GrowLife (PHOT) 10-Q 2 Nov 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 02, 2017
Document And Entity Information
Entity Registrant Name	GrowLife, Inc.
Entity Central Index Key	1,161,582
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
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?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		2,161,362,495
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,017

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2017	Dec. 31, 2016
CURRENT ASSETS:
Cash and cash equivalents	$ 211,770	$ 103,070
Inventory, net	418,544	418,453
Deposits	9,308	11,163
Total Current Assets	639,622	532,686
EQUIPMENT, NET	0	1,890
OTHER ASSETS:
Investment in purchased assets	220,731	0
TOTAL ASSETS	860,353	534,576
CURRENT LIABILITIES:
Accounts payable - trade	1,177,365	1,529,919
Accounts payable - related parties	0	10,952
Accrued expenses	123,715	132,656
Accrued expenses - related parties	26,409	19,605
Derivative liability	0	2,701,559
Current portion of convertible notes payable	2,172,041	2,798,800
Deferred revenue	10,000	47,995
Total current liabilities	3,509,530	7,241,486
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT
Preferred stock	0	0
Common stock - $0.0001 par value, 3,000,000,000 shares authorized, 2,161,362,495 and 1,656,120,083 shares issued and outstanding at 9/30/2017 and 12/31/2016, respectively	216,124	165,600
Additional paid in capital	122,723,135	117,537,822
Accumulated deficit	(125,588,437)	(124,410,332)
Total stockholders' deficit	(2,649,177)	(6,706,910)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	860,353	534,576
Series B Preferred Stock [Member]
STOCKHOLDERS' DEFICIT
Preferred stock	0	0
Series C Preferred Stock [Member]
STOCKHOLDERS' DEFICIT
Preferred stock	$ 0	$ 0

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
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	0	0
Common Stock par value	$ 0.0001	$ 0.0001
Common Stock, Authorized	3,000,000,000	3,000,000,000
Common Stock, Issued	2,161,362,495	1,656,120,083
Common Stock, Outstanding	2,161,362,495	1,656,120,083
Series B Preferred Stock [Member]
Preferred Stock par value	$ 0.0001	$ 0.0001
Preferred Stock, Authorized	150,000	150,000
Preferred Stock, Issued	0	0
Preferred Stock, Outstanding	0	0
Series C Preferred Stock [Member]
Preferred Stock par value	$ 0.0001	$ 0.0001
Preferred Stock, Authorized	51	51
Preferred Stock, Issued	51	51
Preferred Stock, Outstanding	51	51

CONSOLIDATED STATEMENT OF OPERA

CONSOLIDATED STATEMENT OF OPERATIONS - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Statement [Abstract]
NET REVENUE	$ 661,444	$ 199,760	$ 1,650,367	$ 929,108
COST OF GOODS SOLD	476,752	179,252	1,353,049	893,069
GROSS PROFIT	184,692	20,508	297,318	36,039
GENERAL AND ADMINISTRATIVE EXPENSES	588,969	437,170	1,501,924	1,351,111
OPERATING LOSS	(404,277)	(416,662)	(1,204,606)	(1,315,072)
OTHER INCOME (EXPENSE):
Change in fair value of derivative	0	874,985	2,163,861	496,806
Interest expense, net	(153,216)	(375,815)	(468,809)	(614,045)
Other (expense) income	0	(92,025)	0	158,032
Loss on debt conversions	(198,706)	(464,473)	(1,668,551)	(464,473)
Total other (expense) income	(351,922)	(57,328)	26,501	(423,680)
(LOSS) BEFORE INCOME TAXES	(756,199)	(473,990)	(1,178,105)	(1,738,752)
Income taxes - current benefit	0	0	0	0
NET (LOSS)	$ (756,199)	$ (473,990)	$ (1,178,105)	$ (1,738,752)
Basic and diluted (loss) per share	$ 0	$ 0	$ 0	$ 0
Weighted average shares of common stock outstanding- basic and diluted	2,090,300,854	1,195,368,355	1,973,142,842	1,082,494,008

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Dec. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (756,199)	$ (473,990)	$ (1,178,105)	$ (1,738,752)	$ (7,694,684)	$ (5,688,845)
Adjustments to reconcile net loss to net cash (used in) operating activities
Depreciation and amortization			1,890	6,765
Amortization of intangible assets			0	79,911
Stock based compensation			161,895	98,173
Common stock issued for services			51,000	125,000
Amortization of debt discount			121,395	(99,081)
Change in fair value of derivative liability			(2,701,559)	(496,806)
Accrued interest on convertible notes payable			317,392	323,489
Loss on debt conversions			1,668,551	464,473
Write-off of derivative lliabilities to additional paid in capital			537,698	0
Changes in operating assets and liabilities:
Inventory			(91)	78,613
Deposits			1,890	0
Accounts payable			(102,753)	282,705
Accrued expenses			(2,137)	2,377
Deferred revenue			(37,995)	(15,000)
CASH (USED IN) OPERATING ACTIVITIES			(1,160,929)	(888,133)	(1,212,192)	(1,375,891)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in purchased assets			(220,731)	0
NET CASH (USED IN) INVESTING ACTIVITIES			(220,731)	0
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash provided from Convertible Promissory Note with Chicago Venture Partners, L.P.			2,999,401	905,000
Cash payoff to TCA Global Credit Master Fund, LP			(1,509,041)	0
NET CASH PROVIDED BY FINANCING ACTIVITIES			1,490,360	905,000
NET INCREASE IN CASH AND CASH EQUIVALENTS			108,700	16,867
CASH AND CASH EQUIVALENTS, beginning of period			103,070	60,362	60,362
CASH AND CASH EQUIVALENTS, end of period	$ 211,770	$ 77,229	211,770	77,229	$ 103,070	$ 60,362
Supplemental disclosures of cash flow information:
Interest paid			0	0
Taxes paid			0	0
Non-cash investing and financing activities:
Shares issued for convertible note and interest conversion			1,147,923	2,423,729
Shares issued for debt conversion			0	64,000
Shares issued for class action settlements			0	2,000,000
Shares issued for mezzanine equity			0	300,000
Series B Convertible Preferred Stock converted into convertible notes payable			0	(1,500,000)
Series B Convertible Preferred Stock converted into convertible notes payable debt discount			0	315,669
Common shares issued for accounts payable			$ 260,753	$ 0

1. DESCRIPTION OF BUSINESS AND

1. DESCRIPTION OF BUSINESS AND ORGANIZATION	9 Months Ended
	Sep. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
DESCRIPTION OF BUSINESS AND ORGANIZATION	The accompanying unaudited consolidated condensed financial statements have been prepared by GrowLife, Inc. (“us,” “we,” or “our”) in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial reporting and rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. In the opinion of our management, all adjustments, consisting of only normal recurring accruals, necessary for a fair presentation of the financial position, results of operations, and cash flows for the fiscal periods presented have been included. These financial statements should be read in conjunction with the audited financial statements and related notes included in our Annual Report filed on Form 10-K for the year ended December 31, 2016. The results of operations for the nine months ended September 30, 2017 are not necessarily indicative of the results expected for the full fiscal year, or for any other fiscal period. GrowLife, Inc. (“GrowLife” or the “Company”) is incorporated under the laws of the State of Delaware and is headquartered in Kirkland, 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. GrowLife companies distribute and sell over 15,000 products through its e-commerce distribution channel, GrowLifeEco.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. 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 October 17, 2017, the Company informed by Alpine Securities Corporation (“Alpine”) that Alpine has demonstrated compliance with the Financial Industry Regulatory Authority (“FINRA”) Rule 6432 and Rule 15c2-11 under the Securities Exchange Act of 1934. As a result, Alpine may initiate an unpriced quotation for the Company’s common stock. The Company expects to file an amended application with the OTC Markets to list the Company’s common stock on the OTCQB once the minimum share price of $0.01 per share is achieved. The Company currently trades on the OTC Pink Sheet market. 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 the Company's Form 15c2-11.

2. GOING CONCERN

2. GOING CONCERN	9 Months Ended
	Sep. 30, 2017
Going Concern
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 $1,178,155, $7,694,684 and $5,688,845 for the nine months ended September 30, 2017 and the years ended December 31, 2016 and 2015, respectively. Our net cash used in operating activities was $1,160,929, $1,212,192 and $1,375,891 for the nine months ended September 30, 2017 and the years ended December 31, 2016 and 2015, respectively. The Company anticipates that it will record losses from operations for the foreseeable future. As of September 30, 2017, our accumulated deficit was $125,588,437. 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, 2016 and 2015 filed with the SEC on March 31, 2017 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	9 Months Ended
	Sep. 30, 2017
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 - 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 - Sales Returns - Stock Based Compensation Net (Loss) Per Share - Dividend Policy Use of Estimates - Recent Accounting Pronouncements Recent accounting pronouncements, other than those below, issued by the FASB, the AICPA and the SEC did not or are not believed by management to have a material effect on the Company’s present or future financial statements. In July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting. In March 2016, the FASB issued Accounting Standards Update No. 2016-09 (ASU 2016-09), Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting

4. TRANSACTIONS WITH CANX USA,

4. TRANSACTIONS WITH CANX USA, LLC AND LOGIC WORKS LLC	9 Months Ended
	Sep. 30, 2017
Business Combinations [Abstract]
TRANSACTIONS WITH CANX USA, LLC AND LOGIC WORKS LLC	Transactions with CANX, LLC and Logic Works LLC On November 19, 2013, the Company entered into a Joint Venture Agreement with CANX, 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. The Company initially owned a non-dilutive 45% share of OGI and the Company could 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 that is convertible at $0.033 per share, subject to adjustment as provided in the warrant. The five-year warrant expires November 18, 2018. Also, in accordance with the Joint Venture Agreement, on February 7, 2014 the Company issued an additional warrant to purchase 100,000,000 shares of our common stock that is convertible at $0.033 per share, subject to adjustment as provided in the warrant. The five-year warrant expires February 6, 2019. GrowLife received the $1 million as a convertible note in December 2013, received the $1.3 million commitment but not executed and by January 2014 OGI had Letters of Intent with four investment and acquisition transactions valued at $96 million. Before the deals could close, the SEC put a trading halt on our stock on April 10, 2014, which resulted in the withdrawal of all transactions. The business disruption from the trading halt and the resulting class action and derivative lawsuits ceased further investments with the OGI joint venture. The Convertible Note was converted into GrowLife, Inc. common stock as of the year ended December 31, 2016. 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 Amended and Restated Joint Venture Agreement with CANX modified the Joint Venture Agreement dated November 19, 2013 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 loan requiring approval in advance by CANX; (iii) confirmed that the five year warrants, subject to adjustment, 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 adjustment, 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; and (vi) a four year term, subject to adjustment. 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 required approval in advance by Logic Works, provided 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 nine (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. OGI was incorporated on January 7, 2014 in the State of Nevada and had no business activities as of September 30, 2017.

5. INVENTORY

5. INVENTORY	9 Months Ended
	Sep. 30, 2017
Inventory Disclosure [Abstract]
INVENTORY	Inventory as of September 30, 2017 and December 31, 2016 consists of the following: September 30, December 31, 2017 2016 Finished goods $ 438,544 $ 438,453 Inventory reserve (20,000 ) (20,000 ) Total $ 418,544 $ 418,453 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.

6. CONVERTIBLE NOTES PAYABLE, N

6. CONVERTIBLE NOTES PAYABLE, NET	9 Months Ended
	Sep. 30, 2017
Debt Disclosure [Abstract]
CONVERTIBLE NOTES PAYABLE, NET	Convertible notes payable as of September 30, 2017 consisted of the following: Balance Accrued Debt As of Principal Interest Discount September 30, 2017 6% Secured convertible note (2014) $ 39,251 $ 1,381 $ — $ 40,632 7% Convertible note ($850,000) 250,000 209,014 — 459,014 10% OID Convertible Promissory Note with Chicago Venture Partners, L.P. 1,667,373 5,022 — 1,672,395 $ 1,956,624 $ 215,417 $ — $ 2,172,041 Convertible notes payable as of December 31, 2016 consisted of the following: Balance Accrued Debt As of Principal Interest Discount December 31, 2016 6% Secured convertible note (2014) $ 330,295 $ 3,692 $ — $ 333,987 7% Convertible note ($850,000) 250,000 164,137 — 414,137 Replacement debenture with TCA ($2,830,210) 1,468,009 18,350 — 1,486,359 10% OID Convertible Promissory Note with Chicago Venture Partners, L.P. 683,042 2,670 (121,395 ) 564,317 $ 2,731,346 $ 188,849 $ (121,395 ) $ 2,798,800 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. As a result, the Company accrued interest on these notes at the default rates. Furthermore, as a result of being in default on these notes, the Holders could, at their sole discretion, have called these notes. Although no such action has been taken by the Holders, the Company classified these notes as a current liability as of September 30, 2017 and December 31, 2016. 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. Logic Works funded $350,000. The funding provided for interest at 6% with a default interest of 24% per annum and required repayment by June 26, 2016. The Note is convertible into common stock of the Company at the lesser of $0.007 or (B) twenty percent (20%) of the average of the nine (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. On February 28, 2017, Logic Works converted principal and interest of $291,044 into 82,640,392 shares of our common stock at a per share conversion price of $.004. As of September 30, 2017, the outstanding principal on this 6% convertible note was $39,251 and accrued interest was $1,381, which results in a total liability of $40,632. 7% Convertible Notes Payable On October 11, 2013, the Company issued 7% Convertible Notes in the aggregate amount of $850,000 to investors, including $250,000 to Forglen LLC. The Note was due September 30, 2015. All other Notes were converted in 2014. 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 current annual rate of interest was increased to 24% per annum. The conversion price was $0.007 per share, subject to adjustment as provided in the Note. As of September 30, 2017, the outstanding principal on this 7% convertible note was $250,000 and accrued interest was $209,014, which results in a total liability of $459,014. Funding from Chicago Venture Partners, L.P. (“Chicago Venture”) The Company has the following funding transactions with Chicago Venture: Securities Purchase Agreement with Chicago Venture Partners, L.P. Debt Purchase Agreement and First Amendment to Debt Purchase Agreement and Note Assignment Agreement. On August 24, 2016, TCA closed an Assignment of Note Agreement and related agreements with Chicago Venture. The referenced agreements relate to the assignment of Company debt, in the form of debentures, by TCA to Chicago Venture. The Company was a party to the agreements between TCA and Chicago Venture because the Company is the “borrower” under the TCA held debentures. Exchange Agreement, Convertible Promissory Note and related Agreements with Chicago Venture. On January 10, 2017, Chicago Venture, at the Company’s instruction, remitted funds of $1,495,901 to TCA in order to satisfy all debts to TCA. On or around January 11, 2017, the Company was notified by TCA that $13,540 were due to TCA in order for TCA to release its security interest in the Company’s assets. On February 1, 2017, TCA notified the Company that all funds were received and TCA would release its security interest in Company’s assets. TCA has confirmed that it is paid in full and the Company is not aware of any other obligations that the Company has as to TCA. The funds received under the Chicago Venture Agreements and previous Chicago Venture Agreements were used to pay-off TCA. Debt Purchase Agreement and First Amendment to Debt Purchase Agreement and Note Assignment Agreement. On February 1, 2017, the Company closed the transactions described below with Chicago Venture: Securities Purchase Agreement, Secured Promissory Notes, Membership Interest Pledge Agreement and Security Agreement On January 9, 2017, the Company executed the following agreements with Chicago Venture: (i) Securities Purchase Agreement; (ii) Secured Promissory Notes; (iii) Membership Interest Pledge Agreement; and (iv) Security Agreement (collectively the “Chicago Venture Agreements”). The Company entered into the Chicago Venture Agreements with the intent of paying its debt, in full, to TCA Global Credit Master Fund, LP (“TCA”). The total amount of funding under the Chicago Venture Agreements is $1,105,000. Each Convertible Promissory Note carries an original issue discount of $100,000 and a transaction expense amount of $5,000, for total debt of $1,105,000. The Company agreed to reserve 500,000,000 of its shares of common stock for issuance upon conversion of the Debt, if that occurs in the future. If not converted sooner, the Debt is due on or before January 9, 2018. The Debt carries an interest rate of 10%. The Debt is convertible, at Chicago Venture’s option, into the Company’s common stock at $0.009 per share subject to adjustment as provided for in the Secured Promissory Notes attached hereto and incorporated herein by this reference. Chicago Venture’s obligation to fund the Debt was secured by Chicago Venture’s 60% interest in Typenex Medical, LLC, an Illinois corporation, as provided for in the Membership Pledge Agreement. The Company’s obligation to pay the Debt, or any portion thereof, is secured by all Company’s assets. Payment of All TCA Obligations On January 10, 2017, Chicago Venture, at the Company’s instruction, remitted funds of $1,495,901 to TCA in order to satisfy all debts to TCA. On or around January 11, 2017, the Company was notified by TCA that $13,540 were due to TCA in order for TCA to release its security interest in the Company’s assets. On February 1, 2017, TCA notified the Company that all funds were received and TCA released its security interest in Company’s assets. TCA has confirmed that it is paid in full and the Company is not aware of any other obligations that the Company has as to TCA. Securities Purchase Agreement, Secured Promissory Notes and Security Agreement On August 11, 2017, the Company executed the following agreements with Chicago Venture: (i) Securities Purchase Agreement; (ii) Secured Promissory Notes; and (iii) Security Agreement (collectively the “Chicago Venture Agreements”). The Company entered into the Chicago Venture Agreements with the intent to acquire working capital to grow the Company’s business. The total amount of funding under the Chicago Venture Agreements is $1,105,000.00 (the “Debt”). Each Convertible Promissory Note carries an original issue discount of $100,000 and a transaction expense amount of $5,000, for total debt of $1,105,000. We agreed to reserve 200,000,000 of its shares of common stock for issuance upon conversion of the Debt, if that occurs in the future. If not converted sooner, the Debt is due on or before August 11, 2018. The Debt carries an interest rate of ten percent (10%). The Debt is convertible, at Chicago Venture’s option, into our common stock at $0.009 per share subject to adjustment as provided for in the Secured Promissory Notes attached hereto and incorporated herein by this reference. The Company’s obligation to pay the Debt, or any portion thereof, is secured by all of the Company’s assets. As of September 30, 2017, the outstanding principal balance due to Chicago Venture is $1,667,373, accrued interest was $5,022, net of the OID of $0, which results in a total amount of $1,672,395. The OID has been recorded as a discount to debt and $344,635 was amortized to interest expense during the nine months ended September 30, 2017. During the nine months ended September 30, 2017, Chicago Venture converted principal and accrued interest of $2,153,000 into 382,622,126 shares of the Company’s common stock at a per share conversion price of $0.006. The Company recognized $1,668,551 of loss on debt conversions during the nine months ended September 30, 2017.

7. DERIVATIVE LIABILITY

7. DERIVATIVE LIABILITY	9 Months Ended
	Sep. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]
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. There was no derivative liability as of September 30, 2017. For the nine months ended September 30, 2017, the Company recorded non-cash income of $2,163,861 related to the “change in fair value of derivative” expense related to its 6% and 7% convertible notes. Derivative liability as of December 31, 2016 was as follows: Carrying Fair Value Measurements Using Inputs Amount at Financial Instruments Level 1 Level 2 Level 3 December 31, 2016 Liabilities: Derivative Instruments $ — $ 2,701,559 $ — $ 2,701,559 Total $ — $ 2,701,559 $ — $ 2,701,559 For the year ended December 31, 2016, the Company recorded non-cash income of $1,324,384 related to the “change in fair value of derivative” expense related to its 6%, 7% and 18% convertible notes. 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. 7% Convertible Notes As of December 31, 2016, the Company had outstanding 7% convertible notes with a remaining balance of $250,000 that the Company determined had an embedded derivative liability due to the “reset” clause associated with the note’s conversion price. The Company valued the derivative liability of these notes at $1,495,495 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 .001%, (iv) stock price of $0.017, (v) per share conversion price of $0.0036, and (vi) expected term of .25 years, as the Company estimated that the balance of these notes will be converted during the year ended December 31, 2017. 6% Convertible Notes As of December 31, 2016, the Company had outstanding unsecured 6% convertible notes for $330,295 that the Company determined had an embedded derivative liability due to the “reset” clause associated with the note’s conversion price. The Company valued the derivative liability of these notes at $1,206,064 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 .001%, (iv) stock price of $0.017, (v) per share conversion price of $0.0036, and (vi) expected term of .25 years, as the Company estimates that these notes would be converted during the year ended December 31, 2017.

8. RELATED PARTY TRANSACTIONS A

8. RELATED PARTY TRANSACTIONS AND CERTAIN RELATIONSHIPS	9 Months Ended
	Sep. 30, 2017
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS AND CERTAIN RELATIONSHIPS	Since January 1, 2017, the Company engaged in the reportable transaction below with the Company’s 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. On February 4, 2017, the Company issued 1,000,000 shares of the Company’s 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 $0.015 per share. On April 27, 2017, the Company issued 1,000,000 shares of the Company’s to Michael E. Fasci, a Board Director, pursuant to a service award for $9,000. The shares were valued at the fair market price of $0.009 per share. On April 27, 2017, the Company issued 2,000,000 shares of the Company’s to Michael E. Fasci, a Board Director, pursuant to a consulting agreement for $18,000. The shares were valued at the fair market price of $0.009 per share. On April 27, 2017, the Company issued 1,000,000 shares of the Company’s to Katherine McLain, a Board Director, pursuant to a service award for $9,000. The shares were valued at the fair market price of $0.009 per share. Certain Relationships Please see the transactions with CANX, LLC and Logic Works in Note 5, TCA Global Credit Master Fund LP and Chicago Venture Partners, L.P. discussed in Note 4, 6, 7, 9 and 12.

9. EQUITY

9. EQUITY	9 Months Ended
	Sep. 30, 2017
Equity [Abstract]
EQUITY	Authorized Capital Stock The Company has authorized 3,010,000,000 shares of capital stock, of which 3,000,000,000 are shares of voting common stock, par value $0.0001 per share, and 10,000,000 are shares of preferred stock, par value $0.0001 per share. 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 the Company’s 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 we have no present plans to issue any shares of preferred stock. Series C Preferred Stock Designation In connection with the Amended and Restated Securities Purchase Agreement with TCA, 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 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 connection with the closing of the Chicago Venture transactions which closed on February 1, 2017, TCA surrendered the Series C Preferred Stock. 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 nine months ended September 30, 2017, the Company had had the following sales of unregistered of equity securities to accredited investors unless otherwise indicated: On January 2, 2017, Brighton Capital LLC converted debt of $127,148 into 15,893,500 shares of our common stock at a per share conversion price of $0.008. On February 4, 2017, the Company issued 1,000,000 shares of the Company’s 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 $0.015 per share. On February 28, 2017, Logic Works converted principal and interest of $291,044 into 82,640,392 shares of the Company’s common stock at a per share conversion price of $.004. On April 27, 2017, the Company issued 1,000,000 shares of the Company’s common stock to Michael E. Fasci, a Board Director, pursuant to a service award for $9,000. The shares were valued at the fair market price of $0.009 per share. On April 27, 2017, the Company issued 2,000,000 shares of the Company’s common stock to Michael E. Fasci, a Board Director, pursuant to a consulting agreement for $18,000. The shares were valued at the fair market price of $0.009 per share. On April 27, 2017, the Company issued 1,000,000 shares of the Company’s common stock to Katherine McLain, a Board Director, pursuant to a service award for $9,000. The shares were valued at the fair market price of $0.009 per share. During the three months ended September 30, 2017, two vendors converted debt of $133,605 into 119,086,394 shares of the Company’s common stock at the fair market price of $0.007 per share. During the nine months ended September 30, 2017, Chicago Venture converted principal and accrued interest of $2,153,000 into 382,622,126 shares of the Company’s common stock at a per share conversion price of $0.006. Warrants The Company did not issue any warrants during the nine months ended September 30, 2017. A summary of the warrants issued as of September 30, 2017 is as follows: September 30, 2017 Weighted Average Exercise Shares Price Outstanding at beginning of period 595,000,000 $ 0.031 Issued — — Exercised — — Forfeited — — Expired — — Outstanding at end of period 595,000,000 $ 0.031 Exerciseable at end of period 595,000,000 A summary of the status of the warrants outstanding as of September 30, 2017 is presented below: September 30, 2017 Weighted Weighted Weighted Average Average Average Number of Remaining Exercise Shares Exercise Warrants Life Price Exerciseable Price 540,000,000 1.53 $ 0.033 540,000,000 $ 0.033 55,000,000 2.80 0.010 35,000,000 0.010 595,000,000 1.57 $ 0.031 575,000,000 $ 0.032 Warrants totaling 575,000,000 shares of common stock had no intrinsic value as of September 30, 2017.

10. STOCK OPTIONS

10. STOCK OPTIONS	9 Months Ended
	Sep. 30, 2017
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 14,010,000 shares as of September 30, 2017. 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 nine months ended September 30, 2017, the Company had the following stock option activity: On June 28, 2017, the Company’s Compensation Committee granted four advisory committee members each an option to purchase 500,000 shares of the Company’s common stock under the Company’s 2011 Stock Incentive Plan at an exercise price of $0.009 per share, the fair market price on June 28, 2017. As of September 30, 2017, there are 14,010,000 options to purchase common stock at an average exercise price of $0.010 per share outstanding under the 2011 Stock Incentive Plan. The Company recorded $23,352 and $98,173 of compensation expense, net of related tax effects, relative to stock options for the nine months ended September 30, 2017 and 2016 in accordance with ASC 505. Net loss per share (basic and diluted) associated with this expense was approximately ($0.00). As of September 30, 2017, there is $8,048 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 2.22 years. Stock option activity for the nine months ended September 30, 2017 and the years ended December 31, 2016 and 2015 is as follows: Weighted Average Options Exercise Price $ 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 Granted — — — Exercised — — — Forfeitures (17,010,000 ) (0.041 ) (690,500 ) Outstanding as of December 31, 2016 12,010,000 $ 0.010 $ 120,500 Granted 2,000,000 0.009 18,000 Exercised — — — Forfeitures — — — Outstanding as of September 30, 2017 14,010,000 $ 0.010 $ 138,500 The following table summarizes information about stock options outstanding and exercisable as of September 30, 2017: Weighted Weighted Weighted Average Average Average Range of Number Remaining Life Exercise Price Number Exercise Price Exercise Prices Outstanding In Years Exerciseable Exerciseable Exerciseable $ 0.009 2,000,000 2.75 $ 0.009 — $ 0.009 0.010 12,000,000 2.13 0.010 10,000,000 0.010 0.050 10,000 — 0.050 9,167 0.050 14,010,000 2.22 $ 0.010 10,009,167 $ 0.010 Stock option grants totaling 10,009,167 shares of common stock had no intrinsic value as of September 30, 2017.

11. COMMITMENTS, CONTINGENCIES

11. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS	9 Months Ended
	Sep. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS	From time to time, the Company may become subject to various legal proceedings that are incidental to the ordinary conduct of its business. Although the Company cannot accurately predict the amount of any liability that may ultimately arise with respect to any of these matters, it makes provision for potential liabilities when it deems them probable and reasonably estimable. These provisions are based on current information and may be adjusted from time to time according to developments. Other than those certain legal proceedings as reported in our annual report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 31, 2017, the Companies knows of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest. Operating Leases On December 7, 2016, the Company entered into entered into a Consent to Judgement and Settlement Agreement related to its retail hydroponics store located in Portland, Maine. This Agreement provides for a monthly lease payment of $5,373 through May 1, 2020. The Company also agreed to a repayment schedule for past due rent and owes $36,340 as of September 30, 2017. The Company is past due on the repayment schedule by $36,340 as of September 30, 2017. The Company does not have an option to extend the lease after May 1, 2020. 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 $2,792 and increases 3.5% per year thereafter through the end of the lease. The Company terminated this lease agreement as of August 31, 2917. On May 31, 2017, the Company rented space at 5400 Carillon Point, Kirkland, Washington 98033 for $499 per month for the Company’s corporate office and use of space in the Regus network, including California. The Company’s agreement expires May 31, 2018 and can be extended. 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 September 30, Total 2018 $ 104,810 2019 102,092 2020 — 2021 — 2022 — Beyond — Total $ 206,902

12. SUBSEQUENT EVENTS

12. SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2017
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 September 30, 2017, the following material transactions occurred: Lease in Calgary, Canada On October 1, 2017, GrowLife Hydroponics, Inc. entered into a lease in Calgary, Canada. The monthly lease is approximately $1,997. The lease expires September 30, 2022. The Company expects to sale its products at this lease location. Offer Letter with David Reichwein On October 1, 2017, the “Company entered into an Offer Letter with David Reichwein pursuant to which the Company engaged Mr. Reichwein as its Vice-President of Research and Development on an at will basis. Per the terms of the Reichwein Agreement, Mr. Reichwein’s compensation is $150,000 on an annual basis. Starting on the first quarter 2018, Mr. Reichwein is eligible to earn a quarterly commission based on 10% of tile gross margin dollars. Mr. Reichwein was granted an option to purchase twenty million shares of our common stock under our 2011 Stock Incentive Plan at $0.006 per share. The shares vest as follows: i Ten million shares vested immediately; ii Ten million shares vest on a quarterly basis over two 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 our Stock Incentive Plan, including vesting requirements. In the event that Mr. Reichwein’s continuous status as employee to us is terminated by us without Cause or Mr. Reichwein terminates his employment with us for Good Reason as defined in the Reichwein Agreement, in either case upon or within twelve months after a Change in Control as defined in our Stock Incentive, then 100% of the total number of shares shall immediately become vested. Mr. Reichwein was entitled to participate in all group employment benefits that are offered by the Company to our 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. Reichwein is entitled to fifteen days of vacation annually and has certain insurance and travel employment benefits. Mr. Reichwein may receive severance benefits and our obligation under a termination by the Company without Cause or Mr. Reichwein terminates his employment for Good Reason are discussed above. Acquisition of 51% of the Purchased Assets On October 3, 2017, the Company closed the acquisition of 51% of the Purchased Assets from David Reichwein, a Pennsylvania resident, GIP International Ltd, a Hong Kong corporation and DPR International LLC, a Pennsylvania limited liability corporation. The Purchased Assets include intellectual property, copy rights and trademarks related to reflective tiles and flooring. This acquisition of assets is expected to drive the growth of innovative products and services with high margin gross margins for the Company’s distribution channels, including the design and manufacturing of products and services for the indoor cultivation industry including building materials for other industries. The Company acquired its 51% interest in the Purchased Assets for $400,000. The Company funded $75,000 of the Purchase Price by September 30, 2017 for the down payment for equipment and funding of the rent and security deposit of an office lease. The balance of the Purchase Price shall be payable to Seller between October 1, 2017 and December 31, 2017. The Company has the Option to purchase the remaining 49% of the rights, title, and interest in and to the Purchased Assets free and clear of any Encumbrances on or before December 31, 2017 by paying $350,000 in seven monthly payments of $50,000 per month beginning on January 31, 2018 after the Option is exercised and with a final payment on July 31, 2018. As of September, the Company had recorded investment in purchased assets of $220,731. Funding for the acquisition of the Purchased Assets is expected to be provided by Chicago Venture Partners, L.P. under the August 11, 2017 Securities Purchase Agreement with Chicago Venture. FINRA Rule 15c2-11 Notice On October 17, 2017, the Company was informed by Alpine Securities Corporation (“Alpine”) that Alpine has demonstrated compliance with the Financial Industry Regulatory Authority (“FINRA”) Rule 6432 and Rule 15c2-11 under the Securities Exchange Act of 1934. As a result, Alpine may initiate an unpriced quotation for the Company’s common stock. The Company expects to file an amended application with the OTC Markets to list the Company’s common stock on the OTCQB once the minimum share price of $0.01 per share is achieved. The Company currently trades on the OTC Pink Sheet market. Certificate of Elimination for Series B and C Preferred Stock On October 24, 2017, the “Company filed a Certificate of Elimination with the Secretary of State of the State of Delaware to eliminate the Series B Convertible Preferred Stock and Series C Preferred Stock of the Company (the “Certificate of Elimination”). None of the authorized shares of either the Series B or Series C Preferred Stock were outstanding. The Certificate of Elimination, effective upon filing, had the effect of eliminating from the Company's Certificate of Incorporation, as amended, all matters set forth in the Certificate of Designations of the Series B Convertible Preferred Stock and Series C Preferred Stock with respect to each respective series, which were both previously filed by the Company with the Secretary of State on October 22, 2015. Accordingly, the 150,000 shares of Series B Preferred Stock and 51 shares of Series C Preferred Stock previously reserved for issuance under their respective Certificates of Designation resumed their status as authorized but unissued shares of undesignated preferred stock of the Company upon filing of the Certificate of Elimination. Share Exchange Agreement with Soja, Inc. On October 19, 2017, the Company signed a Share Exchange Agreement amongst the Company, GrowLife Hydroponics, Inc. and Soja, Inc. whereby the ownership of Soja, Inc. (“Soja”) was transferred from GrowLife Hydroponics, Inc. to GrowLife, Inc. in exchange for 100 shares of the Company’s Common Stock. As a result, Soja is now a wholly owned subsidiary of the Company. Certificate of Amendment of Certificate of Incorporation On October 24, 2017 the Company filed a Certificate of Amendment of Certificate of Incorporation with the Secretary of State of the State of Delaware to increase the authorized shares of common stock from 3,000,000,000 to 6,000,000,000 shares. Appointment of Independent Chairman of the Board On October 23, 2017, the Board of Directors, appointed Michael E. Fasci, an independent director, Chairman of the Board of Directors. Marco Hegyi, remains Chief Executive Officer and President and a Director. Annual Shareholder Meeting The Company held its 2017 Annual Meeting of Stockholders on October 23, 2017. The results of the Annual Meeting are set forth below. The matters considered at the annual meeting were described in detail in the definitive proxy statement on Schedule 14A that the Company filed with the Securities and Exchange Commission on August 16, 2017. All matters were approved by the shareholders as follows: Shares Shares Motion Description For Withheld 1 To elect four nominees to serve on the Board until the 2018 Annual Meeting of Stockholders- Marco Hegyi 207,273,269 27,049,202 Mark E. Scott 209,651,220 24,671,251 Michael E. Fasci 220,228,468 14,094,003 Katherine McLain 210,317,864 24,004,607 Shares Shares Shares Motion Description For Against Abstained 2 To adopt and approve the 2017 Stock Incentive Plan 176,242,001 49,469,472 8,602,498 3 To approve an amendment to the Company’s Certificate of Incorporation to increase the authorized shares of common stock (“Common Stock”) from 3,000,000,000 to 6,000,000,000 1,099,163,437 694,964,528 27,270,936 4 To ratify the appointment of SD Mayer and Associates, LLP of Seattle, Washington as the Company’s independent registered public accounting firm for the fiscal years ending December 31, 2016 and 2017 1,586,873,838 76,838,085 157,686,979 5 To approve, on a non-binding advisory basis, the compensation paid to the Company’s named executive officers 161,084,619 63,393,490 9,835,862 Motion Description One Year Two Years Three Years Abstain 6 To vote, on a non-binding advisory basis, on the frequency (i.e., every one, two, or three years) of holding an advisory shareholder vote to approve the compensation paid to the Company’s named executive officers 110,133,612 16,013,697 93,296,845 14,888,317 Quorum Issued and Outstanding Voted % 2,064,907,125.00 1,821,398,902.00 88.2 % Committee Assignments On October 23, 2017 the Company’s Board of Directors, approved the following committee assignments: Audit Compensation Nominations and Governance Michael E. Fasci (Chairman) Michael E. Fasci (Chairman) Katherine McLain (Chairman) Thom Kozik Katherine McLain Thom Kozik All committees now consist of independent directors.

3. SIGNIFICANT ACCOUNTING POL18

3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS (Policies)	9 Months Ended
	Sep. 30, 2017
Accounting Policies [Abstract]
Basis of Presentation
Principles of Consolidation
Cash and Cash Equivalents
Accounts Receivable and Revenue
Inventories	I
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
Sales Returns
Stock Based Compensation
Net (Loss) Per Share
Dividend Policy
Use of Estimates
Recent Accounting Pronouncements	Recent accounting pronouncements, other than those below, issued by the FASB, the AICPA and the SEC did not or are not believed by management to have a material effect on the Company’s present or future financial statements. In July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting. In March 2016, the FASB issued Accounting Standards Update No. 2016-09 (ASU 2016-09), Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting

5. INVENTORY (Tables)

5. INVENTORY (Tables)	9 Months Ended
	Sep. 30, 2017
Inventory Disclosure [Abstract]
Inventory	September 30, December 31, 2017 2016 Finished goods $ 438,544 $ 438,453 Inventory reserve (20,000 ) (20,000 ) Total $ 418,544 $ 418,453

6. CONVERTIBLE NOTES PAYABLE,20

6. CONVERTIBLE NOTES PAYABLE, NET (Tables)	9 Months Ended
	Sep. 30, 2017
Debt Disclosure [Abstract]
Convertible notes summarized	Balance Accrued Debt As of Principal Interest Discount September 30, 2017 6% Secured convertible note (2014) $ 39,251 $ 1,381 $ — $ 40,632 7% Convertible note ($850,000) 250,000 209,014 — 459,014 10% OID Convertible Promissory Note with Chicago Venture Partners, L.P. 1,667,373 5,022 — 1,672,395 $ 1,956,624 $ 215,417 $ — $ 2,172,041 Balance Accrued Debt As of Principal Interest Discount December 31, 2016 6% Secured convertible note (2014) $ 330,295 $ 3,692 $ — $ 333,987 7% Convertible note ($850,000) 250,000 164,137 — 414,137 Replacement debenture with TCA ($2,830,210) 1,468,009 18,350 — 1,486,359 10% OID Convertible Promissory Note with Chicago Venture Partners, L.P. 683,042 2,670 (121,395 ) 564,317 $ 2,731,346 $ 188,849 $ (121,395 ) $ 2,798,800

7. DERIVATIVE LIABILITY (Tables

7. DERIVATIVE LIABILITY (Tables)	9 Months Ended
	Sep. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Fair value of financial instruments	Carrying Fair Value Measurements Using Inputs Amount at Financial Instruments Level 1 Level 2 Level 3 December 31, 2016 Liabilities: Derivative Instruments $ — $ 2,701,559 $ — $ 2,701,559 Total $ — $ 2,701,559 $ — $ 2,701,559

9. EQUITY (Tables)

9. EQUITY (Tables)	9 Months Ended
	Sep. 30, 2017
Equity [Abstract]
Warrants	September 30, 2017 Weighted Average Exercise Shares Price Outstanding at beginning of period 595,000,000 $ 0.031 Issued — — Exercised — — Forfeited — — Expired — — Outstanding at end of period 595,000,000 $ 0.031 Exerciseable at end of period 595,000,000 September 30, 2017 Weighted Weighted Weighted Average Average Average Number of Remaining Exercise Shares Exercise Warrants Life Price Exerciseable Price 540,000,000 1.53 $ 0.033 540,000,000 $ 0.033 55,000,000 2.80 0.010 35,000,000 0.010 595,000,000 1.57 $ 0.031 575,000,000 $ 0.032

10. STOCK OPTIONS (Tables)

10. STOCK OPTIONS (Tables)	9 Months Ended
	Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock options	Weighted Average Options Exercise Price $ 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 Granted — — — Exercised — — — Forfeitures (17,010,000 ) (0.041 ) (690,500 ) Outstanding as of December 31, 2016 12,010,000 $ 0.010 $ 120,500 Granted 2,000,000 0.009 18,000 Exercised — — — Forfeitures — — — Outstanding as of September 30, 2017 14,010,000 $ 0.010 $ 138,500 Weighted Weighted Weighted Average Average Average Range of Number Remaining Life Exercise Price Number Exercise Price Exercise Prices Outstanding In Years Exerciseable Exerciseable Exerciseable $ 0.009 2,000,000 2.75 $ 0.009 — $ 0.009 0.010 12,000,000 2.13 0.010 10,000,000 0.010 0.050 10,000 — 0.050 9,167 0.050 14,010,000 2.22 $ 0.010 10,009,167 $ 0.010

11. COMMITMENTS, CONTINGENCIE24

11. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS (Tables)	9 Months Ended
	Sep. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
Schedule of Future minimum rental payments	Years Ended September 30, Total 2018 $ 104,810 2019 102,092 2020 — 2021 — 2022 — Beyond — Total $ 206,902

2. GOING CONCERN (Details Narra

2. GOING CONCERN (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Dec. 31, 2015
Going Concern
Net income (losses)	$ (756,199)	$ (473,990)	$ (1,178,105)	$ (1,738,752)	$ (7,694,684)	$ (5,688,845)
Net cash used in operating activities			(1,160,929)	$ (888,133)	(1,212,192)	$ (1,375,891)
Accumulated deficit	$ (125,588,437)		$ (125,588,437)		$ (124,410,332)

3. SIGNIFICANT ACCOUNTING POL26

3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS (Details Narrative) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Accounting Policies [Abstract]
Inventory reserve	$ 20,000	$ 20,000

5. INVENTORY (Details)

5. INVENTORY (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Inventory Disclosure [Abstract]
Finished goods	$ 438,544	$ 438,453
Inventory reserve	(20,000)	(20,000)
Total	$ 418,544	$ 418,453

6. CONVERTIBLE NOTES PAYABLE (D

6. CONVERTIBLE NOTES PAYABLE (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Principal	$ 1,956,624	$ 2,731,346
Accrued Interest	215,417	188,849
Debt Discount	0	(121,395)
Convertible notes payable	2,172,041	2,798,800
6% Secured convertible note (2014)
Principal	39,251
Accrued Interest	1,381
Debt Discount	0
Convertible notes payable	40,632
7% Convertible notes ($850,000)
Principal	250,000	250,000
Accrued Interest	209,014	164,137
Debt Discount	0	0
Convertible notes payable	459,014	414,137
10% OID Convertible Promissory Note with Chicago Venture Partners, L.P.
Principal	1,667,373	683,042
Accrued Interest	5,022	2,670
Debt Discount	0	(121,395)
Convertible notes payable	$ 1,672,395	564,317
6% Senior secured convertible notes (2012)
Principal		330,295
Accrued Interest		3,692
Debt Discount		0
Convertible notes payable		333,987
Replacement debenture with TCA ($2,830,210)
Principal		1,468,009
Accrued Interest		18,350
Debt Discount		0
Convertible notes payable		$ 1,486,359

7. DERIVATIVE LIABILITY (Detail

7. DERIVATIVE LIABILITY (Details)	Dec. 31, 2016USD ($)
Derivative liability
Derivative Instruments	$ 2,701,559
Total	2,701,559
Level 1
Derivative liability
Derivative Instruments	0
Total	0
Level 2
Derivative liability
Derivative Instruments	2,701,559
Total	2,701,559
Level 3
Derivative liability
Derivative Instruments	0
Total	$ 0

9. EQUITY (Details)

9. EQUITY (Details) - Warrant [Member]	9 Months Ended
	Sep. 30, 2017$ / sharesshares
Shares
Outstanding, beginning of period	595,000,000
Issued	0
Exercised	0
Forfeited	0
Expired	0
Outstanding, end of period	595,000,000
Exerciseable, end of period	575,000,000
Weighted Average Exercise Price
Outstanding, beginning of period | $ / shares	$ .031
Issued | $ / shares	0
Exercised | $ / shares	0
Forfeited | $ / shares	0
Expired | $ / shares	0
Outstanding, end of period | $ / shares	$ .031

9. EQUITY (Details 1)

9. EQUITY (Details 1) - $ / shares	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Warrant 1 [Member]
Shares Outstanding	540,000,000
Weighted average remaining life	1 year 6 months 11 days
Weighted average exercise price outstanding	$ .033
Shares Exerciseable	540,000,000
Weighted average exercise price exercisable	$ .033
Warrant 2 [Member]
Shares Outstanding	55,000,000
Weighted average remaining life	2 years 9 months 18 days
Weighted average exercise price outstanding	$ .010
Shares Exerciseable	35,000,000
Weighted average exercise price exercisable	$ .010
Warrant [Member]
Shares Outstanding	595,000,000	595,000,000
Weighted average remaining life	1 year 6 months 25 days
Weighted average exercise price outstanding	$ .031	$ .031
Shares Exerciseable	575,000,000
Weighted average exercise price exercisable	$ .032

9. EQUITY (Details Narrative)

9. EQUITY (Details Narrative)	Sep. 30, 2017USD ($)
Warrant [Member]
Warrant intrinsic value	$ 0

10. STOCK OPTIONS (Details)

10. STOCK OPTIONS (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016	Dec. 31, 2015
Aggregate Intrinsic Value
Outstanding, end of period	$ 0
Stock Options
Shares
Outstanding, beginning of period	12,010,000	29,020,000	40,720,000
Granted	2,000,000	0	0
Exercised	0	0	0
Forfeitures	0	(17,010,000)	(11,700,000)
Outstanding, end of period	14,010,000	12,010,000	29,020,000
Weighted Average Exercise Price
Outstanding, beginning of period	$ .010	$ .028	$ .058
Granted	.009	0	0
Exercised	0	0	(.000)
Forfeitures	0	(.041)	(.050)
Outstanding, end of period	$ .010	$ .010	$ .028
Aggregate Intrinsic Value
Outstanding, beginning of period	$ 120,500	$ 811,000	$ 2,356,000
Granted	$ 18,000	$ 0	$ (960,000)
Exercised	$ 0	$ 0	$ 0
Forfeitures	$ 0	$ (690,500)	$ (585,000)
Outstanding, end of period	$ 138,500	$ 120,500	$ 811,000

10. STOCK OPTIONS (Details 1)

10. STOCK OPTIONS (Details 1) - $ / shares	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Price 0.009
Outstanding	2,000,000
Weighted average remaining life in years	2 years 9 months
Weighted average exercise price outstanding	$ .009
Exerciseable	0
Weighted average exercise price exercisable	$ .009
Price 0.010
Outstanding	10,000
Weighted average remaining life in years	2 years 1 month 17 days
Weighted average exercise price outstanding	$ .050
Exerciseable	9,167
Weighted average exercise price exercisable	$ .050
Price 0.050
Outstanding	12,000,000
Weighted average exercise price outstanding	$ .010
Exerciseable	10,000,000
Weighted average exercise price exercisable	$ .010
Stock Options
Outstanding	14,010,000	12,010,000	29,020,000	40,720,000
Weighted average remaining life in years	2 years 2 months 19 days
Weighted average exercise price outstanding	$ .010	$ .010	$ .028	$ .058
Exerciseable	10,009,167
Weighted average exercise price exercisable	$ .010

10. STOCK OPTIONS (Details Narr

10. STOCK OPTIONS (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Compensation expense related to Stock Incentive Plan	$ 23,352	$ 98,173
Intrinsic value	$ 0
2011 Stock Incentive Plan
Options to purchase common stock	14,010,000
Options to purchase common stock exercise price	$ 0.010
Total unrecognized costs related to employee granted stock options	$ 8,048
Weighted average remaining life in years	2 years 2 months 19 days

11. COMMITMENTS, CONTINGENCIE36

11. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS (Details)	Sep. 30, 2017USD ($)
Commitments and Contingencies Disclosure [Abstract]
2,018	$ 104,810
2,019	102,092
2,020	0
2,021	0
2,022	0
Beyond	0
Total	$ 206,902