PART I

Item 1. Business

Company Background

We wereItem 1. Business

Company Background

MJ Holdings, Inc., a Nevada corporation (herein after “MJ Holdings”, the “Company”, “we”, “us”, and “our”), is a holding company whose subsidiaries provide infrastructure, consulting and construction services, in addition to holding, and managing third party state issued cultivation and production licenses.

MJ Holdings was originally incorporated on November 17, 2006, as Securitas EDGAR Filings, Inc. under the laws of the State of Nevada. Prior to the formation of Securitas EDGAR Filings Inc., the business was operated as Xpedient EDGAR Filings, LLC, a Florida Limited Liability Company, formed on October 31, 2005. On November 21, 2005, Xpedient EDGAR Filings LLC amended its Articles of Organization to change its name to Securitas EDGAR Filings, LLC. On January, 21 2009, Securitas EdgarEDGAR Filings LLC merged into Securitas EdgarEDGAR Filings, Inc., a Nevada corporation. Since our inception and until February 2014, we operated as an EDGAR filing agent, wherein we assisted company's in preparing and filing periodic reports with the United States Securities and Exchange Commission ("SEC") on the EDGAR, (electronic data gathering analysis retrieval) platform. On February 14, 2014, we amended and restated our Articles of Incorporation and changed our name to MJ Holdings, Inc., concurrent

From February 2014 to January 2017, we owned and leased real estate properties zoned for legalized marijuana operations to licensed marijuana operators.

On November 22, 2016, in connection with a plan to divest ourselves of our name change,real estate business, we changedsubmitted to our business model and began exploring opportunitiesstockholders an offer to exchange (the “Exchange Offer”) our common stock for shares in MJ Real Estate Partners, LLC, (“MJRE”) a newly formed LLC formed for the sole purpose of effecting the Exchange Offer. On January 10, 2017, the Company accepted for exchange 1,800,000 shares of the Company’s common stock in exchange for 1,800,000 shares of MJRE’s common units, representing membership interests in MJRE. Effective February 1, 2017, the Company transferred its ownership interests in the legal marijuana industry, principally in real estate opportunitiesproperties and its subsidiaries, through which the Company holds ownership of the real estate properties, to MJRE. MJRE also assumed the senior notes and any and all obligations associated with the real estate properties and business, effective February 1, 2017.

Reverse Merger

On December 15, 2017, we acquired all of the issued and outstanding membership interests of Red Earth LLC, a Nevada limited liability company (“Red Earth”) established in connection therewith. Our fiscal year isOctober 2016, in exchange for 52,732,969 shares of our common stock of the Company and a calendar year ending December 31.promissory note in the amount of $900,000. The acquisition was accounted for as a reverse merger, whereby Red Earth was considered the accounting acquirer and became a wholly-owned subsidiary of the Company. Upon the consummation of the acquisition, the now-former members of Red Earth became the beneficial owners of approximately 88% of the Company’s common stock, obtained controlling interest of the Company, and retained key management positions of the Company. In accordance with the accounting treatment for a “reverse merger” or a “reverse acquisition,” the Company’s historical financial statements prior to the reverse merger will be replaced with the historical financial statements of Red Earth prior to the reverse merger in all future filings with the U.S. Securities and Exchange Commission (the “SEC”). The consolidated financial statements after completion of the reverse merger will include the assets, liabilities, and results of operations of the combined company from and after the closing date of the reverse merger, with only certain aspects of pre-consummation stockholders’ equity remaining in the consolidated financial statements.

Our principal executive offices arecorporate headquarters is located at 4141 NE 2nd Avenue Suite 204A, Miami, Florida 33137,3275 South Jones Blvd Las Vegas, NV 89146 and our telephone number is (305) 455-1800 .(702) 879-4440. Our website address is: www.MJHoldingsinc.com. No information available on or through our websites shall be deemed to be incorporated into this Annual Report on Form 10-K. Our common stock, par value $0.001 (the “Common Stock”), is located at www.mjholdingsinc.com.quoted on the OTC Markets Group, Inc.’s Pink® Open Market under the symbol “MJNE.”

Our Business

MJ Holdings acquiresThrough our acquisition of Red Earth and leases real estatetheir wholly owned subsidiary, HDGLV, LLC (“HDGLV”) we expect to licensedcommence legal marijuana operators, including but not limitedcultivation activities in the third quarter of 2018 upon approval by the Nevada Department of Taxation of the transfer of a Provisional Cultivation License to providing complete turnkey growing spaceRed Earth and related facilitiesthe required state and city approvals for our cultivation facility. It is our intention to licensed marijuana growersgrow our business through the acquisition of existing companies and/or through the development of new opportunities that can provide a 360-degree spectrum of infrastructure (dispensaries), cultivation and dispensary owners. Additionally, MJ Holdings plans to explore ancillary opportunitiesproduction management, and consulting services in the regulated marijuanacannabis industry.

The Company does notThrough Red Earth, we hold a provisional State of Nevada issued cannabis cultivation license, and through HDGLV, we hold a triple-net leasehold, with an option to buy, on a 17,298 square-foot building, which will not, until such time as Federal law allows, grow, harvest, distribute or sell marijuana or any substances that violate the laws of the United States of America.be home to our cultivation facility.

Our PropertiesMarijuana Industry Overview

AsMarijuana cultivation refers to the planting, tending, improving and harvesting of the dateflowering plant Cannabis, primarily for the production and consumption of this report, we owned the following properties:
cannabis flowers, often referred to as “buds”. The cultivation techniques for marijuana cultivation differ than for other purposes such as hemp production and generally references to marijuana cultivation and production do not include hemp.

States where MarijuanaCannabis belongs to the genus Cannabis in the family Cannabaceae and for the purposes of production and consumption, includes three species, C. sativa (“Sativa”), C. indica (“Indica”), and C. ruderalis (“Ruderalis”). Sativa and Indica generally grow tall with some varieties reaching approximately 4 meters. The females produce flowers rich in tetrahydrocannabinol (“THC”). Ruderalis is Legala short plant and produces trace amounts of THC but is very rich in cannabidiol (“CBD”), which is an antagonist (inhibits the physiological action) to THC.

As of 2014, 24 USDecember 2017, there are a total of 30 states, plus the District of Columbia, with legislation passed as it relates to medicinal cannabis. These state laws are in direct conflict with the United States have passed laws permitting state licensed healthcare practitioners to recommend marijuanaFederal Controlled Substances Act (21 U.S.C. § 811) (“CSA”), which places controlled substances, including cannabis, in a schedule. Cannabis is classified as a Schedule I drug, which is viewed as having a high potential for abuse, has no currently-accepted use for medical treatment in the U.S., and lacks acceptable safety for use and permit its residents the useunder medical supervision.

As of marijuana for medical and or therapeutic purposes; of which fourDecember 2017, 30 states, and the District of Columbia, permithave adopted laws that exempt patients who use medicinal cannabis under a physician’s supervision from state criminal penalties. These are collectively referred to as the states that have de-criminalized medicinal cannabis, although there is a subtle difference between de-criminalization and legalization, and each state’s laws are different. Additionally, 8 states and the Washington D.C. now allow for recreational use and an additional 11 states have laws permitting low tetrahydrocannabinol THC, high cannabidiol (CBD) strains for limited conditions.

Business Strategyof marijuana. (California became the 9^th state to legalize adult recreational marijuana use in January 2018).

MJ Holdings acquires 

Decriminalization of marijuana varies by state. As of January 2018, 13 states have decriminalized the non-medical use and leases real estatepossession of marijuana for personal consumption. Decriminalization generally means that violators of local marijuana laws may be subject to licensedcivil penalty rather than face criminal prosecution. In three states, Idaho, South Dakota and Kansas, the cultivation, possession or use of marijuana operators, including but not limitedis strictly prohibited and violators may be subject to providing complete turnkey growing spacecriminal prosecution.

For example, Nevada legalized marijuana for recreational use, effective July 1, 2017, making it legal for adults over the age of 21 to use marijuana and related facilities to licensedpossess up to one ounce of marijuana growersflowers and dispensary owners. Additionally, MJ Holdings plansone-eighth of an ounce of marijuana concentrates. Individuals are also permitted to explore ancillary opportunities in the regulatedgrow up to six marijuana industry.plants for personal use. In addition, businesses can legally, pursuant to state regulations, cultivate, process, dispense, distribute, and test marijuana products under certain conditions.

The Company does notdichotomy between federal and will not, until such time as Federal law allows, grow, harvest, distribute or sellstate laws has also limited the access to banking and other financial services by marijuana or any substancesbusinesses. Recently the U.S. Department of Justice and the U.S. Department of Treasury issued guidance for banks considering conducting business with marijuana dispensaries in states where those businesses are legal, pursuant to which banks must now file a Marijuana Limited Suspicious Activity Report that violatestates the lawsmarijuana business is following the government’s guidelines with regard to revenue that is generated exclusively from legal sales. However, since the same guidance noted that banks could still face prosecution if they provide financial services to marijuana businesses, it has led to the widespread refusal of the United States of America.banking industry to offer banking services to marijuana businesses operating within state and local laws.

As

The United States Department of Justice (the “DOJ”) has not historically devoted resources to prosecuting individuals whose conduct is limited to possession of small amounts of marijuana for use on private property but has relied on state and local law enforcement to address marijuana activity. In the event the DOJ reverses its stated policy and begins strict enforcement of the CSA in states that have laws legalizing medical marijuana and recreational marijuana in small amounts, there may be a participant in the regulated marijuana industry, we intend to:direct and adverse impact to our business and our revenue and profits.

• Acquire

  Furthermore, H.R. 83, known as the Rohrabacher-Blumenauer is an amendment to the annual appropriations bill that prohibits the Department of Justice from using federal funds to prevent certain states, including Nevada and lease real estate zoned for legalizedCalifornia, from implementing their own laws that authorized the use, distribution, possession, or cultivation of medical marijuana. This prohibition is currently in place until September 30, 2018.

  We are monitoring the Trump administration’s, the DOJ’s and Congress’ positions on federal marijuana operations;

• Finance real estate acquisitionslaw and facilitate loan programs backed by real estate assets;
• Offer real estate structurespolicy. Based on public statements and reports, we understand that maximize working capitalcertain aspects of those laws and policies are currently under review, but no official changes have been announced. It is possible that certain changes to legalexisting laws or policies could have a negative effect on our business and results of operations.

  We currently operate medical marijuana operators;

• Position ourselves tobusinesses in Nevada. Although the possession, cultivation and distribution of marijuana is permitted in Nevada, provided compliance with applicable state and local laws, rules, and regulations, marijuana is illegal under federal law. We believe we operate legal marijuana operationsour business in the U.S. if and when Federal laws reconcilecompliance with applicable state laws and regulations. Any changes in federal, state or local law enforcement regarding marijuana becomes legal undermay affect our ability to operate our business. Strict enforcement of federal law.law regarding marijuana would likely result in the inability to proceed with our business plans, could expose us to potential criminal liability and could subject our properties to civil forfeiture. Any changes in banking, insurance or other business services may also affect our ability to operate our business.
  
  

  Red Earth / HDGLV

We have devised our current business strategy based on certain limitations related to the legal status of marijuana under federal law and the fact that weRed Earth’s assets are a public company and make certain representations and warranties in connection with our public filings withprovisional cultivation license to grow marijuana within the United States Securities and Exchange Commission. We recognize the significant opportunitiesCity of Las Vegas in the legalizedState of Nevada and all of the outstanding membership interests in HDGLV LLC, which holds a triple net leasehold interest in a 17,298 square-foot building located at 2310 Western Avenue in Las Vegas, Nevada, which we will operate as an indoor marijuana spacecultivation and believe that usingan agritourism destination. We expect to complete construction of this facility by early Q3 2018. This facility is intended to serve as a draw for tourists who desire to visit, see, and learn about the inner-workings of a cannabis cultivation facility.

In April 2018, the State of Nevada finalized and approved the transfer of our current business model,provisional cultivation license to Red Earth.In July 2018, we completed the first phase of construction on our cultivation facility and expect to obtain final approvals towards perfecting the cultivation license from the appropriate authorities, but we can position ourselves to not only develop a significant business along our current path, but be able to leverage our position, relationships and assets to capitalizeprovide no assurances on additional opportunities in the future, if and when federal law reconciles with state law; resulting inreceipt and/or timing of the federal legalization of marijuana.

Acquire and Lease Real Estate zoned for legalized marijuana operations.final approvals.

We plan to acquiremay face substantial competition in the operation of cultivation facilities in Nevada. Numerous other companies have also been granted cultivation licenses, and, lease real estate, including retailtherefore, we anticipate that we will face competition from these other companies. Our management team has experience in successfully developing, implementing, and industrial space, to licensedoperating marijuana operators.cultivation and related businesses in other legal cannabis markets. We believe that with continued growthour experience in the marijuana industry licensed marijuana; operatorscultivation and facility management will seek to expand their operations to service the growing demand, which will expand the need for real estate zoned for marijuana operations. We intend to capitalize on the opportunity that exists, due to the fact that certain landlords have been resistant to lease to marijuana operators due to its status under federal law, and as a result landlords who are willing to lease to marijuana tenants may be able to lease the property at a premium to current market rents, that is not to say that we wouldn't enter into leases with qualified tenants at the market rent.

Finance real estate acquisitions and facilitate loan programs backed by real estate assets.

We believe that there is an opportunity to offer hard money loans to marijuana operators to acquire property and or to lend on property already owned to finance the acquisition of additional property or for working capital. A hard money loan is a type of real estate loan collateralized against the quick-sale value of the property for which the loan is made. In a hard money loan arrangement we would hold the first lien position, meaning that in the event of a default, we would be secured by the property and be the first creditor to receive payment upon liquidation of the asset. We would make loans based on a percentage of the quick-sale value of the property; the

so called loan-to-value or LTV ratio. LTV ratios will be established on a case by case basis, based on the particulars of each loan. We believe that we can generate income based on a mix of fees and interest spreads based on the cost of money and the interest rate charged to the borrower.

Offer Real Estate Structures that Maximize Working Capital to Legal Marijuana Operators.

We plan to offer sale-and-leaseback programs to qualified licensed operators. A sale-and-leaseback is a commercial real estate transaction in which one party, in our case a licensed marijuana grower/dispensary, sells its corporate real estate assets toprovide us and we agree to lease the property back to the seller.

The advantage to the licensed marijuana operator of executing a leaseback is freeing up cash that is otherwise tied up in their real estate assets to:

• Help finance expansion of their business, purchase new equipment and or invest in new business opportunities.
• Help pay down debt and improve the company's balance sheet.
• Help reduce the seller/lessee's business income tax liability caused by the appreciation in value (land only) of its corporate real estate assets. In addition, the seller/lessee as a tenant can deduct all rent payments as a business expense on its annual tax returns.

The advantages for the Company are:

• Fair return on the investment in the form of rent during the lease term, and ownership of a depreciable asset already occupied by a reliable tenant.
• Long-term, fully leased asset with a guaranteed income stream.
• For income-tax purposes, we can take an expense deduction for an investment in a depreciable property to allow for the recovery of the cost of the investment.

Financing Real Estate Transactions

We plan to issue debt and or equity to finance real estate acquisitions. As needed, we may employ additional financing and ownership structures and incentives to secure financing for acquisitions. 

Competition

We face significant competition from a diverse mix of market participants, including but not limited to, other public companies with similar business models, independent investors, hedge funds and other real estate investors, hard money lenders, as well as would be clients, marijuana operators themselves, all of whom, who may compete against us incompetitive advantage over our efforts to acquire real estate zoned for marijuana grow and retail operations. In some instances, we will be competing to acquire real estate with persons who have no interest in the marijuana business, but have identified value in a piece of real estate that we may be interested in acquiring. Our greatest competitive threat will likely come from banks, if and when they begin servicing marijuana operators, as the interest rates offered by banks are typically lower than those we can offer.

Availability of Suitable Properties

We believe that the opportunity exists to acquire suitable properties of different sizes to accommodate the varying needs of prospective tenants.

Intellectual Property

We don't own any intellectual property, other than common law rights to our logo and trade dress. We do own various internet domain names which we may develop into internet properties and brands at some point in the future.

Government Regulationcompetitors.

Federal LawsRevenue

The U.S. Government classifies marijuana as a schedule-I controlled substance; and as a result in accordanceFrom inception (October 17, 2016) to Federal law marijuana is an illegal substance. Even in those jurisdictions in whichDecember 31, 2017, we had not generated any revenues. Subject to the use of medical marijuana has been legalized at the state level, its prescription is a violation of federal law. The United States Supreme Court has ruled in United States v. Oakland Cannabis Buyers' Coop. and Gonzales v. Raich that it is the federal government that has the right to regulate and criminalize cannabis, even for medical purposes. Therefore, federal law criminalizing the use of marijuana pre-empts state laws that legalizes its use for medicinal purposes. Federal prosecutions of marijuana crimes, where the operators are acting in accordance with state law are rare, this is as a result of U.S. Justice department policiesreceipt of the current presidential administration, to allow states to implement these lawsrequired State of Nevada and not prosecute anyone operating in accordance with applicable state law.

While different presidential administrations may maintain a similar policy position towards marijuana, and while as a growing numberCity of states vote to legalize marijuana for medical and recreational use, which may result in a reconciliation of Federal and state laws legalizing marijuana, it is possible that a future presidential administration could reverse course on the progress made towards marijuana legalization, and seek to enforce federal laws and thereby eliminating the legal marijuana industry. 

As of the date of this annual report, the Company derives revenue from state-approved marijuana growers and dispensary facilities. While we do not grow or distribute marijuana; deriving rental income from state-approved marijuana growers and dispensary facilities could be deemed to be aiding and abetting illegal activities, a violation of federal law. We intend to remain within the guidelines outlined in the Cole Memo (see the “Risk Factors”), which does not alter the Department of Justice’s authority to enforce federal law, including federal laws relating to marijuana, but does recommend that U.S. Attorneys prioritize enforcement of federal law away from the marijuana industry operating as permitted under certain state laws, so long as certain conditions are met.  Where the individual state framework fails to protect the public, the Justice Department has instructed federal prosecutors to enforce the Controlled Substances Act of 1970. However, we cannot provide assurance that the Company is in full compliance with the Cole Memo or any other federal laws or regulations.

The Company’s ongoing and future business plans rely in part, on our ability to successfully establish and maintain effective controls that follow the United States Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) Guidance, “BSA Expectations Regarding Marijuana-Related Businesses,” in vetting and monitoring potential tenants, customers and clients of the Company.  On February 14, 2014, FinCEN issued guidance to clarify Bank Secrecy Act (“BSA”) expectations for financial institutions seeking to provide services to marijuana-related businesses. FinCEN issued this guidance in light of certain state initiatives to legalize certain marijuana-related enforcement priorities. The FinCEN guidance clarifies how financial institutions can provide services to marijuana-related businesses consistent with their BSA obligations, and aligns the information provided by financial institutions in BSA reports with federal and state law enforcement priorities. This FinCEN guidance is intended to enhance the availability of financial services for, and the financial transparency of, marijuana-related businesses.

While we are not subject to the BSA or FinCEN guidelines,Las Vegas approvals, we expect to implement policiescommence operation of our cultivation facility in Q3 2018 and proceduresrealize revenues beginning in Q4 2018. There can be no assurance that mirrorwe will receive the stated goals of the FinCEN guidelines to comply with the federal government’s stated objectives with respect to the potential conflict of law. The Company anticipates using  FinCEN Guidelines, as may be amended, as the basis for assessing its relationships with potential tenants.requisite approvals or that we will generate meaningful revenues thereafter.

State Laws

As of 2014, 24 US States have passed laws permitting state licensed healthcare practitioners to recommend marijuana for medical use and permit its residents the use of marijuana for medical and or therapeutic purposes; of which four states and the District of Columbia permit recreational use and an additional 11 states have laws permitting low tetrahydrocannabinol THC, high cannabidiol (CBD) strains for limited conditions.

Local Laws; Zoning

Local laws at the city, county and municipal level add an additional layer of complexity to legalized marijuana. Despite a State's having adopted legislation legalizing marijuana, cities, counties and municipalities, within the state seem to have the ability to otherwise restrict marijuana activities, including but not limited to cultivation, retail or consumption.

The effect of local laws and changes based on legal challenges or policy changes will have a direct effect on the values of property we seek to acquire, as more properties are zoned for marijuana operations and or as cities with large populations that may have previously restricted marijuana, ease those restrictions, properties within those cities may become more attractive and real estate prices in

neighboring communities, outside those populist hubs, may decline and the corresponding rents they draw. In the event that we have long term leases in place and our tenants remain in good standing, this should not affect our short term cash-flows.

Zoning sets forth the approved use of land in any given city, county or municipality. Zoning is set by local governments and may otherwise be restricted by state laws, for example, under certain state laws a seller of liquor may not be allowed to operate within 1,000 feet of a school. There are and or will be similar restrictions imposed on marijuana operators, which will restrict how and where marijuana operations can be located and the manner and size of which they can grow and operate. Additionally, zoning is subject to change, properties can be re-zoned and a given zoning may be withdrawn. How properties are zoned will have a direct impact on our business operations, additionally we expect to require the assistance of local counsel, as needed to ensure that properties we may acquire are properly zoned. We intend to seek to purchase property that has the appropriate zoning in place for our tenants operations.

Employees

As of December 31, 2014,2017, we had no4 full-time employees.

Item 1A. Risk Factors

You should carefully consider the risks, uncertainties and other factors described below, in addition to the other information set forth in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes thereto. Any of these risks, uncertainties and other factors could materially and adversely affect our business, financial condition, results of operations, cash flows, or prospects. In that case, the trading price of our Common Stock could decline, and you may lose all or part of your investment. An investment in our securities is speculative and involves a high degree of risk. You should not invest in our securities if you cannot bear the economic risk of your investment for an indefinite period of time and cannot afford to lose your entire investment. There may be additional risks that we do not presently know of or that we currently believe are immaterial which could also impair our business and financial position. See also “Cautionary Note Regarding Forward-Looking Statements.”

Various portionsRisks Relating to Our Business and Industry

The report of this report contain forward-lookingour independent registered public accounting firm that accompanies our audited consolidated financial statements that involve risks and uncertainties. Actual results, performance or achievements could differ materially from those anticipatedincludes a going concern explanatory paragraph in these forward-looking statementswhich such firm expressed substantial doubt about our ability to continue as a resultgoing concern.

Our financial statements have been prepared on a going concern basis, which contemplates the realization of certain risk factors, including those set forth belowassets and elsewhere in this report. These risk factors are not presentedsettlement of liabilities and commitments in the ordernormal course of importance business. However, we are a development stage company with current operations established in October 2016. The Company’s primary asset is a provisional Medical Marijuana Establishment Registration Certificate issued by the State of Nevada for the cultivation of medical marijuana. There is no assurance on the receipt and/or probabilitytiming of occurrence.final approvals from the appropriate authorities. We have not generated any revenues from inception (October 17, 2016) to December 31, 2017 and had an accumulated deficit of $362,521 as of December 31, 2017. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

Risks RelatedWe have a limited operating history, which may make it difficult for investors to Our Business

We Have a limited Operating History Within this Industry, and we may not Succeed.predict future performance based on current operations.

We have a limited operating history or experience in procuring, building out or leasing real estate for agricultural purposes, specifically marijuana grow facilities and as such, within this industryupon which investors may base an evaluation of our potential future performance. In particular, we mayhave not succeed. Moreover, We are subject to all risks inherentproven that we can sell cannabis products in a developingmanner that enables us to be profitable and meet customer requirements, obtain the necessary permits and/or achieve certain milestones to develop our cultivation businesses, enhance our line of cannabis products, develop and maintain relationships with customers and strategic partners, to raise sufficient capital in the public and/or private markets, or respond effectively to competitive pressures. As a newresult, there can be no assurance that we will be able to develop or maintain consistent revenue sources, or that our operations will be profitable and/or generate positive cash flow.

Any forecasts we make about our operations may prove to be inaccurate. We must, among other things, determine appropriate risks, rewards, and level of investment in our product lines, respond to economic and market variables outside of our control, respond to competitive developments and continue to attract, retain, and motivate qualified employees. There can be no assurance that we will be successful in meeting these challenges and addressing such risks and the failure to do so could have a materially adverse effect on our business, enterprise.results of operations, and financial condition. Our likelihood of successprospects must be considered in light of the problems,risks, expenses, difficulties, complications, and delaysdifficulties frequently encountered by companies in connection with establishingthe early stage of development. As a new businessresult of these risks, challenges, and uncertainties, the competitivevalue of your investment could be significantly reduced or completely lost.

We will likely need additional capital to sustain our operations and regulatory environment inwill likely need to seek further financing, which we operate. For example, the medical marijuana industry is a new industry that as a whole may not succeed, particularly should the Federal government change course and decide to prosecute those dealing in medical marijuana under Federal law. If that happens there may not be an adequate market for our properties. 

You should further consider, among other factors, our prospects for success in light of the risks and uncertainties encountered by companies that, like us, are in their early stages. For example, unanticipated expenses, delays andable to obtain on acceptable terms or complications with build outs, zoning issues, legal disputes with neighbors, local governments, communities and or tenants. We may not successfully address these risks and uncertainties or successfully implement our operating strategies.at all. If we fail to do so, it could materially harmraise additional capital, as needed, our ability to implement our business to the point of having to cease operationsmodel and strategy could impair the value of our common stock to the point investors may lose their entire investment.

We may be unable to identify and or successfully acquire properties which are suitable for our business, we will rely on local real estate professionals and our own due diligence to ensure we are acquiring the right properties and at the right price; zoning; market for properties.compromised.

We have limited capital resources and operations. To date, our operations have been funded primarily from the proceeds of equity financings. We may require additional capital in the near future to develop business operations at our proposed production facilities in Las Vegas, Nevada, to expand our production of our future franchise production lines, to develop our intellectual property base, and establish our targeted levels of commercial production. We may not be able to obtain additional financing on terms acceptable to us, or at all. In particular, because marijuana is illegal under federal law, we may have difficulty attracting investors.

Even if we obtain financing for our near-term operations, we expect that we will require additional capital thereafter. Our capital needs will depend on numerous factors including: (i) our profitability; (ii) the release of competitive products by our competition; (iii) the level of our investment in research and development; and (iv) the amount of our capital expenditures, including acquisitions. We cannot assure you that we will be able to obtain capital in the future to meet our needs.

If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership held by our existing stockholders will be reduced and our stockholders may experience significant dilution. In addition, new securities may contain rights, preferences, or privileges that are senior to those of our Common Stock. If we raise additional capital by incurring debt, this will result in increased interest expense. If we raise additional funds through the issuance of securities, market fluctuations in the price of our shares of Common Stock could limit our ability to obtain equity financing.

We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us. If we are unable to identifyraise capital when needed, our business, financial condition, and results of operations would be materially adversely affected, and we could be forced to reduce or successfully acquire propertiesdiscontinue our operations.

We face intense competition and many of our competitors have greater resources that may enable them to compete more effectively.

The industries in which we operate in general are suitablesubject to intense and increasing competition. Some of our competitors may have greater capital resources, facilities, and diversity of product lines, which may enable them to compete more effectively in this market. Our competitors may devote their resources to developing and marketing products that will directly compete with our product lines. Due to this competition, there is no assurance that we will not encounter difficulties in obtaining revenues and market share or in the positioning of our products. There are no assurances that competition in our respective industries will not lead to reduced prices for our business, we will rely on local real estate professionals and our own due diligence to ensureproducts. If we are acquiringunable to successfully compete with existing companies and new entrants to the right propertiesmarket this will have a negative impact on our business and at the right price; zoning; market for properties.financial condition.

If we fail to protect our intellectual property, our business could be adversely affected.

Our business plan involvesviability will depend, in part, on our ability to develop and maintain the identificationproprietary aspects of our intellectual property to distinguish our products from our competitors’ products. We rely on copyrights, trademarks, trade secrets, and confidentiality provisions to establish and protect our intellectual property.

Any infringement or misappropriation of our intellectual property could damage its value and limit our ability to compete. We may have to engage in litigation to protect the rights to our intellectual property, which could result in significant litigation costs and require a significant amount of our time. In addition, our ability to enforce and protect our intellectual property rights may be limited in certain countries outside the United States, which could make it easier for competitors to capture market position in such countries by utilizing technologies that are similar to those developed or licensed by us.

Competitors may also harm our sales by designing products that mirror our products or processes without infringing on our intellectual property rights. If we do not obtain sufficient protection for our intellectual property, or if we are unable to effectively enforce our intellectual property rights, our competitiveness could be impaired, which would limit our growth and future revenue.

We may also find it necessary to bring infringement or other actions against third parties to seek to protect our intellectual property rights. Litigation of this nature, even if successful, is often expensive and time-consuming to prosecute and there can be no assurance that we will have the financial or other resources to enforce our rights or be able to enforce our rights or prevent other parties from developing similar products or processes or designing around our intellectual property.

Although we believe that our products and processes do not and will not infringe upon the patents or violate the proprietary rights of others, it is possible such infringement or violation has occurred or may occur, which could have a material adverse effect on our business.

We are not aware of any infringement by us of any person’s or entity’s intellectual property rights. In the event that products we sell or processes we employ are deemed to infringe upon the patents or proprietary rights of others, we could be required to modify our products or processes or obtain a license for the manufacture and/or sale of such products or processes or cease selling such products or employing such processes. In such event, there can be no assurance that we would be able to do so in a timely manner, upon acceptable terms and conditions, or at all, and the successful acquisitionfailure to do any of propertiesthe foregoing could have a material adverse effect upon our business.

There can be no assurance that we will have the financial or other resources necessary to enforce or defend a patent infringement or proprietary rights violation action. If our products or processes are deemed to infringe or likely to infringe upon the patents or proprietary rights of others, we could be subject to injunctive relief and, under certain circumstances, become liable for damages, which could also have a material adverse effect on our business and our financial condition.

Our trade secrets may be difficult to protect.

Our success depends upon the skills, knowledge, and experience of our scientific and technical personnel, our consultants and advisors, as well as our licensors and contractors. Because we operate in several highly competitive industries, we rely in part on trade secrets to protect our proprietary technology and processes. However, trade secrets are zoned for marijuana businesses, including growdifficult to protect. We enter into confidentiality or non-disclosure agreements with our corporate partners, employees, consultants, outside scientific collaborators, developers, and retail,other advisors. These agreements generally require that the properties we acquire,receiving party keep confidential and not disclose to third parties’ confidential information developed by the receiving party or made known to the receiving party by us during the course of the receiving party’s relationship with us. These agreements also generally provide that inventions conceived by the receiving party in the course of rendering services to us will be leasedour exclusive property, and we enter into assignment agreements to licensed marijuana operators.perfect our rights.

These confidentiality, inventions, and assignment agreements may be breached and may not effectively assign intellectual property rights to us. Our trade secrets also could be independently discovered by competitors, in which case we would not be able to prevent the use of such trade secrets by our competitors. The enforcement of a claim alleging that a party illegally obtained and was using our trade secrets could be difficult, expensive, and time consuming and the outcome would be unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets. The failure to obtain or maintain meaningful trade secret protection could adversely affect our competitive position.

Our business, financial condition, results of operations, and cash flow may in the future be negatively impacted by challenging global economic conditions.

Future disruptions and volatility in global financial markets and declining consumer and business confidence could lead to decreased levels of consumer spending. These macroeconomic developments could negatively impact our business, which depends on the general economic environment and levels of consumer spending. As a result, we may not be able to maintain our existing customers or attract new customers, or we may be forced to reduce the price of our products. We are unable to predict the likelihood of the occurrence, duration, or severity of such disruptions in the credit and financial markets and adverse global economic conditions. Any general or market-specific economic downturn could have a material adverse effect on our business, financial condition, results of operations, and cash flow.

Our future success depends on our key executive officers and our ability to attract, retain, and motivate qualified personnel.

Our future success largely depends upon the continued services of our executive officers and management team. If one or more of our executive officers are unable or unwilling to continue in their present positions, we may not be able to replace them readily, if at all. Additionally, we may incur additional expenses to recruit and retain new executive officers. If any of our executive officers joins a competitor or forms a competing company, we may lose some or all of our customers. Finally, we do not maintain “key person” life insurance on any of our executive officers. Because of these factors, the loss of the services of any of these key persons could adversely affect our business, financial condition, and results of operations, and thereby an investment in our stock.

Our continuing ability to attract and retain highly qualified personnel will also be critical to our success because we will need to hire and retain additional personnel as our business grows. There can be no assurance that we will be able to identifyattract or retain highly qualified personnel. We face significant competition for skilled personnel in our industries. In particular, if the marijuana industry continues to grow, demand for personnel may become more competitive. This competition may make it more difficult and or obtain the capital neededexpensive to purchase any properties. Additionally, local governments must approveattract, hire, and adopt zoning ordinances for marijuana grow facilitiesretain qualified managers and retail dispensaries. A lackemployees. Because of properly zoned real estatethese factors, we may reduce our prospects and limit our opportunity for growth and or increase the cost at which suitable properties are available to us, conversely a surplus of real estate zoned for marijuana establishments may reduce demand and prices we arenot be able to charge for properties we may have previously acquired.effectively manage or grow our business, which could adversely affect our financial condition or business. As a result, the value of your investment could be significantly reduced or completely lost.

Going concern reportWe may not be able to effectively manage our growth or improve our operational, financial, and management information systems, which would impair our results of independent certified public accountants.operations.

OurIn the near term, we intend to expand the scope of our operations activities significantly. If we are successful in executing our business plan, we will experience growth in our business that could place a significant strain on our business operations, finances, management, and other resources. The factors that may place strain on our resources include, but are not limited historyto, the following:

Additionally, our strategy envisions a period of operations,rapid growth that may impose a significant burden on our operating losses,administrative and negative cash flows from operations raise substantial doubt about ouroperational resources. Our ability to continue as a going concern. In this regard, seeeffectively manage growth will require us to substantially expand the Reportcapabilities of Independent Certified Public Accountants accompanying our audited financial statements appearing elsewhere herein which cites substantial doubt about our abilityadministrative and operational resources and to continue as a going concern.attract, train, manage, and retain qualified management and other personnel. There can be no assurance that we will achieve profitabilitybe successful in recruiting and retaining new employees or generate positive cash flow in the future. As a result of these and other factors, there can be no assuranceretaining existing employees.

We cannot provide assurances that our proposed activities will be successful or that the Companymanagement will be able to achievemanage this growth effectively. Our failure to successfully manage growth could result in our sales not increasing commensurately with capital investments or maintain profitableotherwise materially adversely affecting our business, financial condition, or results of operations. If we fail to achieve profitability, our growth strategies could be materially and adversely affected.

Additional capital willIf we are unable to continually innovate and increase efficiencies, our ability to attract new customers may be requiredadversely affected.

In the area of innovation, we must be able to financedevelop new technologies and expandproducts that appeal to our operationscustomers. This depends, in part, on the future, but that capitaltechnological and creative skills of our personnel and on our ability to protect our intellectual property rights. We may not be available when it is neededsuccessful in the development, introduction, marketing, and could be dilutive to existing stockholders.sourcing of new technologies or innovations, that satisfy customer needs, achieve market acceptance, or generate satisfactory financial returns.

We will require additional capital for future operations including acquiring properties, which we intend to build out and lease to tenants. We plan to finance our property acquisitions and accompanying build-outs through the issuance of secured convertible notes, we anticipate we will be able to meet ongoing expenses and capital requirements with funds generated from the following sources:

• cash provided by operating activities;
• capital raised through debt and equity offerings.

We intend to raise capital through the issuance of equity and debt to acquire real estate zoned for marijuana grow and retail sale (dispensary). Debt issued may be securitized by the real estate and any fixtures and improvements to the real estate. Revenue generated by the real estate, less a management fee and any spread between the cost of the loan and the proceeds from our leases, will be used to service the debt, beyond which we expect the debt to be non-recourse against the Company. Debt holders may have the opportunity to convert their note to the Company's Common Stock, dependingare dependent on the termspopularity of the conversion, conversion of  debt may dilute the holdingsconsumer acceptance of our existing stockholders, reduce the market price of our common stock, or both.product lines.

Our ability to raise additional capital, if needed, will depend on conditionsgenerate revenue and be successful in the capital markets, economic conditions and a number of other factors, many of which are outside our control, and on our financial performance. Accordingly, we cannot assure you that we will be able to successfully raise additional capital at all or on terms that are acceptable to us. If we cannot raise additional capital when needed, it may have a material adverse effect on our liquidity, financial condition, results of operations and prospects. Further, if we raise capital by issuing stock, the holdings of our existing stockholders will be diluted.

If we raise capital by issuing debt securities, such debt securities would rank senior to our common stock upon our bankruptcy or liquidation. In addition, we may raise capital by issuing equity securities that may be senior to our common stock for the purposes of dividend and liquidating distributions, which may adversely affect the market price of our common stock. Finally, upon bankruptcy or liquidation, holders of our debt securities and shares of preferred stock and lenders with respect to other borrowings will receive a distribution of our available assets prior to the holders of our common stock. Additional equity offerings may dilute the holdings of our existing stockholders or reduce the market price of our common stock, or both.

Our failure to obtain the capital, which we require to execute our business plan, will result in the slower implementation of our business plan lost opportunitiesis dependent on consumer acceptance and demand of our product lines. Acceptance of our products will depend on several factors, including availability, cost, ease of use, familiarity of use, convenience, effectiveness, safety, and reliability. If customers do not accept our products, or if we fail to othermeet customers’ needs and expectations adequately, our ability to continue generating revenues could be reduced.

A drop in the retail price of medical marijuana products may negatively impact our business.

The demand for our products depends in part on the price of commercially grown marijuana. Fluctuations in economic and market participants, eachconditions that impact the prices of commercially grown marijuana, such as increases in the supply of such marijuana and the decrease in the price of products using commercially grown marijuana, could cause the demand for medical marijuana products to decline, which couldwould have a detrimentalnegative impact on our business, operations and financial condition.

We will need to refinance promissory notes we issue as they mature.

Our success is dependent on our ability to refinance the promissory notes we issue to acquire real estate as those notes mature. We expect that promissory notes will have a maturity between three to five years and upon maturity we will be required to refinance the properties to repay the principal borrowed under the notes. If we are unable to procure replacement financing, either from banks or private investors, we may need to sell those properties, which in turn may have an adverse affect on our cash flow from operations; furthermore, if we sell those properties and those properties have depreciated in value, we will not profit form the appreciation of our equity interest in the properties and any and all of the proceeds from the sale will be used to repay the principal borrowed under the note.

business.

Our business is dependent upon continued market acceptance by consumers.

We are substantially dependent on continued market acceptanceFederal regulation and proliferation of consumers of medical marijuana. We believe that as marijuana becomes more accepted the stigma associated with marijuana use will diminish and as a result consumer demand will continue to grow. And while we believe that the market and opportunity in the marijuana space continues to grow, we cannot predict the future growth rate and size of the market.

The alternative medicine industry faces strong opposition.

We believe that the pharmaceutical industry may be an opponent of medical marijuana. If medical marijuana is a commercial success itenforcement may adversely affect the marketimplementation of medical cannabis laws and regulations may negatively impact our revenues and profits.

Currently, there are 30 states plus the District of Columbia that have laws and/or regulations that recognize, in one form or another, legitimate medical uses for Marinol,cannabis and consumer use of cannabis in connection with medical treatment. Many other states are considering similar legislation. Conversely, under the CSA, the policies and regulations of the federal government and its agencies are that cannabis has no medical benefit and a range of activities including cultivation and the personal use of cannabis is prohibited. Unless and until Congress amends the CSA with respect to medical marijuana, as to the timing or scope of any such potential amendments there can be no assurance, there is a risk that federal authorities may enforce current federal law, and we may be deemed to be producing, cultivating, or dispensing marijuana in violation of federal law. Active enforcement of the current "marijuana pill" which is sold by largefederal regulatory position on cannabis may thus indirectly and established pharmaceutical companies. To protect its interests, Big Pharmaadversely affect our revenues and profits. The risk of strict enforcement of the CSA in light of Congressional activity, judicial holdings, and stated federal policy remains uncertain. In February 2017, the Trump administration announced that there may in turn focus its considerable resources in lobbying efforts to curtail medicalbe “greater enforcement” of federal laws regarding marijuana. If the pharmaceutical companies were successful in their attack on medical marijuana, we would likely see a reduction in demand for grow and dispensary space, and the industry in general may suffer whichAny such enforcement actions could have a detrimental impactnegative effect on our business operations and financial condition.

We plan to pursue additional opportunities in the legal marijuana space. The success of these endeavors is uncertain.

We expect to commit resources and capital to explore and develop new opportunities within the marijuana space. We hope to position ourselves as a diversified marijuana holding and operating company in anticipation of a reconciliation of federal law with state law, which we believe will come as more states legalize marijuana. We cannot assure you that we will be successful in our efforts in establishing operations  or that our ownership of certain marijuana businesses or investments will be permitted as a matter of law, or that we will achieve market acceptance for our ventures and or associated products and services, or other new products and services that we may offer in the future. Moreover, these and other new products and services may be subject to significant competition with offerings by new and existing competitors in the business of dispensing regulated pharmaceutical products. In addition, new products, services and enhancements may pose a variety of technical challenges and require us to attract additional qualified employees. The failure to successfully develop and market these new products, services or enhancements could seriously harm our business, financial condition and results of operations.

Potential competitors could duplicateOn January 4, 2018, Attorney General Jeff Sessions, rescinded guidance previously to federal law enforcement, regarding Marijuana Enforcement to all United States Attorneys in a memorandum known as the “Cole Memo”. The memorandum provided that the DOJ is committed to the enforcement of the CSA, but, the DOJ is also committed to using its limited investigative and prosecutorial resources to address the most significant threats in the most effective, consistent, and rational way.

The guidance, which has since been rescinded set forth certain enforcement priorities that are important to the federal government:

The DOJ has not historically devoted resources to prosecuting individuals whose conduct is limited to possession of small amounts of marijuana for use on private property but has relied on state and local law enforcement to address marijuana activity. In the event the DOJ reverses its stated policy and begins strict enforcement of the CSA in states that have laws legalizing medical marijuana and recreational marijuana in small amounts, there may be a direct and adverse impact to our business model, and others are engagedour revenue and profits. Furthermore, H.R. 83, known as the Rohrabacher-Blumenauer is an amendment to the annual appropriations bill that prohibits the Department of Justice from using federal funds to prevent certain states, including Nevada and California, from implementing their own laws that authorized the use, distribution, possession, or cultivation of medical marijuana. This prohibition is currently in similar of not exact businesses.place until September 30, 2018.

We could be found to be violating laws related to medical cannabis.

ThereCurrently, there are 30 states plus the District of Columbia that have laws and/or regulations that recognize, in one form or another, legitimate medical uses for cannabis and consumer use of cannabis in connection with medical treatment. Many other states are considering similar legislation. Conversely, under the CSA, the policies and regulations of the federal government and its agencies are that cannabis has no medical benefit and a range of activities including cultivation and the personal use of cannabis is prohibited. Unless and until Congress amends the CSA with respect to medical marijuana, as to the timing or scope of any such amendments there can be no aspectassurance, there is a risk that federal authorities may enforce current federal law. The risk of strict enforcement of the CSA in light of Congressional activity, judicial holdings, and stated federal policy remains uncertain. Because we cultivate, produce, sell and distribute medical marijuana, we have risk that we will be deemed to facilitate the selling or distribution of medical marijuana in violation of federal law. Finally, we could be found in violation of the CSA in connection with the sale of any marijuana products. This would cause a direct and adverse effect on our subsidiaries’ businesses, or intended businesses, and on our revenue and prospective profits.

Variations in state and local regulation, and enforcement in states that have legalized medical cannabis, may restrict marijuana-related activities, including activities related to medical cannabis, which may negatively impact our revenues and prospective profits.

Individual state laws do not always conform to the federal standard or to other states laws. A number of states have decriminalized marijuana to varying degrees, other states have created exemptions specifically for medical cannabis, and several have both decriminalization and medical laws. As of February 2018, nine states and the District of Columbia have legalized the recreational use of cannabis. Variations exist among states that have legalized, decriminalized, or created medical marijuana exemptions. For example, certain states have limits on the number of marijuana plants that can be homegrown. In most states, the cultivation of marijuana for personal use continues to be prohibited except for those states that allow small-scale cultivation by the individual in possession of medical marijuana needing care or that person’s caregiver. Active enforcement of state laws that prohibit personal cultivation of marijuana may indirectly and adversely affect our business which is protected by patents, copyrights, trademarks,and our revenue and profits.

Prospective customers may be deterred from doing business with a company with a significant nationwide online presence because of fears of federal or trade names. As a result, potential competitors could duplicate our business model with little effort.

We depend upon key personnel, the lossstate enforcement of which could seriously harm our business.laws prohibiting possession and sale of medical or recreational marijuana.

Our operating performancewebsite is substantially dependent onvisible in jurisdictions where medicinal and/or recreational use of marijuana is not permitted and, as a result, we may be found to be violating the continued serviceslaws of our executive officers, Mr. Shawn Chemtov, our Co- Chief Executive Officer and co-chairman of our Board of Directors and Adam Laufer, our Co- Chief Executive Officer and co-chairman of our Board of Directors. We believe Messrs. Chemtov and Laufer possess valuable knowledge about and experience in real estate and securities law and capital markets respectively, and that their knowledge and relationships would be difficult to replicate. We have not entered into an employment agreement with either Messrs. Chemtov or Laufer and, although we are considering doing so, have not acquired key-person life insurance on either such executive officer. The unexpected loss of the services of Messrs. Chemtov or Laufer could have a material adverse effect on our business, operations, financial condition and operating results, as well as the value of our common stock.those jurisdictions.

Marijuana remains illegal under federal law.

Risks Related to Government Regulation

Marijuana is a Schedule-I controlled substance and is illegal under federal law.

The U.S. Government classifies marijuana as a schedule-I controlled substance; and as a result in accordance to Federal law marijuana is an illegal substance. Even in those jurisdictionsstates in which the use of medical marijuana has been legalized, at the state level, its prescription isuse remains a violation of federal law. The United States Supreme Court has ruled in United States v. Oakland Cannabis Buyers' Coop. and Gonzales v. Raich that it is the federal government that has the right to regulate and criminalize cannabis, even for medical purposes. Therefore,Since federal law criminalizing the use of marijuana pre-emptspreempts state laws that legalizeslegalize its use, for medicinal purposes.

As of January 31, 2014, 21 states and the District of Columbia allow its citizens to use medical marijuana. Additionally, voters in the states of Colorado and Washington approved ballot measures last November to legalize cannabis for adult use. The state laws are in conflict with the federal Controlled Substances Act, which makes marijuana use and possession illegal on a national level. The Obama

administration has effectively stated that it is not an efficient use of resources to direct federal law enforcement agencies to prosecute those lawfully abiding by state-designated laws allowing the use and distribution of medical marijuana.  However, there is no guarantee that the administration will not change its stated policy regarding the low-prioritystrict enforcement of federal laws.

Additionally, any new administration that follows could change this policy and decidelaw regarding marijuana would likely result in our inability to enforce the federal laws strongly. Any such change in the federal government's enforcement of current federal laws could cause significant financial damage to us and its shareholders.

Should such a change occur,proceed with our business operations would be affected to some degree. Ifplan, especially in respect of our marijuana tenants are forced to shutter their operations, we would need to seek to replace those tenants with non marijuana tenants, who would likely expect to pay lower rents, moreover if the marijuana industry were forced to shutter at once, it would result in a high amount of vacancies at oncecultivation, production and create a glut of supply, driving leasesdispensaries. In addition, our assets, including real property, cash, equipment and property values lower. Additionally, we'd almost certainly realize an economic loss on any and all improvements made to the properties that were specific to the marijuana industry and we would likely lose any and all investments in the US market that were marijuana related.

Further, and while we do not intend to harvest, distribute or sell cannabis, by leasing facilities to growers of marijuana, we could be deemed to be participating in marijuana cultivation, which remains illegal under federal law, and exposes us to potential criminal liability, with the additional risk that our propertiesother goods, could be subject to civilasset forfeiture proceedings.because marijuana is still federally illegal.

In February 2017, the Trump administration announced that there may be “greater enforcement” of federal laws regarding marijuana. Any such enforcement actions could have a negative effect on our business and results of operations.

We are not able to deduct some of our business expenses.

Section 280E of the Internal Revenue Code prohibits marijuana businesses from deducting their ordinary and necessary business expenses, forcing us to pay higher effective federal tax rates than similar companies in other industries. The effective tax rate on a marijuana business depends on how large its ratio of nondeductible expenses is to its total revenues. Therefore, our marijuana business may be less profitable than it could otherwise be.

We may not be able to attract or retain any independent directors.

Our board of directors is not currently comprised of a majority of independent directors. We may have difficulty attracting and retaining independent directors because, among other things, we operate in the marijuana industry.

We may not be able to successfully execute on our merger and acquisition strategy

Our business plan depends in part on merging with or acquiring other businesses in the marijuana industry. The success of any acquisition will depend upon, among other things, our ability to integrate acquired personnel, operations, products and technologies into our organization effectively, to retain and motivate key personnel of acquired businesses, and to retain their customers. Any acquisition may result in diversion of management’s attention from other business concerns, and such acquisition may be dilutive to our financial results and/or result in impairment charges and write-offs. We might also spend time and money investigating and negotiating with potential acquisition or investment targets, but not complete the transaction.

Although we expect to realize strategic, operational and financial benefits as a result of our acquisitions, we cannot predict whether and to what extent such benefits will be achieved. There are significant challenges to integrating an acquired operation into our business.

Any future acquisition could involve other risks, including the assumption of unidentified liabilities for which we, as a successor owner, may be responsible. These transactions typically involve a number of risks and present financial and other challenges, including the existence of unknown disputes, liabilities, or contingencies and changes in the industry, location, or regulatory or political environment in which these investments are located, that our due diligence review may not adequately uncover and that may arise after entering into such arrangements.

Laws and regulations affecting the regulatedmedical marijuana industry are constantly changing, which could detrimentally affect our proposedcultivation, and production operations and we cannot predict the impact that future regulations may have on us.

Local, state, and federal medical marijuana laws and regulations are broad in scope and subject to evolving interpretations, which could require us to incur substantial costs associated with compliance or alter certain aspects of our business plan. In addition, violations of these laws, or allegations of such violations, could disrupt certain aspects of our business plan and result in a material adverse effect on itscertain aspects of our planned operations. In addition, it is possible that regulations may be enacted in the future that will be directly applicable to certain aspects of our proposed business.cultivation and production businesses. We cannot predict the nature of any future laws, regulations, interpretations or applications, nor can we determine what effect additional governmental regulations or administrative policies and procedures, when and if promulgated, could have on our business.

Our proposed business is dependent on state laws pertainingWe may not obtain the necessary permits and authorizations to operate the medical marijuana industry.business.

Continued developmentWe may not be able to obtain or maintain the necessary licenses, permits, authorizations, or accreditations for our cultivation and production businesses, or may only be able to do so at great cost. In addition, we may not be able to comply fully with the wide variety of laws and regulations applicable to the medical marijuana industry is dependent upon continued legislative authorization ofindustry. Failure to comply with or to obtain the necessary licenses, permits, authorizations, or accreditations could result in restrictions on our ability to operate the medical marijuana at the state level. Any number of factorsbusiness, which could slow or halt progress in this area. Further, progress, while encouraging, is not assured. While there may be ample public support for legislative action, numerous factors impact the legislative process. Any one of these factors could slow or halt use of marijuana, which would negatively impacthave a material adverse effect on our proposed business.

As of January 13, 2015, 23 states and the District of Columbia allow their residents to use medical marijuana. Voters in the states of Colorado and Washington approved and implemented regulations to legalize cannabis for adult use. The state laws are in conflict with the federal Controlled Substances Act, which makes marijuana use and possession illegal on a national level. The Obama administration has made numerous statements (as memorialized in the "Cole Memo") indicating that it is not an efficient use of resources to direct federal lawIf we incur substantial liability from litigation, complaints, or enforcement agencies to prosecute those lawfully abiding by state-designated laws allowing the use and distribution of medical marijuana. However, there is no guarantee that the administration will not change its stated policy regarding the low-priority enforcement of federal laws. Additionally, any new administration that followsactions, our financial condition could change this policy and decide to stringently enforce the federal laws. Any such change in the federal government’s enforcement of current federal laws could cause significant financial damage to the Company and its stockholders.

suffer.

The Company derives revenue from state-approved marijuana growers and dispensary facilities.

While we do not grow or distribute marijuana we derive rental income from state-approved marijuana growers and dispensary facilities which could be deemed to be aiding and abetting illegal activities, a violation of federal law. If the Federal government sought to enforce marijuana laws in states that have legalized, the same, we could be prosecuted under federal law, which could result in fines, penalties, potential forfeitures and a cessation of  our current business activities.

FDA regulation of marijuana under the Food, Drug and Cosmetic Act, GMPs and possible registration of facilities where medical marijuana is grown.

Should the Federal government legalize marijuana for medical use, it is possible that the U.S. Food and Drug Administration would seek to regulate it under the Food, Drug and Cosmetics Act of 1938. Additionally, the FDA may issue rules and regulations including CGMPs (certified good manufacturing practices) related to the growth, cultivation, harvesting and processing of medical marijuana. Clinical trials may be needed to verify efficacy and safety. It is also possible that the FDA would require that facilities where medical marijuana is grown be registered with the FDA and comply with certain federally prescribed regulations. In the event that some or all of these regulations are imposed, we do not know what the impact would be onOur participation in the medical marijuana industry what costs, requirementsmay lead to litigation, formal or informal complaints, enforcement actions, and possible prohibitionsinquiries by various federal, state, or local governmental authorities against us. Litigation, complaints, and enforcement actions could consume considerable amounts of financial and other corporate resources, which could have a negative impact on our sales, revenue, profitability, and growth prospects. We have not been, and are not currently, subject to any material litigation, complaint, or enforcement action regarding marijuana (or otherwise) brought by any federal, state, or local governmental authority. Certain of our operating subsidiaries, may be enforced. Ifin the future engage in the distribution of marijuana; however, we have not been, and are not currently, subject to any material litigation, complaint or enforcement action regarding marijuana (or otherwise) brought by any federal, state, or local governmental authority with respect to the business of any our tenants are unable to comply with the regulations and or registration as prescribed by the FDA, we and or our tenants may be unable to continue to operate their and our business in its current form or at all.
subsidiaries.

Our clientsWe may have difficulty accessing the service of banks, which may make it difficult for themus to contract with us for their real estate needs.operate.

On February 14, 2014, The U.S. government issued rules allowingSince the use of marijuana is illegal under federal law, many banks to legally provide financial services to state-licensedwill not accept for deposit funds from businesses involved with the marijuana businesses. A memorandum issued by the Justice Department to federal prosecutors re-iterated guidance previously given, this time to the financial industry that banks can do business with legal marijuanaindustry. Consequently, businesses and "may not" be prosecuted. The Treasury Department's Financial Crimes Enforcement Network (FinCEN) issued guidelines to banks that "it is possible to provide financial services" to state-licensed marijuana businesses and still be in compliance with federal anti-money laundering laws. The guidance falls short of the explicit legal authorization that banking industry officials had pushed the government to provide and to date it is not clear what if any banks have relied on the guidance and taken on legal marijuana companies as clients. The aforementioned policy may be administration dependent and a change in presidential administrations may cause a policy reversal and a retraction of current policies, wherein legal marijuana businesses may not have access to the banking industry. The inability of potential clients in our target market to open accounts and otherwise use the service of banks may make it difficult for them to contract with us.

Risks Related to Real Estate

We will be subject to general real estate risks.

We will be subject to risks generally incident to the ownership of real estate, including: (a) changes in general economic or local conditions; (b) changes in supply of, or demand for, similar or competing propertiesinvolved in the area; (c) bankruptcies, financial difficulties or defaults by tenants or other parties; (d) increases in operating costs, such as taxes and insurance; (e) the inabilitymarijuana industry often have difficulty finding a bank willing to achieve full stabilized occupancy at rental rates adequate to produce targeted returns; (f) periods of high interest rates and tight money supply; (g) excess supply of rental properties in the market area; (h) liability for uninsured losses resulting from natural disasters or other perils; (i) liability for environmental hazards; and (j) changes in tax, real estate, environmental, zoning or other laws or regulations. For these and other reasons, no assurance can be given that we will be profitable.

The economic success of an investment in  the Company depends directly upon the results of operations of our properties.

Fluctuations in vacancy rates, rent schedules and operating expenses can adversely affect operating results or render the sale or refinancing of the properties difficult or unattractive. We cannot assure that certain assumptions as to the future levels of occupancy of our properties, cost of repositioning our properties in the marketplace or future costs of operating our properties will be accurate since many of such matters will depend on events and factors beyond our control. Such factors include, without limitation: continued validity and enforceability of the leases; vacancy rates for properties similar to our properties; financial resources of tenants and rent levels near our properties; adverse changes in local population trends, market conditions, neighborhood values, local economic and social conditions; supply and demand for property such as our properties; competition from similar properties; interest rates; real estate tax rates, governmental rules, regulations and fiscal policies; the enactment of unfavorable real estate, rent control, environmental or zoning laws and hazardous material laws; and uninsured losses and effects of inflation.

Our business model depends upon the availability of private financing.

Our ability to acquire, operate and sell properties and achieve the targeted financial performance for such properties depends, in large measure, on its ability to obtain financing in amounts and on terms that are favorable and in some instances, allow for significant leverage at reasonable interest rates. The capital markets in the United States have recently undergone a turbulent period in which lending was severely restricted. Although there appears to be signs that financial institutions are resuming lending, the market has not yet returned to its pre-2008 state; obtaining favorable financing in the current environment remains challenging. If this market does not improve over the next few years, or if it worsens, our financial performance could be adversely affected.

A general economic downturn could adversely affect the economic performance of the properties we own.

Weakness in regional and national economies could materially and adversely impact the tenants in our properties andaccept their business operations. If tenants were to suffer a serious economic setback, they might not be able to pay rent due under their leases. If a number of tenants are unable to pay the rent, we may not receive the anticipated amount of income from our properties or may not be able to pay the debt service to the lenders. In a worst case scenario, this could result in a complete loss of those properties if the lenders were to foreclose. Further, a general or local weakness in economic conditions may reduce the demand for buyers of those properties. There is no assurance that any general appreciation in real estate values or our properties (and currently relatively low capitalization rates) will continue.

We will compete with others for suitable properties.

We will experience competition for real estate investments from individuals, corporations and other entities engaged in real estate investment activities, many of whom have greater financial resources than us. Competition for investments may have the effect of increasing costs and reducing returns to our investors.

Loans the we obtain may prohibit prepayment or require additional payments.

Property loans obtained may prohibit prepayment prior to maturity or some earlier date. If we sought to voluntarily prepay a loan, it may be required to make a defeasance payment to the lender. The defeasance payment is intended to provide the lender with a sum of money that would earn an amount comparable to the interest payments due on the loan through maturity. If interest rates declined prior to defeasance, the defeasance payment generally would be higher; if interest rates increased, the defeasance payment generally would be lower.business. The inability to prepay loans for a number of years and the defeasance payments described aboveopen or maintain bank accounts may adversely impact our ability to sell certain of our properties as contemplated, although a qualified buyer approved by a lender may be able to assume a loan.

There may be restrictions on transfer and encumbrance of our properties.

The terms of any loan are expected to prohibit the transfer or further encumber the properties or any interest in our properties except with a lender's prior consent, which consent each lender is expected to be able to withhold. When borrowing arrangements are entered into by the company, the resulting loans may include provisions that restrict our activities in the management of the the properties. The loans may provide that upon violation of these restrictions on transfer or encumbrance, a lender may declare the entire amount of the loan to be immediately due and payable. If we are unable to obtain replacement financing or otherwise fails to immediately repay the loan in full, the lender may invoke its remedies under the loan, including proceeding with a foreclosure sale that could result in our losing our entire interest in the property.

Indebtedness and high leverage could adversely affect our profits.

Our properties may be leveraged. Such leverage could have negative consequences, including the following: (a) our ability to obtain additional financing for working capital, capital expenditures, or other purposes may be impaired in the future; (b) certain borrowings may be at variable rates of interest, which will expose the company to the risk of increased interest rates; and (c) leverage may limit our flexibility to adjust to changing economic or market conditions, reduce our ability to withstand competitive pressures, make us more vulnerable to a downturn in general or local economic conditions and substantially increase our risk of loss.

If debt payments to note holder are not made, we could lose our investment in our real estate properties.

Loans obtained from investors to fund the acquisition of real estate properties will in most cases be secured by a first mortgage on the properties. If debt service payments are not made as required, a lender could foreclose on the property securing its debt. This could cause the Company to lose part or all of its investment, which in turn would adversely affect our financial performance.

Lenders may require restrictive covenants.

The loan instruments may contain financial and other restrictive covenants that will limit the company's ability to, among other things, borrow additional funds.

Financial arrangements may involve balloon payment obligations.

It is anticipated that many of the financing arrangements will require a lump-sum or “balloon” payment at maturity. The ability to make a balloon payment at maturity is uncertain and may depend upon the borrower's ability to obtain additional financing. At the time the balloon payment is due, the borrower may or may not be able to refinance the existing loan on favorable terms. The effect of an unfavorable refinancing or a forced sale could adversely affect the company's financial performance.

High interest rates may make it difficult to finance or refinance properties.

If debt is unavailable at reasonable rates, we may not be able to finance acquisition of real estate properties, refinance debt when the loan comes due, or refinance such debt on favorable terms. If interest rates are higher upon refinancing debt, income or gain would be reduced. We may be unable to refinance such debt at appropriate times, which could result in the foreclosure of our properties. If any of these events occur, cash flow would be reduced. This, in turn, would materially impair the results of operations of the company.

Property purchase agreements may not provide adequate protection.

Properties may be sold to us in an “as is” condition. Further, representations and warranties in a property purchase agreement typically do not survive the closing. Accordingly, we will engage third parties to conduct the required due diligence involving engineering, radon, environmental, title and other inspections during the applicable due diligence investigation period. However, upon acquisition of properties, we will have limited recourse with respect to conditions affecting the property that were not discovered during this investigation period. The cost of unexpected repairs and remediation work could be material and would therefore have an adverse effect on the Company’s financial condition and results of operations. If claims arising as a result of a breach of a representation or warranty are discovered after this period, we may not be able to seek indemnification from the seller and would therefore suffer the financial consequences of such a breach, which could be material. Further, even if we were entitled to indemnification from the seller, no assurance can be given that the seller would have sufficient funds to satisfy any such indemnification claims.

Non-refundable deposits and costs may be incurred if acquisitions fail to close.

Property acquisition transactions may require deposits and costs to be incurred by the company which may be non-refundable if such transactions fail to close, thereby reducing funds otherwise available to us.

Environmental liabilities are possible and can be costly.

Federal, state and local laws impose liability on a landowner for releases or the otherwise improper presence on the premises of hazardous substances. This liability is without regard to fault for, or knowledge of, the presence of such substances. A landowner may be held liable for hazardous materials brought onto a property before it acquired title and for hazardous materials that are not discovered until after it sells the property. Similar liability may occur under applicable state law. Sellers of properties may make only limited representations as to the absence of hazardous substances. If any hazardous materials are found within our properties in violation of law at any time, we may be liable for all cleanup costs, fines, penalties and other costs. This potential liability will continue after we sell the property(ies) and may apply to hazardous materials present within the property(ies) before the we acquire the property(ies). If losses arise from hazardous substance contamination which cannot be recovered from a responsible party, the financial viability of the property(ies) may be adversely affected. It is expected that each lender will require us to obtain, and we plan to obtain before any purchase, a Phase I environmental site assessment (“ESA”) to determine the existence of hazardous materials and other environmental problems prior to entering into a loan. However, a Phase I ESA generally does not involve invasive testing, but instead is limited to a physical walk through or inspection of the property(ies) and a review of governmental records. It is possible that we will purchase property(ies) with known or unknown environmental problems which may require material expenditures for remediation.

Uninsured losses may be experienced by the Company.

While we intend to carry comprehensive insurance on our properties, including fire, liability and extended coverage insurance, there are certain risks that may be uninsurable or not insurable on terms that management believes to be economical. For example, management may not obtain insurance against floods, terrorism, mold-related claims, or earthquake insurance. If such an event occurs to, or causes the damage or destruction of, a property, we could suffer financial losses.

Non-compliance with the Americans with Disabilities Act may create liabilities.

If any of our properties are not in compliance with the Americans with Disabilities Act of 1990, as amended (the “ADA”), we may be required to pay for any required improvements. Under the ADA, public accommodations must meet certain federal requirements related to access and use by disabled persons. The ADA requirements could require significant expenditures and could result in the imposition of fines or an award of damages to private litigants. We cannot assure that ADA violations do not or will not exist at any of our properties.

Risks Related to Our Stock

Our common stock is currently deemed a "penny stock," which makes it more difficult for our investors to sell their shares.

Our common stock is subject to the "penny stock" rules adopted under Section 15(g) of the Exchange Act. The penny stock rules generally apply to companies whose common stock is not listed on the Nasdaq Stock Market or other national securities exchange and trades at less than $4.00 per share, other than companies that have had average revenue of at least $6,000,000 for the last three years or that have tangible net worth (i.e., total assets less intangible assets and liabilities) of at least $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than "established customers" complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our common stock. If our common stock is subject to the penny stock rules, investors will find it more difficult to dispose of our common stock.

Volatility in our common stock price may subject us to securities litigation.

The market for our common stock is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities to us and could divert our management's attention and resources from managing our operations and business.

Our management controls a large block of our common stock that will allow them to control us.

As of March 18, 2015, members of our management team beneficially own approximately 86% of our outstanding common stock. As such, management owns approximately 86% of our voting power and controls the Company. As a result, management has the ability to control substantially all matters submitted to our stockholders for approval including:

• election of our board of directors;
• removal of any of our directors;
• amendment of our articles of incorporation or bylaws; and
• adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us.

In addition, management's stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.

Our board of directors can issue additional shares of common and preferred stock which will dilute existing shareholders.

We can sell additional shares of common stock without consulting stockholders and without offering shares to existing stockholders, which would result in dilution of existing stockholders' interests in MJ Holdings and could depress our stock price.

Our articles of incorporation authorize 95,000,000 shares of common stock, of which 13,886,794 are outstanding as of March 18, 2015, and 5,000,000 shares of preferred stock, of which none are outstanding. Our Board of Directors is authorized to issue additional shares of our common stock and preferred stock. Although our Board of Directors intend to utilize its reasonable business judgment to fulfill its fiduciary obligations to our stockholders in connection with any future issuance of our capital stock, the future issuance of

additional shares of our common stock or preferred stock convertible into common stock would cause immediate, and potentially substantial, dilution to our existing stockholders, which could also have a material effect on the market value of the shares.

We have never paid dividends on our Common Stock and We do not expect to pay any cash dividends in the foreseeable future.

We have never paid dividends on our Common Stock and we intend to retain our future earnings, if any, in order to reinvest in the development and growth of our business and, therefore, do not intend to pay dividends on our common stock for the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, and such other factors as our board of directors deems relevant. Accordingly, investors may need to sell their shares of our common stock to realize a return on their investment, and they may not be able to sell such shares at or above the price paid for them.

Our board could issue "blank check" preferred stock without stockholder approval with the effect of diluting existing stockholders and impairing their voting rights, and provisions in our charter documents could discourage a takeover that stockholders may consider favorable.

Our certificate of incorporation authorize the issuance of up to 5,000,000 shares of "blank check" preferred stock with designations, rights and preferences as may be determined from time to time by our board of directors. Our board is empowered, without stockholder approval, to issue a series of preferred stock with dividend, liquidation, conversion, voting or other rights which could dilute the interest of, or impair the voting power of, our common stockholders. The issuance of a series of preferred stock could be used as a method of discouraging, delaying or preventing a change in control. For example, it would be possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to effect a change in control of our company.

Our bylaws also allow our board of directors to fix the number of directors. Our stockholders do not have cumulative voting in the election of directors.

Any aspect of the foregoing, alone or together, could delay or prevent unsolicited takeovers and changes in control or changes in our management.

There is no established market four our stock and our common stock is not listed on a stock exchange; as a result, stockholders may not be able to resell their shares at or above the price paid for them.

There is not established market for our common stock. Our common stock trades on the OTC market under ticker symbol MJNE; stocks which trade on the OTC markets tend to be illiquid and volatile and could be subject to significant fluctuations due to changes in sentiment in the market regarding our operations or business prospects, among other factors. Further, our common stock is not listed on a stock exchange, nor do we currently intend to list the common stock on a stock exchange. There are no assurances that an active public market for our common stock will develop. Therefore, stockholders may not be able to sell their shares at or above the price they paid for them.

Among the factors that could affect our stock price are:

• industry trends and the business success of our vendors;
• actual or anticipated fluctuations in our quarterly financial and operating results and operating results that vary from the expectations of our management or of securities analysts and investors;
• our failure to meet the expectations of the investment community and changes in investment community recommendations or estimates of our future operating results;
• announcements of strategic developments, acquisitions, dispositions, financings, product developments and other materials events by us or our competitors;
• regulatory and legislative developments;
• litigation;
• general market conditions;
• other domestic and international macroeconomic factors unrelated to our performance; and
• additions or departures of key personnel.

Sales by our stockholders of a substantial number of shares of our common stock in the public market could adversely affect the market price of our common stock.

A substantial portion of our total outstanding shares of common stock may be sold into the market at any time. While most of these shares are held by two of our principal stockholders, who are also executive officers, and we believe that such holders have no current intention to sell a significant number of shares of our stock, if either of these principal stockholders were to decide to sell large amounts of stock over a short period of time such sales could cause the market price of our common stock to drop significantly, even if our business is doing well.

Further, the market price of our common stock could decline as a result of the perception that such sales could occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and price that we deem appropriate. We currently have 13,886,794 shares of common stock outstanding, 319,000 of which are freely tradable without restriction under the Securities Act.

Having no independent directors on our board limits our ability to establish effective independent corporate governance procedures.

We do not have any independent directors on our board of directors nor do we maintain a standing audit committee, compensation committee or nominating and governance committee. Accordingly, without independent directors, we cannot establish effective standing board committees to oversee functions such as audit, compensation and corporate governance. In addition, our executive officers are also directors, Shawn Chemtov, and Adam Laufer are co-chairmen of our board of directors and our co-CEOs respectively. This structure gives our executive officers significant control over all corporate issues.

Unless and until we have a larger board of directors that would include a majority of independent members, there will be limited oversight of our executive officers' decisions and activities and little ability for you to challenge or reverse those activities and decisions, even if they are not in your best interests.

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results. As a result, we could become subject to sanctions or investigations by regulatory authorities and/or stockholder litigation, which could harm our business and have an adverse effect on our stock price.

As a public reporting company, we are required to comply with the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC, including periodic reports, disclosures and more complex accounting rules. As directed by Section 404 of Sarbanes-Oxley, the SEC adopted rules requiring public companies to include a report of management on a company's internal control over financial reporting in their Annual Report on Form 10-K. Based on current rules, we are required to report under Section 404(a) of Sarbanes-Oxley regarding the effectiveness of our internal control over financial reporting.

Requirements associated with being a reporting public company will require significant company resources and management attention.

We are a voluntary filer under the Securities Exchange Act of 1934, as a result of having filed a Registration Statement on Form S-1 on June 28, 2010, which was declared effective on April 18, 2011, pursuant to section15(d) of the Securities Exchange Act of 1934. As a voluntary filer we intend to continue to file periodic reports to maintain current information with the SEC on Forms 10-Q, 10-K and 8-K as prescribed by the rules and Regulations of the Securities Exchange Act of 1934. We work with independent legal, accounting and financial advisors to ensure adequate disclosure and control systems to manage our growth and our obligations as a company that files reports with the SEC. These areas include corporate governance, internal control, internal audit, disclosure controls and procedures and financial reporting and accounting systems. However, we cannot assure you that these and other measures we may take will be sufficient to allow us to satisfy our obligations as an SEC reporting company on a timely basis.

In addition, compliance with reporting and other requirements applicable to SEC reporting companies will create additional costs for us, will require the time and attention of management and will require the hiring of additional personnel and legal, audit and other professionals. We cannot predict or estimate the amount of the additional costs we may incur, the timing of such costs or the impact that our management's attention to these matters will have on our business.

Our officers and directors have limited liability, and we are required in certain instances to indemnify our officers and directors for breaches of their fiduciary duties.

We have adopted provisions in our Articles of Incorporation and Bylaws, which limit the liability of our officers and directors and provide for indemnification by us of our officers and directors to the full extent permitted by Nevada corporate law. Our articles generally provide that our officers and directors shall have no personal liability to us or our shareholders for monetary damages for breaches of their fiduciary duties as directors, except for breaches of their duties of loyalty, acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, acts involving unlawful payment of dividends or unlawful stock purchases or redemptions, or any transaction from which a director derives an improper personal benefit. Such provisions substantially limit our shareholders' ability to hold officers and directors liable for breaches of fiduciary duty, and may require us to indemnify our officers and directors.

Any future litigation could have a material adverse impact on our results of operations, financial condition and liquidity, particularly since we do not currently have director and officer insurance. Our lack of D&O insurance may also make it difficult for us to retainoperate our medical marijuana businesses. If any of our bank accounts are closed, we may have difficulty processing transactions in the ordinary course of business, including paying suppliers, employees and attract talentedlandlords, which could have a significant negative effect on our operations.

Litigation may adversely affect our business, financial condition, and skilled directors and officers.results of operations.

From time to time in the normal course of our business operations, we may bebecome subject to litigation including potential stockholder derivative actions. Risksthat may result in liability material to our financial statements as a whole or may negatively affect our operating results if changes to our business operations are required. The cost to defend such litigation may be significant and may require a diversion of our resources. There also may be adverse publicity associated with legal liabilitylitigation that could negatively affect customer perception of our business, regardless of whether the allegations are difficult to assess and quantify, and their existence and magnitude can remain unknown for significant periods of time. To date we have not procured directors and officers liability ("D&O") insurance to cover such risk exposure for our directors and officers. Such insurance generally pays the expenses (including amounts paid to plaintiffs, fines, and expenses including attorneys' fees) of officers and directors who are the subject of a lawsuit as a result of their service to the Company. Whilevalid or whether we are currently seeking such insurance, there canultimately found liable. Insurance may not be no assurance that we will be able to do so at reasonable rates oravailable at all or in sufficient amounts adequate to cover such expenses should such a lawsuit occur. While neither Nevada law norany liabilities with respect to these or other matters. A judgment or other liability in excess of our articlesinsurance coverage for any claims could adversely affect our business and the results of incorporation or bylaws require us to indemnify or advance expenses toour operations.

Our officers and directors have substantial equity ownership in the Company and substantial control over certain corporate actions.

As of July 20, 2018, our officers and directors involvedowned approximately 33.3% of our outstanding Common Stock and thus exercise substantial control over stockholder matters, such as election of directors, amendments to the Articles of Incorporation, and approval of significant corporate transactions.

If we fail to implement and maintain proper and effective internal controls and disclosure controls and procedures pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, our ability to produce accurate and timely financial statements and public reports could be impaired, which could adversely affect our operating results, our ability to operate our business, and investors’ views of us.

Our internal controls and procedures were not effective to detect the inappropriate application of U.S. GAAP rules. Our internal controls were adversely affected by deficiencies in the design or operation of our internal controls, which management considered to be material weaknesses. These material weaknesses include the following:

The failure to implement and maintain proper and effective internal controls and disclosure controls could result in material weaknesses in our financial reporting, such a legal action, weas errors in our financial statements and in the accompanying footnote disclosures that could require restatements. Investors may lose confidence in our reported financial information and disclosure, which could negatively impact our stock price.

We do not expect that we would do soour internal controls over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. Over time, controls may become inadequate because changes in conditions or deterioration in the degree of compliance with policies or procedures may occur. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Our insurance coverage may be inadequate to cover all significant risk exposures.

We will be exposed to liabilities that are unique to the extent permitted by Nevada law. Without D&Oproducts we provide. While we intend to maintain insurance for certain risks, the amountsamount of our insurance coverage may not be adequate to cover all claims or liabilities, and we would paymay be forced to indemnifybear substantial costs resulting from risks and uncertainties of our officersbusiness. It is also not possible to obtain insurance to protect against all operational risks and directors should they be subjectliabilities. In particular, we may have difficulty obtaining insurance because we operate in the marijuana industry. The failure to legal action basedobtain adequate insurance coverage on their serviceterms favorable to the Companyus, or at all, could have a material adverse effect on our business, financial condition, and results of operations. We do not have any business interruption insurance. Any business disruption or natural disaster could result in substantial costs and diversion of resources.

If our products are contaminated, we may have litigation and products liability exposure.

We source some of our products from third-party suppliers. Although we are required by Nevada law to test the products we receive from third-party suppliers, we may not identify all contamination in those products. Possible contaminates include pesticides, molds and fungus. If a customer suffers an injury from our products, they may sue us in addition to the supplier and we may not have adequate insurance to cover any such claims, which could result in a negative effect on our results of operations.

Some of our lines of business rely on our third-party service providers to host and deliver services and data, and any interruptions or delays in these hosted services, security or privacy breaches, or failures in data collection could expose us to liability and harm our business and reputation.

Some of our lines of business and services rely on services hosted and controlled directly by third-party service providers. We do not have redundancy for all of our systems, many of our critical applications reside in only one of our data centers, and our disaster recovery planning may not account for all eventualities. If our business relationship with a third-party provider of hosting or software services is negatively affected, or if one of our service providers were to terminate its agreement with us, we might not be able to deliver access our data, which could subject us to reputational harm and cause us to lose customers and future business, thereby reducing our revenue.

We may hold large amounts of customer data, some of which will likely be hosted in third-party facilities. A security incident at those facilities or ours may compromise the confidentiality, integrity or availability of customer data. Unauthorized access to customer data stored on our computers or networks may be obtained through break-ins, breaches of our secure network by an unauthorized party, employee theft or misuse or other misconduct. It is also possible that unauthorized access to customer data may be obtained through inadequate use of security controls by customers. Accounts created with weak passwords could allow cyber-attackers to gain access to customer data. If there were an inadvertent disclosure of customer information, or if a third party were to gain unauthorized access to the information we possess on behalf of our customers, our operations could be disrupted, our reputation could be damaged and liquidity. Further,we could be subject to claims or other liabilities. In addition, such perceived or actual unauthorized disclosure of the information we collect or breach of our security could damage our reputation, result in the loss of customers and harm our business.

Because of the data we expect to collect and manage using our hosted solutions, it is possible that hardware or software failures or errors in our systems (or those of our third-party service providers) could result in data loss or corruption, cause the information that we collect to be incomplete or contain inaccuracies that our customers regard as significant or cause us to fail to meet committed service levels. Furthermore, our ability to collect and report data may be delayed or interrupted by a number of factors, including access to the Internet, the failure of our network or software systems or security breaches. In addition, computer viruses or other malware may harm our systems, causing us to lose data, and the transmission of computer viruses or other malware could expose us to litigation. We may also find, on occasion, that we cannot deliver data and reports in near real time because of a number of factors, including failures of our network or software. If we supply inaccurate information or experience interruptions in our ability to capture, store and supply information in near real time or at all, our reputation could be harmed and we could lose customers, or we could be found liable for damages or incur other losses. Moreover, states in which we operate may require that we maintain certain information about our customers and transactions. If we fail to maintain such information, we could be in violation of state laws.

Risks Related to an Investment in Our Securities

We expect to experience volatility in the price of our Common Stock, which could negatively affect stockholders’ investments.

The trading price of our Common Stock may be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. The stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with securities traded in those markets. Broad market and industry factors may seriously affect the market price of companies’ stock, including ours, regardless of actual operating performance. All of these factors could adversely affect your ability to sell your shares of Common Stock or, if you are able to sell your shares, to sell your shares at a price that you determine to be fair or favorable.

The relative lack of D&O insurancepublic company experience of our management team could adversely impact our ability to comply with the reporting requirements of U.S. securities laws.

Our management team lacks public company experience, which could impair our ability to comply with legal and regulatory requirements such as those imposed by the Sarbanes-Oxley Act of 2002. Our senior management has limited experience in managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our senior management may not be able to implement programs and policies in an effective and timely manner that adequately respond to such increased legal, regulatory compliance, and reporting requirements, including the establishing and maintaining of internal controls over financial reporting. Any such deficiencies, weaknesses, or lack of compliance could have a materially adverse effect on our ability to comply with the reporting requirements of the Securities Exchange Act of 1934, as amended, which is necessary to maintain our public company status. If we were to fail to fulfill those obligations, our ability to continue as a U.S. public company would be in jeopardy, we could be subject to the imposition of fines and penalties, and our management would have to divert resources from attending to our business plan.

Our Common Stock is categorized as “penny stock,” which may make it more difficult for investors to sell their shares of Common Stock due to suitability requirements.

Our Common Stock is categorized as “penny stock.” The Securities and Exchange Commission has adopted Rule 15g-9, which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. The price of our Common Stock is significantly less than $5.00 per share and is therefore considered “penny stock.” This designation imposes additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The penny stock rules require a broker-dealer buying our securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities given the increased risks generally inherent in penny stocks. These rules may restrict the ability and/or willingness of brokers or dealers to buy or sell our Common Stock, either directly or on behalf of their clients, may discourage potential stockholders from purchasing our Common Stock, or may adversely affect the ability of stockholders to sell their shares.

Financial Industry Regulatory Authority (“FINRA”) sales practice requirements may also limit a stockholder’s ability to buy and sell our Common Stock, which could depress the price of our Common Stock.

In addition to the “penny stock” rules described above, FINRA has adopted rules that require a broker-dealer to have reasonable grounds for believing that the investment is suitable for that customer before recommending an investment to a customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives, and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. Thus, the FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our Common Stock, which may limit your ability to buy and sell our shares of Common Stock, have an adverse effect on the market for our shares of Common Stock, and thereby depress our price per share of Common Stock.

The elimination of monetary liability against our directors, officers, and employees under Nevada law and the existence of indemnification rights for our obligations to our directors, officers, and employees may result in substantial expenditures by us and may discourage lawsuits against our directors, officers, and employees.

Our Articles of Incorporation contain a provision permitting us to retaineliminate the personal liability of our directors to us and attract talented and skilledour stockholders for damages for the breach of a fiduciary duty as a director or officer to the extent provided by Nevada law. We may also have contractual indemnification obligations under any future employment agreements with our officers or agreements entered into with our directors. The foregoing indemnification obligations could result in us incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which could adversely affectwe may be unable to recoup. These provisions and the resulting costs may also discourage us from bringing a lawsuit against directors and officers for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our business.stockholders against our directors and officers even though such actions, if successful, might otherwise benefit us and our stockholders.

Item 1B. Unresolved Staff CommentsWe may issue additional shares of Common Stock or preferred stock in the future, which could cause significant dilution to all stockholders.

NoneOur Articles of Incorporation authorize the issuance of up to 95,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, with a par value of $0.001 per share. As of July 20, 2018, we had 63,310,522 shares of Common Stock, outstanding; however, we may issue additional shares of Common Stock or preferred stock in the future in connection with a financing or an acquisition. Such issuances may not require the approval of our stockholders.  Any issuance of additional shares of our Common Stock, or equity securities convertible into our Common Stock, including but not limited to, preferred stock, warrants, and options, will dilute the percentage ownership interest of all stockholders, may dilute the book value per share of our Common Stock, and may negatively impact the market price of our Common Stock.

Anti-takeover effects of certain provisions of Nevada state law hinder a potential takeover of us.

Nevada has a business combination law that prohibits certain business combinations between Nevada corporations and “interested stockholders” for three years after an “interested stockholder” first becomes an “interested stockholder,” unless the corporation’s board of directors approves the combination in advance. For purposes of Nevada law, an “interested stockholder” is any person who is (i) the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the outstanding voting shares of the corporation or (ii) an affiliate or associate of the corporation and at any time within the three previous years was the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the then outstanding shares of the corporation. The definition of the term “business combination” is sufficiently broad to cover virtually any kind of transaction that would allow a potential acquirer to use the corporation’s assets to finance the acquisition or otherwise to benefit its own interests rather than the interests of the corporation and its other stockholders.

The effect of Nevada’s business combination law is potentially to discourage parties interested in taking control of us from doing so if they cannot obtain the approval of our Board. Both of these provisions could limit the price investors would be willing to pay in the future for shares of our Common Stock.

Because we do not intend to pay any cash dividends on our Common Stock, our stockholders will not be able to receive a return on their shares unless they sell them.

We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. Declaring and paying future dividends, if any, will be determined by our Board, based upon earnings, financial condition, capital resources, capital requirements, restrictions in our Articles of Incorporation, contractual restrictions, and such other factors as our Board deems relevant. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them. There is no assurance that stockholders will be able to sell shares when desired or for prices that they deem acceptable.

Item 1B. Unresolved Staff Comments

The disclosures are not applicable to us.

Item 2. Properties

The following table provides certain summary information about our real estate properties as of December 31, 2014:

Our principal office is located at 3275 South Jones Boulevard, Las Vegas, Nevada, where we occupy 3,250 square-feet subject to a monthly lease payment of $5,500.  The current lease is for a term of 18 months, expires on May 31, 2019, and is renewable at our option.

We currently are using office space, providedhold a triple net leasehold interest in a 17,298 square-foot building located at 2310 Western Avenue, Las Vegas, Nevada. The lease is for an initial term of 10 years, with a 12-month rent abatement. The commencement date of the lease is June 29, 2017. The lease includes two options to us by our co-CEO Shawn Chemtov, atextend, each for an additional 5 years. The lease grants Tenant an option to purchase the property on or after the 25^th month of the lease and continuing through the 60^th month of the lease for the sum of $2,607,880. Currently, we have no cost.intention to exercise the purchase option.

Item 3. Legal Proceedings

ThereAs of the date of this Annual Report on Form 10-K, there are no legal proceedings which are pending or have been threatened against us or any of our officers, directors or control persons of which management is aware.

Item 4. 4. Mine Safety Disclosures

NotThe disclosures are not applicable to us.

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