture ($1,050,000)
Principal amount due	1,150,000
Accrued Interest	68,510
Debt discount	(552,139)
Long-term convertible notes payable	666,371
Total Long term convertible Debt Member
Principal amount due	2,413,680
Accrued Interest	510,251
Debt discount	(636,063)
Long-term convertible notes payable	$ 2,287,868

12. EQUITY (Details)

12. EQUITY (Details) - Warrant [Member]	12 Months Ended
	Dec. 31, 2015$ / sharesshares
Shares
Outstanding-beginning of year (in shares)	565,000,000
Issued	0
Exercised	0
Forfeited	0
Expired	0
Outstanding at end of year	565,000,000
Exerciseable at end of year	565,000,000
Weighted Average Exercise Price
Outstanding-beginning | $ / shares	$ .032
Issued | $ / shares	0
Exercised | $ / shares	0
Forfeited | $ / shares	0
Expired | $ / shares	0
Outstanding at end of year | $ / shares	$ 0.032

12. EQUITY - Price Range (Detai

12. EQUITY - Price Range (Details)	12 Months Ended
	Dec. 31, 2015$ / sharesshares
Price range 1
Outstanding at end of year	540,000,000
Weighted average remaining life	3 years 3 months 22 days
Outstanding at end of year | $ / shares	$ .033
Exerciseable at end of year	540,000,000
Price range 2
Outstanding at end of year	25,000,000
Weighted average remaining life	2 years 11 months 8 days
Outstanding at end of year | $ / shares	$ .010
Exerciseable at end of year	25,000,000
Warrant [Member]
Outstanding at end of year	565,000,000
Weighted average remaining life	3 years 3 months 18 days
Outstanding at end of year | $ / shares	$ 0.032
Exerciseable at end of year	565,000,000

13. STOCK OPTIONS (Details)

13. STOCK OPTIONS (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Aggregate Intrinsic Value
Exercised		$ (44,673)
Options
Shares
Outstanding-beginning of year (in shares)	40,720,000	40,851,187
Granted	0	49,720,000
Exercised	0	(5,126,187)
Forfeitures	(11,700,000)	(44,725,000)
Outstanding-end of year (in shares)	29,020,000	40,720,000
Weighted Average Exercise Price
Outstanding-beginning	$ 0.058	$ 0.085
Granted	0	0.075
Exercised	0	(0.133)
Forfeitures	(.050)	(0.092)
Outstanding at end of year	$ .028	$ 0.058
Aggregate Intrinsic Value
Outstanding-beginning of year (in dollars)	$ 2,356,000	$ 3,465,673
Granted	(960,000)	3,706,000
Exercised	0	(682,922)
Forfeitures	(585,000)	(4,132,751)
Outstanding-end of year (in dollars)	$ 811,000	$ 2,356,000

13. STOCK OPTIONS - Price range

13. STOCK OPTIONS - Price range (Details)	12 Months Ended
	Dec. 31, 2015$ / sharesshares
Price 0.05
Outstanding-end of year (in shares) | shares	13,020,000
Weighted average remaining life in years	4 years
Outstanding at end of year | $ / shares	$ .050
Exerciseable at end of year | shares	7,120,000
Weighted average exercise price exercisable | $ / shares	$ .050
Price 0.01
Outstanding-end of year (in shares) | shares	16,000,000
Weighted average remaining life in years	3 years 9 months 7 days
Outstanding at end of year | $ / shares	$ .010
Exerciseable at end of year | shares	7,833,333
Weighted average exercise price exercisable | $ / shares	$ .010
Options
Outstanding-end of year (in shares) | shares	29,020,000
Weighted average remaining life in years	3 years 10 months 6 days
Outstanding at end of year | $ / shares	$ .028
Exerciseable at end of year | shares	14,953,333
Weighted average exercise price exercisable | $ / shares	$ .043

14. COMMITMENTS, CONTINGENCIE46

14. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS (Details)	Dec. 31, 2015USD ($)
Commitments And Contingencies Details
2,016	$ 76,929
2,017	34,675
2,018	28,365
2,019	0
2,020	0
Beyond	0
Total	$ 139,969

15. INCOME TAXES - Deferred tax

15. INCOME TAXES - Deferred tax asset (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Deferred tax assets:
U.S. operations loss carry forward and state at statutory rate of 40%	$ 6,713,538	$ 5,038,976	$ 3,612,736
Less valuation allowance	(6,713,538)	(5,038,976)	(3,612,736)
Net deferred tax asset	0	0	0
Change in valuation allowance	$ (6,713,538)	$ (5,038,976)	$ (3,612,736)

15. INCOME TAX - Rate reconcili

15. INCOME TAX - Rate reconciliation (Details)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Tax Details
Federal statutory rate	(34.00%)	(34.00%)
State income tax rate	(6.00%)	(6.00%)
Change in valuation allowance	40.00%	40.00%
Total	0.00%	0.00%

15. INCOME TAXES (Details Narra

15. INCOME TAXES (Details Narrative)	12 Months Ended
	Dec. 31, 2015USD ($)
Income Taxes Details Narrative
Net operating loss carryforwards	$ 17,000,000
Net operating loss carryforwards expiration	2023-2033