SHAREHOLDERS EQUITY

3 Months Ended

Mar. 31, 2013

Equity [Abstract]

SHAREHOLDERS EQUITY

NOTE 14 – SHAREHOLDERS’ EQUITY

Common Stock

During the three month period ended March 31, 2013, the Company issued 79,595,461 shares of its common stock related to the conversion of notes payable and 6% Notes. These shares were valued at $641,275 and the debt conversions are detailed below:

Debt Conversion
W-Net Fund I, LP	$	353,500	See "Note 11 - 6% SENIOR CONVERTIBLE NOTES"
Black Mountain Equities, Inc		156,000	See “Note 12 – 10% Senior Convertible Note”
Europa International, Inc		70,000	See "Note 11 - 6% SENIOR CONVERTIBLE NOTES"
Forglen, LLC		51,775	See "Note 11 - 6% SENIOR CONVERTIBLE NOTES"
Carla Badaracco		10,000	See "Note 11- 6% SENIOR CONVERTIBLE NOTES"
	$	641,275

During the three month period ended March 31, 2013, the Company issued 15,278,861 shares of its common stock for cash. The shares were sold at a price of $0.035 per share and generated proceeds to the Company in the amount of $534,760.

During the three month period ended March 31, 2013, the Company issued 11,379,166 shares of its common stock for services rendered. These services were valued at $179,125 and are detailed as follows:

Shares for Services
Wages paid to Company employees	$	132,458
Consulting		20,000
Cannabis.org expenses		11,667
Board Member compensation		15,000
	$	179,125

During the three month period ended March 31, 2013, the Company issued 3,680,773 shares of its common stock in relation to the cashless exercise of stock options. These shares were valued at zero by the Company.

During the three month period ended March 31, 2013, the Company issued 470,237 shares of its common stock in relation to the exercise of stock options by Eric Shevin, who joined the Company’s Board of Directors in April 2013 (see “Note 15 – Subsequent Events”). These shares generated proceeds to the Company in the amount of $9,000.

On March 19, 2013, pursuant to the terms and conditions of the Merger Agreement, the Company cancelled all of the 3,000,000 shares of its Series A Preferred Stock that were issued and outstanding. Per the terms of the Merger Agreement, the Company was required to attain specified net revenue and gross profit milestones by May 1, 2013 in order for the shares to vest and be distributed to the former shareholders of SGT. On March 19, 2013, applicable parties agreed that the milestones would not be met so the Series A Preferred Stock was returned to the Company and subsequently cancelled.

Stock options

On April 5, 2012, the date of the Merger, Phototron 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, 2011		30,861,087		$	0.07
Granted		—			—
Exercised		—			—
Forfeited or expired		(18,009,900	)		0.05
Outstanding December 31, 2012		12,851,187		$	0.10		8.46		—
Forfeited or expired		(10,500,000	)
Vested or expected to vest at March 31, 2013		2,351,187		$	0.02		8.21		—

Warrants

The Company did not issue any warrants during the three months ended March 31, 2013, nor were there any warrants outstanding as of March 31, 2013.

The table below summarizes the Company’s warrant activity during the year ended December 31, 2012:

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

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