ACQUISITION

12 Months Ended

Dec. 31, 2012

Business Combinations [Abstract]

ACQUISITION

NOTE 3 – ACQUISITION

On March 21, 2012, we entered into the Merger Agreement. The Closing of the transactions contemplated by the Merger Agreement occurred on April 5, 2012. At the Closing, (a) MergerCo was merged with and into SGT; (b) SGT became our wholly-owned subsidiary; and (c) all SGT shares of common stock were exchanged for shares of our common stock and shares of our Series A Preferred. At the Closing, we issued to SGT’s former stockholders, in exchange for the 200 shares of SGT’s common stock outstanding immediately prior to the Merger, 157,000,000 shares of our common stock and 3,000,000 shares of Series A Preferred Stock.

Since after the Merger former holders of SGT’s common stock owned in excess of 50% of our fully-diluted shares of common stock, and as a result of certain other factors, including that all members of our executive management are members of SGT’s management, SGT is deemed to be the acquiring company and we are deemed to be the legal acquirer for accounting purposes, and the Merger was accounted for as a reverse merger and a recapitalization in accordance with GAAP. The accompanying consolidated financial statements of GrowLife, Inc. (formerly Phototron Holdings, Inc.) and subsidiaries reflect the historical activity of SGT, and the historical stockholders’ equity of SGT has been retroactively restated for the equivalent number of shares received in the exchange after giving effect to the differences in par value offset to additional paid-in capital. In connection with the Merger Agreement, we are deemed to have issued an additional 152,343,383 shares of common stock to our stockholders existing prior to the Merger.

The Company has estimated that the fair value of the 152,343,383 common shares issued to the former stockholders of the Growlife Inc. to be $300,000; however, a formal valuation is underway and actual valuation may differ. The purchase price has been allocated to specific identifiable tangible and intangible assets at their fair value at the date of the purchase in accordance with Accounting Standards Codification 805, “Business Combinations”, as follows

Tangible assets	$	248,494
Intangible assets		225,000
Goodwill		634,128
Total		1,107,622
Less fair value of liabilities assumed		(807,622	)
Purchase price	$	300,000

The intangible assets relate to customer lists and will be amortized over their respective life of three years.

Pro-forma results of operations as if the acquisition had occurred at the beginning of the period for the six months ended June 30, 2012 and 2011 and the three months ended June 30, 2011 are as follows:

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2011			2012			2011
Revenue	$	425,190		$	895,433		$	846,086
Cost of revenue		210,689			584,290			560,403
Gross profit		214,501			311,143			285,683
General and administrative		2,985,019			1,852,682			3,663,099
Loss from operations		(2,770,518	)		(1,541,539	)		(3,377,416	)
Other expenses
Change in fair value of derivatives		—			97,153			—
Interest expense,net		(14,617	)		(138,319	)		(15,789	)
Net loss	$	(2,785,135	)	$	(1,582,705	)	$	(3,393,205	)
Net loss per share - (basic and diluted)	$	(0.01	)	$	(0.00	)	$	(0.01	)
Weighted average shares oustanding -
(basic and diluted)		326,666,931			326,666,931			326,666,931