000-50385
|
|
90-0821083
|
(Commission
File Number)
|
|
(IRS
Employer Identification No.)
|
Exhibit No.
|
|
Description
|
10.1
|
|
Purchase
and Sale Agreement dated October 10, 2018, entered into by and
between GrowLife, Inc. and EZ Clone Enterprises, Inc. Filed as an
exhibit to the Company’s Form 8-K and filed with the SEC on
October 18, 2018, and hereby incorporated by reference
|
|
Consent
of SD Mayer & Associates LLP. Filed Herewith.
|
|
99.1
|
|
Press
release dated October 16, 2018 concerning the GrowLife, Inc.
acquisition of EZ Clone Enterprises, Inc. Filed as an exhibit to
the Company’s Form 8-K and filed with the SEC on October 18,
2018, and hereby incorporated by reference
|
|
Audited
Financial Statements of EZ-Clone Enterprises, Inc. Filed
Herewith.
|
|
|
Unaudited Pro Forma Financial Information of GrowLife, Inc.
and EZ-Clone Enterprises, Inc. Filed Herewith.
|
|
GROWLIFE,
INC.
|
|
|
|
|
|
|
Date: January 24,
2019
|
By:
|
/s/ Mark Scott
|
|
|
|
Mark Scott |
|
|
|
Chief Financial Officer |
|
|
September
30,
2018
|
December
31,
2017
|
ASSETS
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
Cash and cash
equivalents
|
$28,450
|
$18,829
|
Accounts receivable
- trade, net of reserve for doubtful accounts of $0 as of 9/39/2018
and 12/31/17, respectively
|
37,950
|
99,959
|
Inventory,
net
|
494,145
|
549,629
|
Prepaid
costs
|
2,438
|
16,611
|
Deposits
|
6,100
|
6,100
|
Total current
assets
|
569,083
|
691,128
|
|
|
|
EQUIPMENT,
NET
|
317,734
|
351,864
|
|
|
|
TOTAL
ASSETS
|
$886,816
|
$1,042,992
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' (DEFICIT) EQUITY
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
Accounts payable -
trade
|
$191,529
|
$147,661
|
Accrued
expenses
|
78,215
|
37,110
|
Current portion of
notes payable
|
139,125
|
148,269
|
Current portion of
notes payable - related party
|
101,636
|
89,131
|
Cuurent portion of
capital lease
|
10,704
|
6,141
|
Total current
liabilities
|
521,209
|
428,311
|
|
|
|
LONG TERM
LIABILITIES:
|
|
|
Long term portion
of notes payable
|
397,993
|
439,602
|
Capital
leases
|
-
|
10,704
|
Total long term
liabilites
|
397,993
|
450,306
|
|
|
|
COMMITMENTS AND
CONTINGENCIES
|
-
|
-
|
|
|
|
STOCKHOLDERS'
(DEFICIT) EQUITY:
|
|
|
Common stock - no
par value, 100,000 shares authorized and 50,000 shares issued and
outstanding
|
|
|
at 9/30/2018 and
12/31/2017, respectively
|
10,000
|
10,000
|
Additional paid in
capital
|
60,000
|
60,000
|
Accumulated
(deficit) equity
|
(102,385)
|
94,375
|
Total stockholders'
(deficit) equity
|
(32,385)
|
164,375
|
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' (DEFICIT) EQUITY
|
$886,817
|
$1,042,992
|
|
Nine Months
Ended
|
Year
Ended
|
|
September
30,
2018
|
December
31,
2017
|
|
|
|
NET
REVENUE
|
$1,513,699
|
$2,648,873
|
COST OF GOODS
SOLD
|
674,848
|
1,310,455
|
GROSS
PROFIT
|
838,852
|
1,338,418
|
GENERAL AND
ADMINISTRATIVE EXPENSES
|
918,635
|
1,396,471
|
OPERATING
LOSS
|
(79,784)
|
(58,052)
|
|
|
|
OTHER INCOME
(EXPENSE):
|
|
|
Interest expense,
net
|
(28,877)
|
(39,582)
|
Loss on sale of
fixed assets
|
-
|
(30,128)
|
Total other
(expense)
|
(28,877)
|
(69,710)
|
|
|
|
(LOSS) BEFORE
INCOME TAXES
|
(108,660)
|
(127,762)
|
|
|
|
Income taxes -
current provision
|
(1,100)
|
(800)
|
|
|
|
NET
(LOSS)
|
$(107,560)
|
$(126,962)
|
|
|
|
Basic and diluted
(loss) per share
|
$(2.15)
|
$(2.54)
|
|
|
|
Weighted average
shares of common stock outstanding- basic and diluted
|
50,000
|
50,000
|
|
|
|
|
|
Total
|
|
Common Stock
|
Additional Paid
|
Accumulated
|
Stockholders'
|
|
|
Shares
|
Amount
|
in
Capital
|
Equity
(Deficit)
|
Equity
(Deficit)
|
Balance as of
December 31, 2016
|
50,000
|
$10,000
|
$-
|
$337,605
|
$347,605
|
|
|
|
|
|
|
Contributed
capital
|
-
|
-
|
60,000
|
-
|
60,000
|
Shareholder
distributions
|
-
|
-
|
-
|
(116,268)
|
(116,268)
|
Net (loss) for the
year ended December 31, 2017
|
-
|
-
|
-
|
(126,962)
|
(126,962)
|
|
|
|
|
|
|
Balance as of
December 31, 2017
|
50,000
|
10,000
|
60,000
|
94,375
|
164,375
|
Shareholder
distributions
|
-
|
-
|
-
|
(89,200)
|
(89,200)
|
Net (loss) for the
nine months ended September 30, 2018
|
-
|
-
|
-
|
(107,560)
|
(107,560)
|
|
|
|
|
|
|
Balance as of
September 30, 2018
|
50,000
|
$10,000
|
$60,000
|
$(102,385)
|
$(32,385)
|
|
|
|
|
|
|
|
Nine Months
Ended
|
Year
Ended
|
|
September
30,
2018
|
December
31,
2017
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
Net
loss
|
$(107,560)
|
$(126,962)
|
Adjustments to
reconcile net loss to net cash (used in)
|
|
|
operating
activities
|
|
|
Depreciation
and amortization
|
50,385
|
67,466
|
Changes in
operating assets and liabilities:
|
|
|
Accounts
receivable
|
62,009
|
113,569
|
Inventory
|
55,484
|
80,437
|
Prepaid
expenses
|
14,173
|
(11,060)
|
Accounts
payable
|
43,869
|
(47,052)
|
Accrued
expenses
|
41,105
|
68,933
|
CASH PROVIDED
BY OPERATING ACTIVITIES
|
159,465
|
145,331
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
Disposal of fixed
assets
|
(16,255)
|
-
|
Investment in
purchased assets
|
-
|
41,942
|
NET CASH (USED IN)
PROVIDED BY INVESTING ACTIVITIES:
|
(16,255)
|
41,942
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
Shareholder
distributions
|
(89,200)
|
(116,268)
|
Additional paid in
capital
|
-
|
60,000
|
Repayment of
capital lease
|
(10,704)
|
(14,595)
|
Repayment in notes
payable
|
(33,685)
|
(119,563)
|
NET CASH (USED IN)
FINANCING ACTIVITIES
|
(133,589)
|
(190,426)
|
|
|
|
NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
9,621
|
(3,153)
|
|
|
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
18,829
|
21,982
|
|
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
$28,450
|
$18,829
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
Interest
paid
|
$28,877
|
$39,582
|
Taxes
paid
|
$1,100
|
$800
|
|
September 30,
|
December 31,
|
|
2018
|
2017
|
|
|
|
Raw
materials
|
$413,905
|
$210,742
|
Work
in process
|
47,251
|
170,193
|
Finished
goods
|
32,989
|
168,694
|
Total
|
$494,145
|
$549,629
|
|
September 30,
|
December 31,
|
|
2018
|
2017
|
|
|
|
Automobiles
|
$135,928
|
$135,928
|
Furniture
and fixtures
|
16,675
|
16,675
|
Leasehold
improvements
|
14,703
|
14,703
|
Shop
equipment
|
130,769
|
130,769
|
Tooling
equipment
|
259,868
|
243,613
|
Total
property and equipment
|
557,943
|
541,688
|
Less
accumulated depreciation and amortization
|
(240,209)
|
(189,824)
|
Net
property and equipment
|
$317,734
|
$351,864
|
|
|
EZ-Clone
|
|
|
|
|
GrowLife, Inc.
|
Enterprises, Inc.
|
Pro Forma
|
|
Total
|
|
December 31, 2017
|
December 31, 2017
|
Adjustments
|
|
December 31, 2017
|
ASSETS
|
(Audited)
|
(Audited)
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
Cash
and cash equivalents
|
$69,191
|
$18,829
|
$130,000
|
a
|
$218,020
|
Accounts
receivable
|
-
|
99,959
|
-
|
|
99,959
|
Inventory,
net
|
465,678
|
549,629
|
-
|
|
1,015,307
|
Prepaid
costs
|
-
|
16,611
|
-
|
|
16,611
|
Deposits
|
24,308
|
6,100
|
-
|
|
30,408
|
Total
current assets
|
559,177
|
691,128
|
130,000
|
|
1,380,305
|
|
|
|
|
|
|
EQUIPMENT,
NET
|
302,689
|
351,864
|
(105,306)
|
b
|
549,247
|
INTANGIBLE
ASSETS
|
-
|
-
|
3,036,300
|
c
|
3,036,300
|
|
|
|
|
|
|
TOTAL
ASSETS
|
$861,866
|
$1,042,992
|
$3,060,994
|
|
$4,965,852
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
Accounts
payable - trade
|
$821,398
|
$147,661
|
$-
|
|
$969,059
|
Accrued
expenses
|
133,988
|
37,109
|
-
|
|
171,097
|
Accrued
expenses - related parties
|
37,776
|
-
|
-
|
|
37,776
|
Derivative
liability
|
2,660,167
|
-
|
-
|
|
2,660,167
|
Current
portion of convertible notes payable
|
3,015,021
|
-
|
775,000
|
d
|
3,790,021
|
Current
portion of notes payable
|
-
|
148,269
|
(148,269)
|
e
|
-
|
Current
portion of notes payable- related parties
|
-
|
89,131
|
-
|
|
89,131
|
Current
portion of capital lease
|
-
|
6,141
|
-
|
|
6,141
|
Deferred
revenue
|
10,000
|
-
|
-
|
|
10,000
|
Total
current liabilities
|
6,678,350
|
428,311
|
626,731
|
|
7,733,392
|
|
|
|
|
|
|
LONG
TERM LIABILITIES:
|
|
|
|
|
|
Long
term portion of notes payable
|
-
|
439,602
|
(439,602)
|
f
|
-
|
Capital
leases
|
-
|
10,704
|
-
|
|
10,704
|
Total
long term liabilites
|
-
|
450,306
|
(439,602)
|
|
10,704
|
|
|
|
|
|
|
COMMITMENTS
AND CONTINGENCIES
|
-
|
-
|
-
|
|
-
|
|
|
|
|
|
|
STOCKHOLDERS'
DEFICIT
|
|
|
|
|
|
Preferred
stock
|
-
|
-
|
-
|
|
-
|
Common
stock
|
236,752
|
10,000
|
731
|
g
|
247,483
|
Additional
paid in capital
|
123,678,069
|
60,000
|
1,324,269
|
h
|
125,062,338
|
Accumulated
deficit
|
(129,731,305)
|
94,375
|
(491,136)
|
i
|
(130,128,066)
|
Total
stockholders' deficit
|
(5,816,484)
|
164,375
|
833,864
|
|
(4,818,245)
|
|
|
|
|
|
|
NON
CONROLLING INTEREST IN EZ CLONE ENTERPRISES, INC.
|
-
|
-
|
2,040,001
|
j
|
2,040,001
|
|
|
|
|
|
|
TOTAL
LIABILITIES, STOCKHOLDERS' DEFICIT AND NON CONTROLLING
INTEREST
|
$861,866
|
$1,042,992
|
$3,060,994
|
|
$4,965,852
|
|
Year
Ended,
|
|||
|
|
EZ-Clone
|
|
|
|
GrowLife,
Inc.
|
Enterprises,
Inc.
|
|
Total
|
|
December
31,
2017
|
December
31,
2017
|
Pro
Forma
Adjustments
|
December
31,
2017
|
|
(Audited)
|
(Audited)
|
|
|
|
|
|
|
|
NET
REVENUE
|
$2,452,104
|
$2,648,873
|
$-
|
$5,100,977
|
COST OF GOODS
SOLD
|
2,180,603
|
1,310,455
|
-
|
3,491,058
|
GROSS
PROFIT
|
271,501
|
1,338,418
|
-
|
1,609,919
|
GENERAL AND
ADMINISTRATIVE EXPENSES
|
2,320,455
|
1,396,471
|
-
|
3,716,926
|
AMORTIZATION OF
INTANGIBLE ASSETS- EZ-CLONE ENTERPRISES, INC.
|
-
|
-
|
607,405k
|
607,405
|
OPERATING
LOSS
|
(2,048,954)
|
(58,053)
|
(607,405)
|
(2,714,412)
|
|
|
|
|
|
OTHER INCOME
(EXPENSE):
|
|
|
|
|
Change in fair
value of derivative
|
496,305
|
-
|
-
|
496,305
|
Interest expense,
net
|
(1,281,083)
|
(39,581)
|
-
|
(1,320,664)
|
Other (expense)
income
|
15,577
|
-
|
-
|
15,577
|
Loss on debt
conversions
|
(2,502,819)
|
-
|
-
|
(2,502,819)
|
Loss on sale of
fixed assets
|
-
|
(30,128)
|
-
|
(30,128)
|
Total other
(expense) income
|
(3,272,020)
|
(69,709)
|
-
|
(3,341,729)
|
|
|
|
|
|
(LOSS) BEFORE
INCOME TAXES
|
(5,320,974)
|
(127,762)
|
(607,405)
|
(6,056,141)
|
|
|
|
|
|
Income taxes -
current benefit
|
-
|
(800)
|
-
|
(800)
|
|
|
|
|
|
NET
(LOSS)
|
$(5,320,974)
|
$(126,962)
|
$(607,405)
|
$(6,055,341)
|
|
|
|
|
|
Basic and diluted
(loss) per share
|
$(0.00)
|
$-
|
|
$(0.00)
|
|
|
|
|
|
Weighted average
shares of common stock outstanding- basic and diluted
|
2,044,521,389
|
-
|
107,307,692
|
2,151,829,081
|
|
|
EZ-Clone
|
|
|
|
|
GrowLife, Inc.
|
Enterprises, Inc.
|
Pro Forma
|
|
Total
|
|
September 30, 2018
|
September 30, 2018
|
Adjustments
|
|
September 30, 2018
|
ASSETS
|
(Unaudited)
|
(Audited)
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
Cash
and cash equivalents
|
$197,180
|
$28,450
|
$130,000
|
a
|
$355,630
|
Accounts
receivable
|
-
|
37,950
|
-
|
|
37,950
|
Inventory,
net
|
486,661
|
494,145
|
-
|
|
980,806
|
Prepaid
costs
|
-
|
2,438
|
-
|
|
2,438
|
Deposits
|
32,921
|
6,100
|
-
|
|
39,021
|
Total
current assets
|
716,762
|
569,083
|
130,000
|
|
1,415,845
|
|
|
|
|
|
|
EQUIPMENT,
NET
|
502,397
|
317,734
|
(90,891)
|
b
|
729,240
|
INTANGIBLE
ASSETS
|
-
|
-
|
3,037,027
|
c
|
3,037,027
|
|
|
|
|
|
|
TOTAL
ASSETS
|
$1,219,159
|
$886,817
|
$3,076,136
|
|
$5,182,112
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
Accounts
payable - trade
|
$954,218
|
$191,529
|
$-
|
|
$1,145,747
|
Accrued
expenses
|
244,910
|
78,215
|
-
|
|
323,125
|
Accrued
expenses - related parties
|
47,726
|
-
|
-
|
|
47,726
|
Derivative
liability
|
1,118,107
|
-
|
-
|
|
1,118,107
|
Current
portion of convertible notes payable
|
2,319,687
|
-
|
775,000
|
d
|
3,094,687
|
Current
portion of notes payable
|
-
|
139,125
|
(139,125)
|
e
|
-
|
Current
portion of notes payable- related parties
|
-
|
101,636
|
-
|
|
101,636
|
Current
portion of capital lease
|
-
|
10,704
|
-
|
|
10,704
|
Deferred
revenue
|
10,000
|
-
|
-
|
|
10,000
|
Total
current liabilities
|
4,694,648
|
521,209
|
635,875
|
|
5,851,732
|
|
|
|
|
|
|
LONG
TERM LIABILITIES:
|
|
|
|
|
|
Long
term portion of notes payable
|
-
|
397,993
|
(397,993)
|
f
|
-
|
Total
long term liabilites
|
-
|
397,993
|
(397,993)
|
|
-
|
|
|
|
|
|
|
COMMITMENTS
AND CONTINGENCIES
|
-
|
-
|
-
|
|
-
|
|
|
|
|
|
|
STOCKHOLDERS'
DEFICIT
|
|
|
|
|
|
Common
stock
|
305,411
|
10,000
|
731
|
g
|
316,142
|
Additional
paid in capital
|
134,527,801
|
60,000
|
1,324,269
|
h
|
135,912,070
|
Accumulated
deficit
|
(138,308,701)
|
(102,385)
|
(446,746)
|
i
|
(138,857,832)
|
Total
stockholders' deficit
|
(3,475,489)
|
(32,385)
|
878,254
|
|
(2,629,620)
|
|
|
|
|
|
|
NON
CONROLLING INTEREST IN EZ CLONE ENTERPRISES, INC.
|
-
|
-
|
1,960,000
|
j
|
1,960,000
|
|
|
|
|
|
|
TOTAL
LIABILITIES, STOCKHOLDERS' DEFICIT AND NON CONTROLLING
INTEREST
|
$1,219,159
|
$886,817
|
$3,076,136
|
|
$5,182,112
|
|
Nine Months
Ended,
|
||||
|
|
EZ-Clone
|
|
|
|
|
GrowLife,
Inc.
|
Enterprises,
Inc.
|
|
|
Total
|
|
September
30,
2018
|
September
30,
2018
|
Pro
Forma
Adjustments
|
|
September
30,
2018
|
|
(Unaudited)
|
(Audited)
|
|
|
|
|
|
|
|
|
|
NET
REVENUE
|
$953,949
|
$1,513,699
|
$
|
|
$2,467,648
|
COST OF GOODS
SOLD
|
898,962
|
674,848
|
-
|
|
1,573,810
|
GROSS
PROFIT
|
54,987
|
838,851
|
-
|
|
893,838
|
GENERAL AND
ADMINISTRATIVE EXPENSES
|
1,116,724
|
918,635
|
-
|
|
2,035,359
|
AMORTIZATION OF
INTANGIBLE ASSETS- EZ-CLONE ENTERPRISES, INC.
|
-
|
-
|
455,554
|
k
|
455,554
|
OPERATING
LOSS
|
(1,061,737)
|
(79,784)
|
(455,554)
|
|
(1,597,075)
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE):
|
|
|
|
|
|
Change in fair
value of derivative
|
(120,286)
|
-
|
-
|
|
(120,286)
|
Interest expense,
net
|
(365,859)
|
(28,876)
|
-
|
|
(394,735)
|
Impairment of
acquired assets- Go Green
|
(60,000)
|
-
|
-
|
|
(60,000)
|
Loss on debt
conversions
|
(645,483)
|
-
|
-
|
|
(645,483)
|
Total other (expense)
income
|
(1,191,628)
|
(28,876)
|
-
|
|
(1,220,504)
|
|
|
|
|
|
|
(LOSS) BEFORE
INCOME TAXES
|
(2,253,365)
|
(108,660)
|
(455,554)
|
|
(2,817,579)
|
|
|
|
|
|
|
Income taxes -
current benefit
|
-
|
(1,100)
|
-
|
|
(1,100)
|
|
|
|
|
|
|
NET
(LOSS)
|
$(2,253,365)
|
$(107,560)
|
$(455,554)
|
|
$(2,816,479)
|
|
|
|
|
|
|
Basic and diluted
(loss) per share
|
$(0.00)
|
$-
|
|
|
$(0.00)
|
|
|
|
|
|
|
Weighted average
shares of common stock outstanding- basic and diluted
|
2,996,701,771
|
-
|
107,307,692
|
|
3,104,009,463
|