SHAREHOLDERS EQUITY

12 Months Ended

Dec. 31, 2012

Equity [Abstract]

SHAREHOLDERS EQUITY

NOTE 13 – STOCKHOLDERS’ DEFICIT

Preferred Stock

On April 5, 2012, we issued to SGT’s former stockholders 3,000,000 shares of Series A Preferred Stock in connection with the Merger (the “Series A Shares”). Pursuant to the Certificate of Designation, each share of Series A Preferred Stock will convert into 23 shares of our common stock on the earlier of (a) the date agreed to by the holders of a majority of the shares of Series A Preferred Stock and the Investor Representative and (b) the 18-month anniversary of the Closing.

Common Stock

On April 5, 2012, we issued to SGT’s former stockholders 157,000,000 shares of our common stock

In conjunction with the Merger, the Company is considered to have issued 152,343,383 shares to the stockholders of the Company existing prior to the Merger. (See Note 3)

On April 19, 2012, the Company’s landlord returned 1,884,796 shares of the Company’s common stock that was previously issued to the landlord as part of a settlement. The Company did not provide any additional compensation to the landlord and no gain or loss has been reflected.

During the three months ended June 30, 2012, the Company issued an aggregate of 435,715 shares of its common stock for services. These shares were valued at the fair value at the date of issuance of $15,250.

On July 12, 2012, the Company issued an additional 8,914,296 shares of its common stock to the participants in Phototron’s first quarter 2011 private placement. The Company did not receive any additional compensation for these shares. The additional shares were valued at $445,715 based on the fair value of the stock price on the date of declaration on June 8, 2012 and are recorded as a stock dividend to shareholders.

During the three months ended September 30, 2012, the Company issued 9,858,333 shares of its common stock for stock based compensation. Of the shares issued, 5,000,000 shares were to related parties. We recorded stock based compensation of $105,250 related to these shares of which $50,000 was attributed to related parties.

During the three months ended December 31, 2012, we issued 41,142,857 shares of common stock relating to the conversion of the Notes. We issued 4,053,012 shares of common stock for a cashless exercise of options. We issued 3,906,252 shares of restricted common stock relating to the acquisition of Urban Garden. We issued 185,714 shares of restricted common stock relating to a downward adjustment of a previous private placement. The additional shares were valued at $9,285 based on the fair value of the stock price on the date of declaration on June 8, 2012 and are recorded as a stock dividend to shareholders. We issued 13,750,000 shares of restricted common stock for professional services of which 5,500,000 shares were to related parties. We recorded stock based compensation of $227,500 relates to these shares of which $55,000 was attributed to related parties.

Stock options

On April 5, 2012, the date of the Merger, we had certain stock options outstanding that had been granted to its employees, officers and directors. The terms of these stock options remained unchanged as a result of the Merger and are summarized below:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Options			Price		Term		Value
Outstanding December 31, 2010		—		$	—		—		—
Granted		55,461,557			0.10		—		—
Exercised		—			—		—		—
Forfeited or expired		(24,600,470	)		0.14		—		—
Outstanding December 31, 2011		30,861,087			0.07		5.81		2,898,302
Granted		—			—		—		—
Exercised		—			—
Forfeited or expired		(18,009,900	)		0.05		—		—
Outstanding December 31, 2012		12,851,187		$	0.09		8.21		—
Vested or expected to vest at December 31, 2012		12,851,187		$	0.09		8.21		—

Warrants

The following table summarizes warrant activity for our company during the years ended December 31, 2012 and 2011:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
			Exercise		Contractual		Intrinsic
	Warrants		Price		Term		Value
Outstanding, December 31, 2010		—		—		—		—
Issued		2,248,954		0.10		—		—
Outstanding, December 31, 2011		2,248,954	$	0.10		4.50	$	22,490
Forfeited		2,248,954	$	0.10		4.50	$	—
Outstanding, December 31, 2012		—	$	—		—	$	—

The warrants were forfeited during the year ended December 31, 2012.