Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 14, 2018 | |
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, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 3,217,711,802 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 197,180 | $ 69,191 |
Inventory, net | 486,661 | 465,678 |
Deposits | 32,921 | 24,308 |
Total current assets | 716,762 | 559,177 |
EQUIPMENT, NET | 502,397 | 302,689 |
TOTAL ASSETS | 1,219,159 | 861,866 |
CURRENT LIABILITIES: | ||
Accounts payable - trade | 954,218 | 821,398 |
Accrued expenses | 244,910 | 133,988 |
Accrued expenses - related parties | 47,726 | 37,776 |
Derivative liability | 1,118,107 | 2,660,167 |
Current portion of convertible notes payable | 2,319,687 | 3,015,021 |
Deferred revenue | 10,000 | 10,000 |
Total current liabilities | 4,694,648 | 6,678,350 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' DEFICIT | ||
Preferred stock - $0.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Common stock - $0.0001 par value, 6,000,000,000 shares authorized, 3,054,218,374 and 2,367,634,022 shares issued and outstanding at 9/30/2018 and 12/31/2017, respectively | 305,411 | 236,752 |
Additional paid in capital | 134,527,801 | 123,678,069 |
Accumulated deficit | (138,308,701) | (129,731,305) |
Total stockholders' deficit | (3,475,489) | (5,816,484) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 1,219,159 | $ 861,866 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
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 | 6,000,000,000 | 6,000,000,000 |
Common Stock, Issued | 3,054,218,374 | 2,367,634,022 |
Common Stock, Outstanding | 3,054,218,374 | 2,367,634,022 |
CONSOLIDATED STATEMENT OF OPERA
CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
NET REVENUE | $ 953,949 | $ 661,444 | $ 2,871,300 | $ 1,650,367 |
COST OF GOODS SOLD | 898,962 | 476,752 | 2,628,413 | 1,353,049 |
GROSS PROFIT | 54,987 | 184,692 | 242,887 | 297,318 |
GENERAL AND ADMINISTRATIVE EXPENSES | 1,116,724 | 588,969 | 3,220,994 | 1,501,924 |
OPERATING LOSS | (1,061,737) | (404,277) | (2,978,107) | (1,204,606) |
OTHER INCOME (EXPENSE): | ||||
Change in fair value of derivative | (120,286) | 0 | 1,534,812 | 2,163,861 |
Interest expense, net | (365,859) | (153,216) | (1,075,092) | (468,809) |
Impairment of acquired assets | (60,000) | 0 | (60,000) | 0 |
Loss on debt conversions | (645,483) | (198,706) | (5,999,009) | (1,668,551) |
Total other (expense) income | (1,191,628) | (351,922) | (5,599,289) | 26,501 |
(LOSS) BEFORE INCOME TAXES | (2,253,365) | (756,199) | (8,577,396) | (1,178,105) |
Income taxes - current benefit | 0 | 0 | 0 | 0 |
NET (LOSS) | $ (2,253,365) | $ (756,199) | $ (8,577,396) | $ (1,178,105) |
Basic and diluted (loss) per share | $ 0 | $ 0 | $ 0 | $ 0 |
Weighted average shares of common stock outstanding- basic and diluted | 2,996,701,771 | 2,090,300,854 | 2,882,328,973 | 1,973,142,842 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
Net loss | $ (2,253,365) | $ (756,199) | $ (8,577,396) | $ (1,178,105) | $ (7,694,684) | $ (5,688,845) |
Adjustments to reconcile net loss to net cash (used in) operating activities | ||||||
Depreciation and amortization | 50,292 | 1,890 | ||||
Stock based compensation | 175,860 | 161,895 | ||||
Common stock issued for services | 153,206 | 51,000 | ||||
Amortization of debt discount | 660,472 | 121,395 | ||||
Change in fair value of derivative liability | (1,542,060) | (2,701,559) | ||||
Accrued interest on convertible notes payable | 301,885 | 317,392 | ||||
Loss on debt conversions | 6,170,022 | 1,668,551 | ||||
Write-off of derivative liability to additional paid in capital | 0 | 537,698 | ||||
Changes in operating assets and liabilities: | ||||||
Inventory | (20,983) | (91) | ||||
Deposits | 0 | 1,890 | ||||
Accounts payable | 150,820 | (102,753) | ||||
Accrued expenses | 120,872 | (2,137) | ||||
Deferred revenue | 0 | (37,995) | ||||
CASH (USED IN) OPERATING ACTIVITIES | (2,357,010) | (1,160,929) | (2,082,493) | (1,212,192) | ||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
Investment in purchased assets | (250,000) | (220,731) | ||||
NET CASH (USED IN) INVESTING ACTIVITIES | (250,000) | (220,731) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
Cash provided from Convertible Promissory Note with Chicago Venture Partners, L.P. | 1,435,000 | 2,999,401 | ||||
Share issuances to St. George Investments LLC | 1,300,000 | 0 | ||||
Cash payoff to TCA Global Credit Master Fund, LP | 0 | (1,509,041) | ||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 2,735,000 | 1,490,360 | ||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 127,990 | 108,700 | ||||
CASH AND CASH EQUIVALENTS, beginning of period | 69,191 | 103,070 | 103,070 | |||
CASH AND CASH EQUIVALENTS, end of period | $ 197,180 | $ 211,770 | 197,180 | 211,770 | $ 69,191 | $ 103,070 |
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 | 3,067,295 | 1,147,923 | ||||
Common shares issued for accounts payable | $ 18,000 | $ 260,753 |
1. DESCRIPTION OF BUSINESS AND
1. DESCRIPTION OF BUSINESS AND ORGANIZATION | 9 Months Ended |
Sep. 30, 2018 | |
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, 2017. The results of operations for the three months ended September 30, 2018 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. 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. The Company did not acquire business, customer list or employees. The Company acquired its 51% interest in the Purchased Assets for $400,000. The Company funded equipment and rent of an office lease. On February 16, 2018, the Company purchased the remaining 49% of the Purchased Assets in exchange for a one-time payment of $250,000. As September 30, 2018, the Company had recorded investment in purchased assets of $552,689. On August 17, 2018, the Company entered into an Asset Purchase Agreement with Go Green Hydroponics, Inc., a California corporation and TCA – Go Green SPV, LLC, a Florida limited liability pursuant to which the Company acquired the intellectual property and assumed the lease for the property located at 15721 Ventura Blvd., Encino, CA 91436. The Company intends to operate a retail store, sale over the internet and sell on a direct basis at this location. Concurrently, the Company and Seller entered into a Security Agreement for securing the assets of Company as collateral for the obligations of Company as set forth in the Security Agreement. In consideration for the sale and assignment of the Purchased Assets, the Company agreed to pay the Seller: (i) the proceeds generated from the sale of the closing inventory until all closing inventory has been sold, and (ii) to pay the Seller 5% of all gross revenue of Company earned or in any way related to the Purchased Assets generated between October 1, 2018 and December 31, 2019, up to a maximum of $200,000. 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 filed an application with the OTC Markets to list the Company’s common stock on the OTCQB. On March 20, 2018 the Company’s Common Stock began trading on the OTCQB. |
2. GOING CONCERN
2. GOING CONCERN | 9 Months Ended |
Sep. 30, 2018 | |
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 $8,577,396, $7,694,684 and $5,688,845 for the nine months ended September 30, 2018 and the years ended December 31, 2017 and 2016, respectively. Our net cash used in operating activities was $2,357,010, $2,082,493 and $1,212,192 for the nine months ended September 30, 2018 and the years ended December 31, 2017 and 2016, respectively. The Company anticipates that it will record losses from operations for the foreseeable future. As of September 30, 2018, the accumulated deficit was $138,308,701. 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 opinion prepared by our independent registered public accounting firm relating to our financial statements for the year ended December 31, 2017 and 2016 filed with the SEC on March 28, 2018, and amended July 9, 2018, 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, 2018 | |
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 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 the Company’s consolidated financial statements. |
4. TRANSACTIONS WITH CANX USA,
4. TRANSACTIONS WITH CANX USA, LLC AND LOGIC WORKS LLC | 9 Months Ended |
Sep. 30, 2018 | |
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, 2018. |
5. INVENTORY
5. INVENTORY | 9 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
INVENTORY | Inventory as of September 30, 2018 and December 31, 2017 consists of the following: September 30, December 31, 2018 2017 Raw materials $ 130,348 $ 110,000 Finished goods 376,313 375,678 Inventory reserve (20,000 ) (20,000 ) Total $ 486,661 $ 465,678 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. On August 17, 2018, the Company entered into an Asset Purchase Agreement with Go Green Hydroponics, Inc. and TCA – Go Green SPV, LLC. The Company acquired the inventory of Go Green but agreed to pay the Seller 100% of the proceeds generated from the sale of the closing inventory until all closing inventory has been sold. The Company recorded inventory of $134,497 as of September 30, 2018. |
6. PROPERTY AND EQUIPMENT
6. PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | Property and equipment as of September 30, 2018 and December 31, 2017 consists of the following: September 30, December 31, 2018 2017 Machines and equipment $ 552,689 $ 365,861 Furniture and fixtures - 49,787 Computer equipment - 52,304 Leasehold improvements - 56,965 Total property and equipment 552,689 524,917 Less accumulated depreciation and amortization (50,292 ) (222,228 ) Net property and equipment $ 502,397 $ 302,689 Fixed assets, net of accumulated depreciation, were $502,397 and $302,689 as of September 30, 2018 and December 31, 2017, respectively. Accumulated depreciation was $50,292 and $222,228 as of September 30, 2018 and December 31, 2017, respectively. Total depreciation expense was $50,292 and $1,890 for the nine months ended September 30, 2018 and 2017, respectively. All equipment is used for manufacturing, selling, general and administrative purposes and accordingly all depreciation is classified in cost of goods sold, selling, general and administrative expenses. The Company began depreciation on the purchased machine on January 1, 2018, when significant operations began. 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. The Company did not acquire business, customer list or employees. The Company acquired its 51% interest in the Purchased Assets for $400,000. The Company funded equipment and rent of an office lease. On February 16, 2018, the Company purchased the remaining 49% of the Purchased Assets in exchange for a one-time payment of $250,000. As of September 30, 2018, the Company had recorded investment in purchased assets of $552,689. During the nine months ended September 30, 2018, the Company retired fully depreciated assets of $222,228. |
7. ACCOUNTS PAYABLE
7. ACCOUNTS PAYABLE | 9 Months Ended |
Sep. 30, 2018 | |
Accounts Payable [Abstract] | |
ACCOUNTS PAYABLE | Accounts payable were $954,218 and $821,398 as of September 30, 2018 and December 31, 2017, respectively. Such liabilities consisted of amounts due to vendors for inventory purchases, audit, legal and other expenses incurred by the Company. |
8. ACCRUED EXPENSES
8. ACCRUED EXPENSES | 9 Months Ended |
Sep. 30, 2018 | |
Accrued Liabilities [Abstract] | |
ACCRUED EXPENSES | Accrued expenses were $244,910 and $133,988 as of September 30, 2018 and December 31, 2017, respectively. Such liabilities consisted of amounts due to Go Green Hydroponics, Inc. and TCA – Go Green SPV, LLC and sales tax and payroll liabilities. On August 17, 2018, the Company entered into an Asset Purchase Agreement with Go Green Hydroponics, Inc. and TCA – Go Green SPV, LLC. The Company acquired the inventory of Go Green but agreed to pay the Seller 100% of the proceeds generated from the sale of the closing inventory until all closing inventory has been sold. The Company recorded accrued expenses $134,497 as of September 30, 2018 related to the sale of inventory. Also, the Company agreed to pay 5% of all gross revenue of Company earned or in any way related to the Purchased Assets generated between October 1, 2018 and December 31, 2019, up to a maximum of $200,000. The Company estimated gross revenue for that period to be approximately $1,200,000 and recorded a $60,000 liability. The Company recorded an impairment of acquired assets in the amount of $60,000 as of September 30, 2018. |
9. CONVERTIBLE NOTES PAYABLE, N
9. CONVERTIBLE NOTES PAYABLE, NET | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES PAYABLE, NET | Convertible notes payable as of September 30, 2018 consisted of the following: Balance Accrued Debt As of Principal Interest Discount September 30, 2018 10% OID Convertible Promissory Notes $ 1,961,340 $ 115,146 $ (38,075 ) $ 2,038,411 7% Convertible note ($850,000) 270,787 10,489 - 281,276 $ 2,232,127 $ 125,635 $ (38,075 ) $ 2,319,687 Convertible notes payable as of December 31, 2017 consisted of the following: Balance Accrued Debt As of Principal Interest Discount December 31, 2017 6% Secured convertible note (2014) $ 39,251 $ 1,974 $ - $ 41,225 7% Convertible note ($850,000) 250,000 321,652 - 571,652 10% OID Convertible Promissory Notes $ 2,980,199 $ 120,492 $ (698,547 ) $ 2,402,144 $ 3,269,450 $ 444,118 $ (698,547 ) $ 3,015,021 6% Secured Convertible Note and Secured Credit Facility (2014) On March 13, 2018, the Company, received a Notice of Conversion from Logic Works LLC converting principal and interest of $41,690 owed under that a 6% Convertible Note into 16,445,609 shares of our common stock with a fair value of $248,329. As of March 13, 2018, the outstanding balance on the Convertible Note was $0. 7% Convertible Notes Payable As of December 31, 2017, the outstanding principal on the 7% convertible note was $250,000 and accrued interest was $321,652, which results in a total liability of $571,652. On February 12, 2018, the Company received a Notice of Conversion from Forglen LLC converting principal and interest of $321,945 owed under that 7% Convertible Note as amended June 19, 2014 into 127,000,000 shares of the Company’s common stock with a fair value of $2,235,200. On February 23, 2018, the Company, submitted a Notice of Prepayment to Forglen LLC to prepay the balance owed under that 7% Convertible Note as amended June 19, 2014. In response to the Prepay Notice, Forglen submitted a Notice of Conversion on March 8, 2018 to convert the entire balance of the Note and all accrued interest. Upon negotiations between Forglen and the Company, the parties entered into a Second Amendment to the Note, dated March 12, 2018. Pursuant to the Amendment, the Note’s maturity date has been extended to December 31, 2019, and interest on the Note shall accrue at 7% per annum, compounding on the maturity date. As consideration for the Amendment, the Company rescinded its Prepay Notice and Forglen rescinded its Conversion Notice. Additionally, after review of the Note and accrued interest, the Parties agreed that as of March 12, 2018, the outstanding balance on the Note was $270,787. As of September 30, 2018, the outstanding principal on this 7% convertible note was $270,787 and accrued interest was $10,489, which results in a total liability of $281,276. 10% Convertible Promissory Notes Funding from Chicago Venture Partners, L.P. (“Chicago Venture”) As of December 31, 2017, the outstanding principal balance due to Chicago Venture was $2,980,199, accrued interest was $120,492, net of the discount of $698,547, which results in a total amount of $2,402,144. As of September 30, 2018, the outstanding principal balance due to Chicago Venture is $1,426,342, accrued interest was $110,964, net of the discount of $$38,075, which results in a total amount of $1,499,231. During the nine months ended September 30, 2018, Chicago Venture converted principal and interest of $2,779,358 into 469,401,651 shares of our common stock at a per share conversion price of $0.0058 with a fair value of $6,994,433. The Company recognized $4,256,766 of loss on debt conversions during the nine months ended September 30, 2018. During the nine months ended September 30, 2018, the Company recorded an OID debt discount expense of $660,472 to interest expense related to the Chicago Venture financing. Securities Purchase Agreement, Secured Promissory Notes and Security Agreement with Iliad Research and Trading, L.P. (“Iliad”) On August 10, 2018, the Company closed the transactions described below with Iliad. On August 7, 2018, the Company executed the following agreements with Iliad: (i) Securities Purchase Agreement; (ii) Secured Promissory Notes; and (iii) Security Agreement (collectively the “Iliad Agreements”). The Company entered into the Iliad Agreements with the intent to acquire working capital to grow our businesses. The total amount of funding under the Iliad Agreements is $1,500,000. The Convertible Promissory Note carries an original issue discount of $150,000 and a transaction expense amount of $5,000, for total debt of $1,655,000. The Company agreed to reserve three times the number of shares based on the redemption value with a minimum of 150 million shares of its 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 7, 2019. The Debt carries an interest rate of ten percent (10%). The Debt is convertible, at Iliad’s option, into our common stock at $0.015 per share subject to adjustment as provided for in the Secured Promissory Notes. The Company’s obligation to pay the Debt, or any portion thereof, is secured by all of our assets. The Company has $1,055,000 available under this debt financing. At September 30, 2018 the outstanding principal balance due to Iliad Research and Trading, L.P. is $535,000, accrued interest of $4,182 resulting in a total of $539,182. |
10. DERIVATIVE LIABILITY
10. DERIVATIVE LIABILITY | 9 Months Ended |
Sep. 30, 2018 | |
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. If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (BCF). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20. Debt with Conversion and Other Options. In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method. The debt is convertible at the lesser of 65% of the fair value of the Company’s common stock or $0.009 requiring the conversion feature to be bifurcated from the host debt contract and accounting for separately as a derivative, resulting in periodic revaluations. There was a derivative liability of $1,118,107 as of September 30, 2018. For the nine months ended September 30, 2018, the Company recorded non-cash income of $1,534,812 related to the “change in fair value of derivative” expense related to the Chicago Venture and Iliad financing. The income related to a decline in the share price and Chicago Venture converted principal and interest of $2,737,688 into 469,401,651 shares of our common stock during the nine months ended September 30, 2018. Derivative liability as of September 30, 2018 was as follows: Carrying Fair Value Measurements Using Inputs Amount at Financial Instruments Level 1 Level 2 Level 3 September 30, 2018 Liabilities: Derivative Instruments $ - $ 1,118,107 $ - $ 1,118,107 Total $ - $ 1,118,107 $ - $ 1,118,107 |
11. RELATED PARTY TRANSACTIONS
11. RELATED PARTY TRANSACTIONS AND CERTAIN RELATIONSHIPS | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS AND CERTAIN RELATIONSHIPS | Related Party Transactions Since January 1, 2018, 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. On February 7, 2018, the Company issued 7,660,274 shares to three directors. The shares were valued at the fair market price of $0.020 per share or $153,205. The shares were issued for annual director service to the Company. Certain Relationships Please see the transactions with CANX, LLC and Logic Works in Note 4, and Chicago Venture Partners, L.P. discussed in Note 9, 10 and 11. |
12. EQUITY
12. EQUITY | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
EQUITY | Authorized Capital Stock The Company has authorized 6,010,000,000 shares of capital stock, of which 6,000,000,000 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. 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. 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. 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. Equity Issuances During the nine months ended September 30, 2018, the Company had had the following sales of unregistered of equity securities to accredited investors unless otherwise indicated: On February 7, 2018, the Company issued 7,660,274 shares to three directors. The shares were valued at the fair market price of $0.020 per share or $153,205. The shares were issued for annual director service to the Company. On February 12, 2018, the Company received a Notice of Conversion from Forglen LLC converting principal and interest of $321,945 owed under that certain 7% Convertible Note as amended June 19, 2014 into 127,000,000 shares of the Company’s common stock with a fair value of $2,235,200. On February 16, 2018, the Company issued 900,000 shares of its common stock to a service provider pursuant to a conversion of debt totaling $18,000. The shares were valued at the fair market price of $0.020 per share. On March 13, 2018, the Company, received a Notice of Conversion from Logic Works LLC converting principal and interest of $41,690 owed under that a 6% Convertible Note into 16,445,609 shares of our common stock with a fair value of $248,329. As of March 13, 2018, the outstanding balance on the Convertible Note was $0. During the nine months ended September 30, 2018, Chicago Venture and Iliad converted principal and interest of $2,779,358 into 469,401,651 shares of our common stock at a per share conversion price of $0.0058 with a fair value of $6,994,433. The Company recognized $4,526,766 of loss on debt conversions during the nine months ended September 30, 2018. Securities Purchase Agreements with St. George Investments, LLC On February 9, 2018, the Company executed the following agreements with St. George Investments LLC, a Utah limited liability company: (i) Securities Purchase Agreement; and (ii) Warrant to Purchase Shares of Common Stock. The Company entered into the St. George Agreements with the intent to acquire working capital to grow the Company’s businesses. Pursuant to the St. George Agreements, the Company agreed to sell and to issue to St. George for an aggregate purchase price of $1,000,000: (a) 48,687,862 Shares of newly issued restricted Common Stock of the Company; and (b) the Warrant. St. George has paid the entire Purchase Price for the Securities. The Warrant is exercisable for a period of five (5) years from the Closing, for the purchase of up to 48,687,862 shares of the Company’s Common Stock at an exercise price of $0.05 per share of Common Stock. The Warrant is subject to a cashless exercise option at the election of St. George and other adjustments as detailed in the Warrant. On March 20, 2018, the Company entered into and closed on a Common Stock Purchase Agreement with St. George Investments, LLC, a Utah limited liability company. The Company issued St. George 6,410,256 shares of newly issued restricted Common Stock of the Company at a purchase price of $0.0156 per share. On April 26, 2018, the Company entered into and closed on a Common Stock Purchase Agreement with St. George Investments, LLC, Pursuant to the St. George Agreements, the Company sold and agreed to issue to St. George 4,950,495 shares of newly issued restricted Common Stock of the Company at a purchase price of $0.0202 per share. On May 25, 2018, the Company entered into and closed on a Common Stock Purchase Agreement with St. George Investments, LLC, Pursuant to the St. George Agreements, the Company sold and agreed to issue to St. George 5,128,205 shares of newly issued restricted Common Stock of the Company at a purchase price of $0.0195 per share. Warrants The Company issued the following warrants during the nine months ended September 30, 2018: Securities Purchase Agreements with St. George Investments, LLC On February 9, 2018, the Company executed the following agreements with St. George Investments LLC and issued a warrant to purchase of up to 48,687,862 shares of the Company’s Common Stock at an exercise price of $0.05 per share. The Warrant is subject to a cashless exercise option at the election of St. George and other adjustments as repricing as detailed in the Warrant. A summary of the warrants issued as of September 30, 2018 is as follows: September 30, 2018 Weighted Average Exercise Shares Price Outstanding at beginning of period 595,000,000 $ 0.032 Issued 48,687,862 0.050 Exercised - - Forfeited - - Expired - - Outstanding at end of period 643,687,862 $ 0.032 Exercisable at end of period 643,687,862 A summary of the status of the warrants outstanding as of September 30, 2018 is presented below: September 30, 2018 Weighted Weighted Weighted Average Average Average Number of Remaining Exercise Shares Exercise Warrants Life Price Exercisable Price 540,000,000 0.53 $ 0.033 540,000,000 $ 0.033 55,000,000 1.73 0.010 45,000,000 0.010 48,687,862 4.33 0.050 48,687,862 0.050 643,687,862 1.00 $ 0.032 633,687,862 $ 0.029 Warrants totaling 55 million shares of common stock had an intrinsic value of $110,000 as of September 30, 2018. |
13. STOCK OPTIONS
13. STOCK OPTIONS | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK OPTIONS | Description of Stock Option Plan On October 23, 2017, the Company’s Shareholders authorized a Stock Incentive Plan whereby a maximum of 100,000,000 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. The Company has outstanding unexercised stock option grants totaling 37,000,000 shares as of September 30, 2018. The Company filed a registration statement on Form S-8 to register 100,000,000 shares of Company’s common stock related to the 2017 Stock Incentive Plan. 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, 2018, the Company had the following stock option activity: On February 23, 2018, an employee was granted an option to purchase 2,000,000 shares of common stock at an exercise price of $0.020 per share. The stock option grant vests quarterly over two years and is exercisable for 5 years. The stock option grant was valued at $13,000. On February 23, 2018, an employee was granted an option to purchase 1,000,000 shares of common stock at an exercise price of $0.020 per share. The stock option grant vests quarterly over one year and is exercisable for 5 years. The stock option grant was valued at $20,000. On February 23, 2018, an employee was granted an option to purchase 1,000,000 shares of common stock at an exercise price of $0.020 per share. The stock option grant vests quarterly over one year and is exercisable for 5 years. The stock option grant was valued at $6,500. On May 1, 2018, an employee was granted an option to purchase 2,000,000 shares of common stock at an exercise price of $0.020 per share. The stock option grant vests quarterly over one year and is exercisable for 5 years. The stock option grant was valued at $13,000. On June 1, 2018, an employee was granted an option to purchase 2,000,000 shares of common stock at an exercise price of $0.020 per share. The stock option grant vests quarterly over one year and is exercisable for 5 years. The stock option grant was valued at $13,000. As of September 30, 2018, there are 63,000,000 options to purchase common stock at an average exercise price of $0.010 per share outstanding under the 2017 Stock Incentive Plan. The Company recorded $29,619 and $23,352 of compensation expense, net of related tax effects, relative to stock options for the nine months ended September 30, 2018 and 2017 in accordance with ASC 505. Net loss per share (basic and diluted) associated with this expense was approximately ($0.00). As of September 30, 2018, there is $80,043 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 3.45 years. Stock option activity for the nine months ended September 30, 2018 and the years ended December 31, 2017 and 2016 is as follows: Weighted Average Options Exercise Price $ Outstanding as of December 31, 2015 29,020,000 $ 0.03 $ 811,000 Granted - - - Exercised - - - Forfeitures (17,010,000 ) (0.041 ) (690,500 ) Outstanding as of December 31, 2016 12,010,000 0.01 120,500 Granted 44,000,000 0.006 280,000 Exercised - - - Forfeitures (10,000 ) (0.050 ) (500 ) Outstanding as of December 31, 2017 56,000,000 0.007 400,000 Granted 7,000,000 0.020 140,000 Exercised - - - Forfeitures - - - Outstanding as of September 30, 2018 63,000,000 $ 0.009 $ 540,000 The following table summarizes information about stock options outstanding and exercisable as of September 30, 2018: Weighted Weighted Weighted Average Average Average Range of Number Remaining Life Exercise Price Number Exercise Price Exercise Prices Outstanding In Years Exercisable Exercisable Exercisable $ 0.006 32,000,000 4.00 $ 0.006 4,000,000 $ 0.006 0.007 10,000,000 4.00 0.007 3,333,333 0.007 0.009 2,000,000 1.75 0.009 833,333 0.009 0.010 12,000,000 1.13 0.010 12,000,000 0.010 0.020 7,000,000 4.64 0.020 833,333 0.020 63,000,000 3.45 $ 0.009 21,000,000 $ 0.009 Stock option grants totaling 56,000,000 shares of common stock had an intrinsic value of $180,100 as of September 30, 2018. |
14. COMMITMENTS, CONTINGENCIES
14. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS | 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. Sales, Payroll and Other Tax Liabilities As of September 30, 2018, the Company owes $94,217 in sales tax to the City of Boulder, CO. The Company expects to pay $5,000 per month. Other Legal Proceedings The Company may be sued for non-payment of lease payments at closed stores. We may be subject to legal actions with vendors. 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 July 31, 2020. We also agreed to a repayment schedule for past due rent and owe $54,010 as of December 31, 2017. The Company is past due on the repayment schedule by $58,678 as of September 30, 2018. The Company terminated the lease in April 2018. On May 31, 2018, the Company rented space at 5400 Carillon Point, Kirkland, Washington 98033 for $623 per month for our corporate office and use of space in the Regus network, including California. The Company’s agreement expires May 31, 2019. On October 1, 2017, GrowLife Hydroponics, Inc. entered into a lease in Calgary, Canada. The monthly lease is approximately $3,246. The lease expires September 30, 2022. On December 19, 2017, GrowLife Innovations, Inc. entered into a lease in Grand Prairie, Texas dated October 9, 2017, for 5,000 square feet for the manufacturing and distribution of its flooring products. The monthly lease payment is $15,000. The lease expires December 1, 2022 and can be renewed. On July 2, 2018, GrowLife Hydroponics, Inc. entered into a store lease for 1,950 square feet in Portland, Maine. The monthly lease is approximately $2,113, with 3% increases in year two and three. The lease expires July 2, 2021 and can be extended. On August 31, 2018, GrowLife, Inc. entered into the Fourth Amendment to the Lease Agreement for the store in Encino California. The monthly lease is approximately $6,720, with a 3% increase on March 1, 2019. The lease expires February 28, 2019 and can be extended. The Company agreed to provide six months’ notice to terminate the lease. 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 2019 $ 249,281 2020 486,419 2021 83,948 2022 - 2023 - Beyond - Total $ 819,648 Employment and Consulting Agreements First Addendum to Agreements with David Reichwein On February 16, 2018, the Company entered into an Addendum to amend the terms between the Company and David Reichwein. Pursuant to the First Addendum, the Company purchased the remaining 49% of the Purchased Assets in exchange for a one-time payment of $250,000 and the cancellation of Reichwein’s right to receive a 10% commission on certain sales of Free Fit products as was set forth in Reichwein’s employment agreement. In exchange for the cancellation of the commission in the employment agreement, Reichwein may earn a common stock bonus of up to 2,500,000 shares if certain revenue and gross margin goals are met by December 31, 2018. Consulting Agreement with an Entity Controlled by Michael E. Fasci On March 20, 2018, the Company terminated a Consulting Agreement dated October 21, 2016 with an entity controlled by Michael E. Fasci. Mr. Fasci had provided services related to lender management, financing and acquisitions. |
15. SUBSEQUENT EVENTS
15. SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2018 | |
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. There were the material events subsequent to September 30, 2018: Rights Offering to Shareholders On September 18, 2018, the Company filed its proposed Rights Offering on Amendment 1 to Form S-1 that would allow the Company’s shareholders to acquire additional shares of common stock (the “Offering”). The Offering is designed to give record shareholders the opportunity to invest directly into the Company at a set price with additional warrants to support the Company’s capital raise to be used for continued expansion. Each shareholder will receive one non-transferable right (the “Right”) for each share of common stock held on the record date (October 12, 2018). Each Right will include one share of Common Stock and two one-half warrants. The purchase price will be payable in cash to the Company. The warrants included in each Right will be exercisable for one-half of the number of rights for one share of our Common Stock at an exercise price of $0.018 per share and one-half warrant exercisable for one share of our Common Stock at an exercise price of $0.024. For example: if you subscribe for 100 Units you will receive 100 common stock shares and 100 warrants divided into 50 warrants exercisable at $0.018 and 50 warrants exercisable at $0.024). The Record date shareholders who fully exercise their Subscription Rights will be eligible for an over-subscription privilege entitling these shareholders to subscribe, subject to certain limitations and a pro-rata allotment, for any additional shares of common stock not purchased pursuant to the Subscription. The Offering expired at 6:00 PM Eastern Time on November 12, 2018, unless extended. The SEC declared Amendment 1 to Form S-1 effective on October 15, 2018. On November 8, 2018, the Company filed its prospectus supplement and announced the extension of its Rights Offering as previously announced (the “Rights Offering”). The Company has chosen to extend the offering period of the Rights Offering to November 20, 2018 to give stockholders, particularly those holding shares in street name who may have only recently received applicable materials, additional time to participate in the Rights Offering should they desire to do so and due to the original expiration date falling on a holiday. The Offering expires at 6:00 PM Eastern Time on November 20, 2018, unless extended. Purchase and Sale Agreement- EZ Clone Enterprises, Inc. On October 15, 2018, the Company closed the Purchase and Sale Agreement with EZ Clone Enterprises, Inc., a California corporation. EZ Clone is the manufacturer of multiple award-winning products specifically designed for the commercial cloning and propagation stage of indoor plant cultivation including cannabis, food, and other hydroponic farming. The Company The Company has the obligation to acquire the remaining 49% of EZ Clone within one year for $1,960,000, payable as follows: (i) a cash payment of $855,000; and (ii) the issuance of 85,000,000 shares of the Company’s common stock at a price of $0.013 per share or $1,105,000. Mr. William Blackburn will remain as President of EZ Clone. Securities Purchase Agreement, Secured Promissory Notes and Security Agreement On October 15, 2018, the Company executed the following agreements with Iliad: (i) Securities Purchase Agreement; (ii) Secured Promissory Notes; (iii) Security Agreement; and (iv) Warrant to Purchase Shares of Common Shares (collectively the “Iliad Agreements”). The Company entered into the Iliad Agreements with the intent to acquire EZ Clone Enterprises, Inc. The total amount of funding under the Iliad Agreements is $700,000. The Convertible Promissory Note carries an original issue discount of $70,000 and a transaction expense amount of $5,000, for total debt of $775,000. The Company agreed to reserve 350 million shares of its 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 July 15, 2018. The Debt carries an interest rate of ten percent (10%). The Debt is convertible, at Iliad’s option, into the Company’s common stock at 65% of the lowest trading prices in the twenty trading days before conversion. The Warrant is exercisable for a period of five (5) years from the Closing, for the purchase of up to $387,500 shares of the Company’s Common Stock at the market price as of the date of closing. The Warrant is subject to a cashless exercise option at the election of Iliad and other adjustments as detailed in the Warrant. The Company’s obligation to pay the Debt, or any portion thereof, is secured by all of the Company’s assets as described in Schedule A to the Security Agreement attached hereto and incorporated herein by this reference. Employment Agreement with Marco Hegyi On October 15, 2018, the Board of Directors of GrowLife, Inc. (the “Company”) entered into an Employment Agreement with Marco Hegyi pursuant to which the Company engaged Mr. Hegyi as its Chief Executive Officer through October 15, 2021. Mr. Hegyi’s previous Employment Agreement was set to expire on October 21, 2018. Mr. Hegyi’s annual compensation is $275,000. 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 following the end of each calendar year. Mr. Hegyi received a Warrant to purchase up to 16,000,000 shares of common stock of the Company at an exercise price of $0.012 per share which vest immediately. In addition, Mr. Hegyi received two Warrants to purchase up to 16,000,000 shares of common stock of the Company at an exercise price of $0.012 per share which vest on October 15, 2019 and 2020, respectively. The Warrants are exercisable for 5 years. Mr. Hegyi 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 will purchase and maintain during the Term an insurance policy on Mr. Hegyi’s life in the amount of $2,000,000 payable to Mr. Hegyi’s named heirs or estate as the beneficiary. If the Company terminates Mr. Hegyi’s employment at any time prior to the expiration of the Term without Cause, as defined in the Employment Agreement, 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. Employment Agreement with Mark Scott On October 15, 2018, the Compensation Committee of the Company entered into an Employment Agreement with Mark Scott pursuant to which the Company engaged Mr. Scott as its Chief Financial Officer through October 15, 2021. Mr. Scott’s previous Agreement was cancelled. Mr. Scott’s annual compensation is $165,000. Mr. Scott is also entitled to receive an annual bonus equal to two percent (2%) of the Company’s EBITDA for that year. The annual bonus shall be paid no later than 31 days following the end of each calendar year. The Company’s Board of Directors granted Mr. Scott an option to purchase twenty million shares of the Company’s Common Stock under the Company’s 2017 Stock Incentive Plan at an exercise price of $0.012 per share. The Shares vest quarterly over three years. 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 employee 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, then 100% of the total number of Shares shall immediately become vested. Mr. Scott is 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 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 the Company terminates Mr. Scott’s employment at any time prior to the expiration of the Term without Cause, as defined in the Employment Agreement, or if Mr. Scott terminates his employment at any time for “Good Reason” or due to a “Disability”, Mr. Scott will be entitled to receive (i) his Base Salary amount for ninety days; and (ii) his Annual Bonus amount for each year during the remainder of the Term. Employment Agreement with Joseph Barnes On October 15, 2018, the Compensation Committee of the Company entered into an Employment Agreement with Joseph Barnes pursuant to which the Company engaged Mr. Barnes as President of the GrowLife Hydroponics Company through October 15, 2021. Mr. Barnes’s previous Agreement was cancelled. Mr. Barnes’s annual compensation is $165,000. Mr. Barnes is also entitled to receive an annual bonus equal to two percent (2%) of the Company’s EBITDA for that year. The annual bonus shall be paid no later than 31 days following the end of each calendar year. The Company’s Board of Directors granted Mr. Barnes an option to purchase eighteen million shares of the Company’s Common Stock under the Company’s 2017 Stock Incentive Plan at an exercise price of $0.012 per share. The Shares vest quarterly over three years. 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 is 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 purchase and maintain an insurance policy on Mr. Barnes’s life in the amount of $2,000,000 payable to Mr. Barnes’s named heirs or estate as the beneficiary. Finally, Mr. Barnes is entitled to twenty days of vacation annually and also has certain insurance and travel employment benefits. If the Company terminates Mr. Barnes’s employment at any time prior to the expiration of the Term without Cause, as defined in the Employment Agreement, or if Mr. Barnes terminates his employment at any time for “Good Reason” or due to a “Disability”, Mr. Barnes will be entitled to receive (i) his Base Salary amount for ninety days; and (ii) his Annual Bonus amount for each year during the remainder of the Term. |
3. SIGNIFICANT ACCOUNTING POL_2
3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
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 - |
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 - |
Sales Returns | Sales Returns - |
Stock Based Compensation | Stock Based Compensation |
Net (Loss) Per Share | Net (Loss) Per Share - |
Dividend Policy | Dividend Policy |
Use of Estimates | Use of Estimates - |
Recent Accounting Pronouncements | 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 the Company’s consolidated financial statements. |
5. INVENTORY (Tables)
5. INVENTORY (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventory | September 30, December 31, 2018 2017 Raw materials $ 130,348 $ 110,000 Finished goods 376,313 375,678 Inventory reserve (20,000 ) (20,000 ) Total $ 486,661 $ 465,678 |
6. PROPERTY AND EQUIPMENT (Tabl
6. PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Summary of property and equipment | September 30, December 31, 2018 2017 Machines and equipment $ 552,689 $ 365,861 Furniture and fixtures - 49,787 Computer equipment - 52,304 Leasehold improvements - 56,965 Total property and equipment 552,689 524,917 Less accumulated depreciation and amortization (50,292 ) (222,228 ) Net property and equipment $ 502,397 $ 302,689 |
9. CONVERTIBLE NOTES PAYABLE,_2
9. CONVERTIBLE NOTES PAYABLE, NET (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Convertible notes summarized | Balance Accrued Debt As of Principal Interest Discount September 30, 2018 10% OID Convertible Promissory Notes $ 1,961,340 $ 115,146 $ (38,075 ) $ 2,038,411 7% Convertible note ($850,000) 270,787 10,489 - 281,276 $ 2,232,127 $ 125,635 $ (38,075 ) $ 2,319,687 Balance Accrued Debt As of Principal Interest Discount December 31, 2017 6% Secured convertible note (2014) $ 39,251 $ 1,974 $ - $ 41,225 7% Convertible note ($850,000) 250,000 321,652 - 571,652 10% OID Convertible Promissory Notes $ 2,980,199 $ 120,492 $ (698,547 ) $ 2,402,144 $ 3,269,450 $ 444,118 $ (698,547 ) $ 3,015,021 |
10. DERIVATIVE LIABILITY (Table
10. DERIVATIVE LIABILITY (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018 Liabilities: Derivative Instruments $ - $ 1,118,107 $ - $ 1,118,107 Total $ - $ 1,118,107 $ - $ 1,118,107 |
12. EQUITY (Tables)
12. EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Warrants | September 30, 2018 Weighted Average Exercise Shares Price Outstanding at beginning of period 595,000,000 $ 0.032 Issued 48,687,862 0.050 Exercised - - Forfeited - - Expired - - Outstanding at end of period 643,687,862 $ 0.032 Exercisable at end of period 643,687,862 September 30, 2018 Weighted Weighted Weighted Average Average Average Number of Remaining Exercise Shares Exercise Warrants Life Price Exercisable Price 540,000,000 0.53 $ 0.033 540,000,000 $ 0.033 55,000,000 1.73 0.010 45,000,000 0.010 48,687,862 4.33 0.050 48,687,862 0.050 643,687,862 1.00 $ 0.032 633,687,862 $ 0.029 |
13. STOCK OPTIONS (Tables)
13. STOCK OPTIONS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock options | Weighted Average Options Exercise Price $ Outstanding as of December 31, 2015 29,020,000 $ 0.03 $ 811,000 Granted - - - Exercised - - - Forfeitures (17,010,000 ) (0.041 ) (690,500 ) Outstanding as of December 31, 2016 12,010,000 0.01 120,500 Granted 44,000,000 0.006 280,000 Exercised - - - Forfeitures (10,000 ) (0.050 ) (500 ) Outstanding as of December 31, 2017 56,000,000 0.007 400,000 Granted 7,000,000 0.020 140,000 Exercised - - - Forfeitures - - - Outstanding as of September 30, 2018 63,000,000 $ 0.009 $ 540,000 Weighted Weighted Weighted Average Average Average Range of Number Remaining Life Exercise Price Number Exercise Price Exercise Prices Outstanding In Years Exercisable Exercisable Exercisable $ 0.006 32,000,000 4.00 $ 0.006 4,000,000 $ 0.006 0.007 10,000,000 4.00 0.007 3,333,333 0.007 0.009 2,000,000 1.75 0.009 833,333 0.009 0.010 12,000,000 1.13 0.010 12,000,000 0.010 0.020 7,000,000 4.64 0.020 833,333 0.020 63,000,000 3.45 $ 0.009 21,000,000 $ 0.009 |
14. COMMITMENTS, CONTINGENCIE_2
14. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum rental payments | Years Ended September 30, Total 2019 $ 249,281 2020 486,419 2021 83,948 2022 - 2023 - Beyond - Total $ 819,648 |
2. GOING CONCERN (Details Narra
2. GOING CONCERN (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Going Concern | ||||||
Net loss | $ (2,253,365) | $ (756,199) | $ (8,577,396) | $ (1,178,105) | $ (7,694,684) | $ (5,688,845) |
Net cash used in operating activities | (2,357,010) | $ (1,160,929) | (2,082,493) | $ (1,212,192) | ||
Accumulated deficit | $ (138,308,701) | $ (138,308,701) | $ (129,731,305) |
3. SIGNIFICANT ACCOUNTING POL_3
3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS (Details Narrative) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||
Inventory reserve | $ 20,000 | $ 20,000 |
5. INVENTORY (Details)
5. INVENTORY (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 130,348 | $ 110,000 |
Finished goods | 376,313 | 375,678 |
Inventory reserve | (20,000) | (20,000) |
Total | $ 486,661 | $ 465,678 |
6. PROPERTY AND EQUIPMENT (Deta
6. PROPERTY AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Abstract] | ||
Machines and equipment | $ 552,689 | $ 365,861 |
Furniture and fixtures | 0 | 49,787 |
Computer equipment | 0 | 52,304 |
Leasehold improvements | 0 | 56,965 |
Total property and equipment | 552,689 | 524,917 |
Less accumulated depreciation and amortization | (50,292) | (222,228) |
Net property and equipment | $ 502,397 | $ 302,689 |
6. PROPERTY AND EQUIPMENT (De_2
6. PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Property And Equipment | |||
Fixed assets, net of accumulated depreciation | $ 502,397 | $ 302,689 | |
Accumulated depreciation | (50,292) | $ (222,228) | |
Depreciation expense | $ 50,292 | $ 1,890 |
7. ACCOUNTS PAYABLE (Details Na
7. ACCOUNTS PAYABLE (Details Narrative) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Accounts Payable [Abstract] | ||
Accounts payable | $ 954,218 | $ 821,398 |
8. ACCRUED EXPENSES (Details Na
8. ACCRUED EXPENSES (Details Narrative) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Accrued Liabilities [Abstract] | ||
Accrued expenses | $ 244,910 | $ 133,988 |
9. CONVERTIBLE NOTES PAYABLE (D
9. CONVERTIBLE NOTES PAYABLE (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Principal | $ 2,232,127 | $ 3,269,450 |
Accrued Interest | 125,635 | 444,118 |
Debt Discount | (38,075) | (698,547) |
Convertible notes payable | 2,319,687 | 3,015,021 |
10% OID Convertible Promissory Note with Chicago Venture Partners, L.P. | ||
Principal | 1,961,340 | 2,980,119 |
Accrued Interest | 115,146 | 120,492 |
Debt Discount | (38,075) | (698,547) |
Convertible notes payable | 2,038,411 | 2,402,144 |
7% Convertible notes ($850,000) | ||
Principal | 270,787 | 250,000 |
Accrued Interest | 10,489 | 321,652 |
Debt Discount | 0 | 0 |
Convertible notes payable | $ 281,276 | 571,652 |
6% Secured convertible note (2014) | ||
Principal | 39,251 | |
Accrued Interest | 1,974 | |
Debt Discount | 0 | |
Convertible notes payable | $ 41,225 |
10. DERIVATIVE LIABILITY (Detai
10. DERIVATIVE LIABILITY (Details) | Sep. 30, 2018USD ($) |
Derivative liability | |
Derivative instruments | $ 1,118,107 |
Total | 1,118,107 |
Level 1 | |
Derivative liability | |
Derivative instruments | 0 |
Total | 0 |
Level 2 | |
Derivative liability | |
Derivative instruments | 1,118,107 |
Total | 1,118,107 |
Level 3 | |
Derivative liability | |
Derivative instruments | 0 |
Total | $ 0 |
12. EQUITY (Details)
12. EQUITY (Details) - Warrant [Member] | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Shares | |
Outstanding, beginning of period | 595,000,000 |
Issued | 48,687,862 |
Exercised | 0 |
Forfeited | 0 |
Expired | 0 |
Outstanding, end of period | 643,687,862 |
Exercisable, end of period | 643,687,862 |
Weighted Average Exercise Price | |
Outstanding, beginning of period | $ / shares | $ .032 |
Issued | $ / shares | .050 |
Exercised | $ / shares | .000 |
Forfeited | $ / shares | (.000) |
Expired | $ / shares | .000 |
Outstanding, end of period | $ / shares | $ .032 |
12. EQUITY (Details 1)
12. EQUITY (Details 1) - $ / shares | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Weighted average remaining life | 3 years 5 months 12 days | |
Warrant 1 [Member] | ||
Shares outstanding | 540,000,000 | |
Weighted average remaining life | 6 months 11 days | |
Weighted average exercise price outstanding | $ .033 | |
Shares exercisable | 540,000,000 | |
Weighted average exercise price exercisable | $ .033 | |
Warrant 2 [Member] | ||
Shares outstanding | 55,000,000 | |
Weighted average remaining life | 1 year 8 months 23 days | |
Weighted average exercise price outstanding | $ .010 | |
Shares exercisable | 55,000,000 | |
Weighted average exercise price exercisable | $ .010 | |
Warrant 3 [Member] | ||
Shares outstanding | 48,687,862 | |
Weighted average remaining life | 4 years 3 months 29 days | |
Weighted average exercise price outstanding | $ .050 | |
Shares exercisable | 48,687,862 | |
Weighted average exercise price exercisable | $ .050 | |
Warrant [Member] | ||
Shares outstanding | 643,687,862 | 595,000,000 |
Weighted average remaining life | 1 year | |
Weighted average exercise price outstanding | $ .032 | $ .032 |
Shares exercisable | 643,687,862 | |
Weighted average exercise price exercisable | $ .029 |
12. EQUITY (Details Narrative)
12. EQUITY (Details Narrative) | Sep. 30, 2018USD ($) |
Warrant [Member] | |
Warrant intrinsic value | $ 110,000 |
13. STOCK OPTIONS (Details)
13. STOCK OPTIONS (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Aggregate Intrinsic Value | |||
Outstanding, end of period | $ 180,100 | ||
Stock Options | |||
Shares | |||
Outstanding, beginning of period | 56,000,000 | 12,010,000 | 29,020,000 |
Granted | 7,000,000 | 44,000,000 | 0 |
Exercised | 0 | 0 | 0 |
Forfeitures | 0 | (10,000) | (17,010,000) |
Outstanding, end of period | 63,000,000 | 56,000,000 | 12,010,000 |
Weighted Average Exercise Price | |||
Outstanding, beginning of period | $ .007 | $ 0.010 | $ .030 |
Granted | .020 | .006 | .000 |
Exercised | (.000) | (.000) | (.000) |
Forfeitures | (.000) | (.050) | (.041) |
Outstanding, end of period | $ 0.009 | $ .007 | $ 0.010 |
Aggregate Intrinsic Value | |||
Outstanding, beginning of period | $ 400,000 | $ 120,500 | $ 811,000 |
Granted | $ 140,000 | $ 280,000 | $ 0 |
Exercised | $ 0 | $ 0 | $ 0 |
Forfeitures | $ 0 | $ (500) | $ (690,500) |
Outstanding, end of period | $ 540,000 | $ 400,000 | $ 120,500 |
13. STOCK OPTIONS (Details 1)
13. STOCK OPTIONS (Details 1) - $ / shares | 9 Months Ended | |||
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Weighted average remaining life in years | 3 years 5 months 12 days | |||
Price 0.006 | ||||
Outstanding | 32,000,000 | |||
Weighted average remaining life in years | 4 years | |||
Weighted average exercise price outstanding | $ 0.006 | |||
Exerciseable | 4,000,000 | |||
Weighted average exercise price exercisable | $ 0.006 | |||
Price 0.007 | ||||
Outstanding | 10,000,000 | |||
Weighted average remaining life in years | 4 years | |||
Weighted average exercise price outstanding | $ 0.007 | |||
Exerciseable | 3,333,333 | |||
Weighted average exercise price exercisable | $ 0.007 | |||
Price 0.009 | ||||
Outstanding | 2,000,000 | |||
Weighted average remaining life in years | 1 year 9 months | |||
Weighted average exercise price outstanding | $ 0.009 | |||
Exerciseable | 833,333 | |||
Weighted average exercise price exercisable | $ 0.009 | |||
Price 0.010 | ||||
Outstanding | 12,000,000 | |||
Weighted average remaining life in years | 1 year 1 month 17 days | |||
Weighted average exercise price outstanding | $ .010 | |||
Exerciseable | 12,000,000 | |||
Weighted average exercise price exercisable | $ .010 | |||
Price 0.020 | ||||
Outstanding | 7,000,000 | |||
Weighted average remaining life in years | 4 years 7 months 20 days | |||
Weighted average exercise price outstanding | $ .020 | |||
Exerciseable | 833,333 | |||
Weighted average exercise price exercisable | $ .020 | |||
Stock Options | ||||
Outstanding | 63,000,000 | 56,000,000 | 12,010,000 | 29,020,000 |
Weighted average remaining life in years | 3 years 5 months 12 days | |||
Weighted average exercise price outstanding | $ 0.009 | $ .007 | $ 0.010 | $ .030 |
Exerciseable | 21,000,000 | |||
Weighted average exercise price exercisable | $ 0.009 |
12. STOCK OPTIONS (Details Narr
12. STOCK OPTIONS (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Total unrecognized costs related to employee granted stock options | $ 80,043 | ||
Weighted average remaining life in years | 3 years 5 months 12 days | ||
Intrinsic value | $ 180,100 | ||
2017 Stock Incentive Plan | |||
Options to purchase common stock | 59,000,000 | ||
Options to purchase common stock exercise price | $ 0.008 | ||
Compensation expense related to Stock Incentive Plan | $ 29,619 | $ 23,352 |
14. COMMITMENTS, CONTINGENCIE_3
14. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS (Details) | Sep. 30, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,019 | $ 249,281 |
2,020 | 486,419 |
2,021 | 83,948 |
2,022 | 0 |
2,023 | 0 |
Beyond | 0 |
Total | $ 819,648 |