~~4141 NE 2nd Avenue, Suite 204-A, Miami, Florida 33137~~3275 South Jones Blvd, Las Vegas, NV 89146
(Address of principal executive offices)

~~(305) 455-1881~~(702) 879-4440
(Registrant’s telephone number, including area code)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yeso ☐ Noþ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yeso ☐ Noþ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesþNoo ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YesþNoo ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the securities act.o

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso ☐ Noþ

The aggregate market value of the voting and non-voting shares of the Company’s Common Stock held by non-affiliates based on the last sale of the Common Stock on June 30, ~~2016,~~2017, was ~~$2,108,844.~~$721,992.

The number of shares outstanding of the issuer’s Common Stock as of ~~March~~July 20, ~~2017,~~2018, was ~~12,227,939.~~63,310,522.

In this Annual Report on Form 10-K, unless the context otherwise requires, the terms “MJ Holdings, Inc.” “MJ Holdings,” “we,” “us,” “our” and the Company refer to MJ Holdings, Inc., formerly Securitas EDGAR Fiilngs, Inc.

In addition to historical information, this Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are those that predict or describe future events or trends and that do not relate solely to historical matters. You can generally identify forward-looking statements as statements containing the words “believe,” “expect,” “will,” “anticipate,” “intend,” “estimate,” “project,” “assume” or other similar expressions, although not all forward-looking statements contain these identifying words. All statements in this report regarding our future strategy, future operations, projected financial position, estimated future revenue, projected costs, future prospects, and results that might be obtained by pursuing management’s current plans and objectives are forward-looking statements. You should not place undue reliance on our forward-looking statements because the matters they describe are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond our control. Important risks that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report and in our subsequent filings with the SEC. Our forward-looking statements are based on the information currently available to us and speak only as of the date on which this report was filed with the SEC. We expressly disclaim any obligation to issue any updates or revisions to our forward-looking statements, even if subsequent events cause our expectations to change regarding the matters discussed in those statements. Over time, our actual results, performance or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, and such difference may be significant and materially adverse to our stockholders.

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. ~~Until February 2014, we~~Prior to the formation of Securitas EDGAR Filings Inc., the business was operated as anXpedient EDGAR ~~filing agent, wherein we assisted companies in preparing and filing periodic reports with the United States Securities and Exchange Commission (“SEC”)~~Filings, LLC, a Florida Limited Liability Company, formed on ~~the~~October 31, 2005. On November 21, 2005, Xpedient EDGAR ~~(electronic data gathering analysis retrieval) platform.~~Filings LLC amended its Articles of Organization to change its name to Securitas EDGAR Filings, LLC. On January, 21 2009, Securitas EDGAR Filings LLC merged into Securitas EDGAR Filings, Inc., a Nevada corporation. On February 14, 2014, we amended and restated our Articles of Incorporation and changed our ~~business model.~~

~~All references to “MJ Holdings” the “Company,” “we,” “our” or “us” in this report are~~name to MJ Holdings, Inc.

~~MJ Holdings~~From February 2014 to January 2017, we owned and leased real estate properties zoned for legalized marijuana operations to licensed operators in the regulated cannabis industry. Additionally, we are developing desktop and mobile social, meet-up and health and wellness applications. We have been able to charge rents at a premium to current market rents as certain landlords have been resistant to lease to marijuana ~~operators due to its legal status under federal law.~~

~~To date, we have financed our real estate acquisitions through the issuance of debt and equity.~~

On November 22, 2016, in connection with a plan to divest ourselves of our real estate business, we submitted to our ~~shareholders~~stockholders 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. Subsequent to the completion of the Exchange Offer, which closed on January 10, 2017, MJRE will serve as a holding company for the real estate assets and business previously owned by MJ Holdings. Shareholders who participated in the Exchange Offer received one MJRE common unit for each share of MJ Holdings common stock accepted in 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 real estate properties 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.

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 October 2016, in exchange for 52,732,969 shares of our common stock of the Company and a promissory note in the amount of $900,000. The ~~MJ Real Estate Partners separation~~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 corporate headquarters is ~~due~~located at 3275 South Jones Blvd Las Vegas, NV 89146 and our telephone number is (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 quoted on the OTC Markets Group, Inc.’s Pink® Open Market under the symbol “MJNE.”

Through our ~~inability~~acquisition of Red Earth and their wholly owned subsidiary, HDGLV, LLC (“HDGLV”) we expect to ~~scale~~commence legal marijuana cultivation activities in the third quarter of 2018 upon approval by the Nevada Department of Taxation of the transfer of a Provisional Cultivation License to Red Earth and ~~expand~~the required state and city approvals for our ~~real estate business as previously planned and~~cultivation facility. It is our intention to ~~engage~~grow 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 production management, and consulting services in ~~business opportunities where~~the regulated cannabis industry.

Through Red Earth, we ~~believe~~hold a provisional State of Nevada issued cannabis cultivation license, and through HDGLV, we ~~have greater growth opportunities~~hold a triple-net leasehold, with an option to buy, on a 17,298 square-foot building, which ~~capital~~ will be ~~more readily available.~~home to our cultivation facility.

Marijuana cultivation refers to the planting, tending, improving and harvesting of the flowering plant Cannabis, primarily for the production and consumption of 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.

Cannabis 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 a 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 December 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 Federal 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 under medical supervision.

As of December 2017, 30 states, and the District of Columbia, have 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 of marijuana. (California became the 9^th state to legalize adult recreational marijuana use in January 2018).

~~Our Digital Assets~~Decriminalization of marijuana varies by state. As of January 2018, 13 states have decriminalized the non-medical use and possession of marijuana for personal consumption. Decriminalization generally means that violators of local marijuana laws may be subject to civil penalty rather than face criminal prosecution. In three states, Idaho, South Dakota and Kansas, the cultivation, possession or use of marijuana is strictly prohibited and violators may be subject to criminal prosecution.

~~We operate~~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 to possess up to one ounce of marijuana flowers and one-eighth of an ounce of marijuana concentrates. Individuals are ~~developing mobile~~also permitted to grow up to six marijuana plants for personal use. In addition, businesses can legally, pursuant to state regulations, cultivate, process, dispense, distribute, and computer based applications focused on providing cannabis for medical use content and educational materials to licensed medical professionals, in addition to matching patients with medical professionals who are familiar with the therapeutic effects and indications of cannabinoids~~and making social connections by and between cannabis users.~~

We have not generated any revenue from our digital assets and do not anticipate generating revenues in the next six to nine months. Our goal is to develop a “freemium” based business model, where we offer our services for free in an effort to build and develop a user-base. We expect to generate revenues in the future through advertising and by marketing premium products and services to our growing user-base.

We expect to attract the majority of our users through word-of-mouth, search engine, social media and other free channels. We believe that by aggregating compelling content we can generate traffic to our websites. We further believe that if we are successful in recruiting medical professionals as advisors who will promote the use of cannabis for medical use, we can build public awareness and drive engagement.

The ~~medical information~~dichotomy between federal and ~~content industry~~state laws has also limited the access to banking and other financial services by marijuana businesses. 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 states the marijuana business is ~~extremely competitive. We compete~~following the government’s guidelines with ~~mainstream companies as well as a number of other companies~~regard to revenue that ~~are directing their efforts~~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 ~~cannabis space. In addition~~widespread refusal of the banking industry to ~~other online brands, we compete indirectly with offline~~offer banking services ~~such as in-person caregivers in addition~~ to ~~internet forums~~marijuana businesses operating within state and ~~social media platforms.~~local laws.

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 ~~our ability~~have laws legalizing medical marijuana and recreational marijuana in small amounts, there may be a direct and adverse impact to ~~compete successfully will depend primarily upon the following factors:~~

~~We don’t own any intellectual property, other than common law rights to our logo and trade dress. As we develop~~ our business and ~~products, we expect~~ our ~~intellectual property rights, including trademarks, domain names~~revenue and ~~other intellectual property, will be critical to our success.~~profits.

~~Government regulation~~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 place until September 30, 2018.

We are ~~subject to foreign~~monitoring the Trump administration’s, the DOJ’s and ~~domestic~~Congress’ positions on federal marijuana law and policy. Based on public statements and reports, we understand that certain aspects of those laws and policies are currently under review, but no official changes have been announced. It is possible that certain changes to existing laws or policies could have a negative effect on our business and results of operations.

We currently operate medical marijuana businesses 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, ~~that~~marijuana is illegal under federal law. We believe we operate our business in compliance with applicable state laws and regulations. Any changes in federal, state or local law enforcement regarding marijuana may affect ~~companies conducting~~our ability to operate our business. Strict enforcement of federal 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’s assets are a provisional cultivation license to grow marijuana within the City of Las Vegas in the State 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 cultivation and an 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 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 provide no assurances on the ~~internet, generally, including laws relating~~receipt and/or timing of the final approvals.

We may face substantial competition in the operation of cultivation facilities in Nevada. Numerous other companies have also been granted cultivation licenses, and, therefore, we anticipate that we will face competition from these other companies. Our management team has experience in successfully developing, implementing, and operating marijuana cultivation and related businesses in other legal cannabis markets. We believe our experience in cultivation and facility management will provide us with a competitive advantage over our competitors.

From inception (October 17, 2016) to December 31, 2017, we had not generated any revenues. Subject to the ~~liability~~receipt of ~~providers~~the required State of ~~online services for their operations~~Nevada and City of Las Vegas approvals, we expect to commence operation of our cultivation facility in Q3 2018 and realize revenues beginning in Q4 2018. There can be no assurance that we will receive the ~~activities of their users. As a result,~~requisite approvals or that we ~~could be subject to actions based on negligence, various torts and trademark and copyright infringement, among other actions.~~will generate meaningful revenues thereafter.

Because we receive, store and use information received from or generated by our users, we are also impacted by laws and regulations governing privacy, the storage, sharing, use, processing, disclosure and protection of personal data and data breaches,

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.”

The report of our independent registered public accounting firm that accompanies our audited consolidated financial statements includes a going concern explanatory paragraph in which such firm expressed substantial doubt about our ability to continue as a going concern.

Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of 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 timing of 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.

We have a limited operating history, which may make it difficult for investors to predict future performance based on current operations.

We have a limited operating history upon which investors may base an evaluation of our potential future performance. In particular, we have not proven that we can sell cannabis products in a manner 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 result, 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, results of operations, and financial condition. Our prospects must be considered in light of the risks, expenses, and difficulties frequently encountered by companies in the early stage of development. As a result of these risks, challenges, and uncertainties, the value of your investment could be significantly reduced or completely lost.

We will likely need additional capital to sustain our operations and will likely need to seek further financing, which we may not be able to obtain on acceptable terms or at all. If we fail to raise additional capital, as needed, our ability to implement our business model and strategy could be 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 raise capital when needed, our business, financial condition, and results of operations would be materially adversely affected, and we could be forced to reduce or discontinue 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 subject 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 products. If we are unable to successfully compete with existing companies and new entrants to the market this will have a negative impact on our business and financial condition.

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

Our viability will depend, in part, on our ability to develop and maintain the proprietary 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 ~~provide~~modify our products or processes or obtain a license for the ~~information required by this item.~~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 failure to do any of the 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 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 difficult to protect. We enter into confidentiality or non-disclosure agreements with our corporate partners, employees, consultants, outside scientific collaborators, developers, and other advisors. These agreements generally require that the 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 our exclusive property, and we enter into assignment agreements to 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 attract 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 expensive to attract, hire, and retain qualified managers and employees. Because of these factors, we may not be able to 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.

We may not be able to effectively manage our growth or improve our operational, financial, and management information systems, which would impair our results of operations.

In 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 to, the following:

Additionally, our strategy envisions a period of rapid growth that may impose a significant burden on our administrative and operational resources. Our ability to effectively manage growth will require us to substantially expand the capabilities of our administrative and operational resources and to attract, train, manage, and retain qualified management and other personnel. There can be no assurance that we will be successful in recruiting and retaining new employees or retaining existing employees.

We cannot provide assurances that our management will be able to manage this growth effectively. Our failure to successfully manage growth could result in our sales not increasing commensurately with capital investments or otherwise materially adversely affecting our business, financial condition, or results of operations.

If we are unable to continually innovate and increase efficiencies, our ability to attract new customers may be adversely affected.

In the area of innovation, we must be able to develop new technologies and products that appeal to our customers. This depends, in part, on the technological and creative skills of our personnel and on our ability to protect our intellectual property rights. We may not be successful in the development, introduction, marketing, and sourcing of new technologies or innovations, that satisfy customer needs, achieve market acceptance, or generate satisfactory financial returns.

We are dependent on the popularity of consumer acceptance of our product lines.

Our ability to generate revenue and be successful in the implementation of our business plan is 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 meet 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 conditions 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 would have a negative impact on our business.

Federal regulation and enforcement may adversely affect the implementation 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 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 federal regulatory position on cannabis may thus indirectly and adversely 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 be “greater enforcement” of federal laws regarding marijuana. Any such enforcement actions could have a negative effect on our business and results of operations.

On 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 and our 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 place until September 30, 2018.

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 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 assurance, 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 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 state enforcement of laws prohibiting possession and sale of medical or recreational marijuana.

Our website is visible 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 laws of those jurisdictions.

Marijuana is a Schedule-I controlled substance and is illegal under federal law. Even in those states in which the use of marijuana has been legalized, its use remains a violation of federal law. Since federal law criminalizing the use of marijuana preempts state laws that legalize its use, strict enforcement of federal law regarding marijuana would likely result in our inability to proceed with our business plan, especially in respect of our marijuana cultivation, production and dispensaries. In addition, our assets, including real property, cash, equipment and other goods, could be subject to asset forfeiture 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.

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.

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 medical marijuana industry are constantly changing, which could detrimentally affect our cultivation, and production operations

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 certain 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 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.

We may not obtain the necessary permits and authorizations to operate the medical marijuana business.

We 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. 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 business, which could have a material adverse effect on our business.

If we incur substantial liability from litigation, complaints, or enforcement actions, our financial condition could suffer.

Our participation in the medical marijuana industry may lead to litigation, formal or informal complaints, enforcement actions, and inquiries 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 in 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 subsidiaries.

We may have difficulty accessing the service of banks, which may make it difficult for us to operate.

Since the use of marijuana is illegal under federal law, many banks will not accept for deposit funds from businesses involved with the marijuana industry. Consequently, businesses involved in the marijuana industry often have difficulty finding a bank willing to accept their business. The inability to open or maintain bank accounts may make it difficult for us to operate 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 landlords, which could have a significant negative effect on our operations.

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

From time to time in the normal course of our business operations, we may become subject to litigation that 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 litigation that could negatively affect customer perception of our business, regardless of whether the allegations are valid or whether we are ultimately found liable. Insurance may not be available at all or in sufficient amounts to cover any liabilities with respect to these or other matters. A judgment or other liability in excess of our insurance coverage for any claims could adversely affect our business and the results of our 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 owned 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 as 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 our 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 products we provide. While we intend to maintain insurance for certain risks, the amount of our insurance coverage may not be adequate to cover all claims or liabilities, and we may be forced to bear substantial costs resulting from risks and uncertainties of our business. It is also not possible to obtain insurance to protect against all operational risks and liabilities. In particular, we may have difficulty obtaining insurance because we operate in the marijuana industry. The failure to obtain adequate insurance coverage on terms favorable to us, 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 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.

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 public 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 eliminate the personal liability of our directors to us and our 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 we 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 stockholders against our directors and officers even though such actions, if successful, might otherwise benefit us and our stockholders.

We may issue additional shares of Common Stock or preferred stock in the future, which could cause significant dilution to all stockholders.

Our 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.

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 ~~following table provides certain summary information about~~current lease is for a term of 18 months, expires on May 31, 2019, and is renewable at our ~~real estate properties held for disposition as of December 31, 2016:~~option.

We ~~currently are using office space, provided~~hold 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, at~~extend, 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.

~~There~~As 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 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our shares of common stock are currently quoted on the OTC Bulletin Board under the symbol MJNE. The following table sets forth the high and low closing bid prices of our common stock for the quarterly periods for the years ended December 31, ~~2016~~2017 and ~~2015.~~2016. These bid prices represent prices quoted by broker-dealers on the OTC Bulletin Board. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions, and may not represent actual transactions.

As of ~~March 15, 2016,~~July 20, 2018, there were 13103 shareholders of record. However, we believe that there are more beneficial holders of our common stock as beneficial holders may hold their stock in “street” name.

We did not pay any cash dividends on our common stock during ~~2016~~2017 or ~~2015~~2016 and have no intention of doing so in the foreseeable future. We intend to retain any earnings for use in our operations and the expansion of our business. Any future determination to declare and pay cash dividends will be made at the discretion of our board of directors, subject to applicable laws and will depend on our financial condition, results of operations, liquidity, capital requirements, general business conditions, any contractual restriction on the payment of dividends and other factors that our board of directors may deem relevant.

In connection with and contemporaneously with the Reverse Merger, in December 2017, we sold an aggregate of 3,524,496 shares of our common stock at a price of $0.75 per share for gross proceeds of $2,643,372 to 43 otherwise unaffiliated third parties. Between January 2018 and the date of this Annual Report, we sold an additional 762,000 shares of our common stock at a price of $0.75 per share for gross proceeds of $571,500 to 13 unaffiliated third parties. The proceeds of the common stock sales will be used to develop certain business opportunities, including but not limited to monetizing the acquired Red Earth asset.

The shares were sold and issued pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D promulgated thereunder (“Regulation D”) since, among other things, the transactions did not involve a public offering or a general solicitation and the securities were acquired for investment purposes only and not with a view to or for sale in connection with any distribution thereof.

During March and June 2018, we offered and sold 6,448 shares of Common Stock to two unaffiliated third parties in exchange for providing professional services to us. The issuances were made pursuant to the exemptions for registration afforded by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D, promulgated under the Securities Act.

All of the securities referenced in this section have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

We did not, nor did any affiliated purchaser, make any repurchases of our securities during the fourth quarter of the year ended December 31, 2017.

Smaller reporting companies are not required to provide the information required by this item.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following management’s discussion and analysis of financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes thereto included elsewhere in this report.

MJ Holdings, Inc. is a holding company whose subsidiaries provide infrastructure, consulting and ~~Plan of Operation~~construction services, in addition to holding, and managing third party state issued cultivation and production licenses.

MJ Holdings, Inc. was originally incorporated on November 17, 2006, as Securitas EDGAR Filings, Inc. under the laws of the State of ~~Nevada and until February 2014, we~~Nevada. Prior to the formation of Securitas EDGAR Filings Inc., the business was operated as anXpedient EDGAR ~~filing agent, wherein we assisted companies in preparing and filing periodic reports with the United States Securities and Exchange Commission (“SEC”)~~Filings, LLC, a Florida Limited Liability Company, formed on ~~the~~October 31, 2005. On November 21, 2005, Xpedient EDGAR ~~(electronic data gathering analysis retrieval) platform.~~Filings LLC amended its Articles of Organization to change its name to Securitas EDGAR Filings, LLC. On January, 21 2009, Securitas EDGAR Filings LLC merged into Securitas EDGAR Filings, Inc., a Nevada corporation. On February 14, 2014, we amended and restated our Articles of Incorporation and changed our ~~business model. Our fiscal year is a calendar year ending December 31.~~name to MJ Holdings, Inc.

~~Our principal executive offices are located at 4141 NE 2nd Avenue Suite 204A, Miami, Florida 33137,~~From February 2014 to January 2017, we owned and ~~our telephone number is (305) 455-1800.~~

~~Divestiture of Our Real Estate Business~~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 real estate business, we submitted to our shareholders 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. Subsequent to the completion of the Exchange Offer, which closed on January 10, 2017, MJRE will serve as a holding company for the real estate assets and business previously owned by MJ Holdings. Shareholders who participated in the Exchange Offer received one MJRE common unit for each share of MJ Holdings common stock accepted in the Exchange Offer.

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 October 2016, in exchange for 52,732,969 shares of common stock of the Company, par value $0.001 and a Promissory Note in the amount of $900,000. The ~~MJ Real Estate Partners separation~~merger was accounted for as a reverse merger, whereby Red Earth was considered the accounting acquirer and became a wholly-owned subsidiary of the Company. As a result of the acquisition, the members of Red Earth became the beneficial owners of approximately 88% of the Company’s common stock immediately following the acquisition, 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.

Our corporate headquarters is ~~due~~located at 3275 South Jones Blvd., Las Vegas, NV 89146, and our telephone number is (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 Form 10-K. Our common stock, par value $0.001 (the “Common Stock”), is quoted on the OTC Markets Group, Inc.’s listing service under the symbol “MJNE.”

~~We operate and are developing mobile and computer based applications focused on:~~

As of December 31, 2016, we had acquired three real estate properties in Colorado that are leased to state licensed marijuana operators and generated $57,978 in monthly rental income. The following table provides certain summary information about our real estate properties held for disposition as of December 31, 2016:

~~The Company does not and 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.~~

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The preparation of these consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur, could materially impact the consolidated financial statements. We believe that the following critical accounting policies reflect the more significant estimates and assumptions used in the preparation of the consolidated financial statements.

~~Before~~The Company recognizes revenue ~~can be recognized,~~from the sales of products or services rendered when the following four ~~basic~~revenue recognition criteria ~~must be~~have been met: persuasive evidence of an arrangement exists; the delivery has occurred or services have been rendered; the fee is fixed or determinable; and collectability is reasonably assured.

The ~~Company’s revenues~~Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities.

Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are ~~rental income generated by leasing acquired real estate properties~~not clearly and closely related to ~~licensed marijuana operators. All~~the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.

The Company leases ~~are classified as~~production and warehouse facilities and office space under operating leases. ~~Rental income is~~Operating lease agreements may contain rent escalation clauses, rent holidays or certain landlord incentives, including tenant improvement allowances. Rent expense with scheduled rent increases or landlord incentives are recognized on a straight-line basis over the ~~terms~~lease term, beginning with the effective lease commencement date, which is generally the date in which the Company takes possession of or controls the physical use of the leases. Straight-line rent is recognized for all tenants with contractual fixed increases in rent. Deferred rent receivable represents rental revenue recognized on a straight-line basis in excess of billed rents. Reimbursements from tenants for real estate taxes and other recoverable operating expenses are recognized as rental income in the period the applicable costs are incurred. property.

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance on deferred tax assets is established when management considers it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Tax benefits from an uncertain tax position are only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Interest and penalties related to unrecognized tax benefits are recorded as incurred as a component of income tax expense. The Company has not recognized any tax benefits from uncertain tax positions for any of the reporting periods presented.

Results of Operations ~~For~~for the Year Ended December 31, ~~2016 Compared~~2017

The Company’s historical financial statements prior to the ~~Year Ended~~reverse merger were replaced with the historical financial statements of Red Earth, the “accounting acquirer,” based on the accounting treatment for reverse merger transactions. Since Red Earth was established in October 2016 and had no results of operations during 2016, no comparisons to prior periods are available for the Company’s 2017 results of operations.

The Company has not generated any revenues from inception (October 17, 2016) to December 31, ~~2015~~2017. During the first quarter of 2018, we began accepting customer deposits for the sale, design, installation and/or construction of greenhouse solutions to be used in the cultivation process in the cannabis industry. We expect to begin generating revenues from these greenhouse projects during the fourth quarter of 2018.

~~Revenue~~General and administrative expenses were $270,267 for the year ended December 31, 2016, was $9,039 compared with revenue of $0 for the year ended December 31, 2015. Revenue for 2016 was generated as a result of interest income from a $150,000 investment in a $1,750,000 promissory note secured by the assignment of a mortgage on real estate property located in Miami, Florida. The promissory note paid interest at 12% per annum and provided for cash interest payments on a monthly basis, commencing on July 1, 2016. The outstanding principal amount and any unpaid interest were due on May 19, 2017. The promissory note contained a prepayment charge equal to six months of interest on the prepaid amount less interest paid to the date of such prepayment. In September 2016, the promissory note was repaid in full, including $3,600 of additional interest as a result of the prepayment.

~~General and administrative expenses~~ ~~for the year ended December 31, 2016, decreased by $164,718 to $92,600 compared with~~ general and administrative expenses consisted of ~~$257,318~~facility costs of $179,615, of which $104,565 was for ~~the year ended December 31, 2015. The decrease in general and administrative expenses during 2016 was primarily attributed to a reduction in~~non-cash deferred rent expense, professional fees ~~legal fees,~~of $53,480, conferences and ~~consulting services,~~travel expense of ~~which $139,134 was associated with non-cash stock-based compensation for consulting services in 2015.~~$24,481, and other administrative costs of $12,691.

We had a loss from continuing operations of $84,133, or a basic and diluted loss per share from continuing operations of less than $0.01, for the year ended December 31, 2016, compared with a net loss of $257,376, or a basic and diluted loss per share from continuing operations of $0.02, for the year ended December 31, 2015. The decrease of $173,243 in the loss from continuing operations for 2016 compared with 2015 was primarily driven by the decrease in operating expenses of $164,162, specifically the decreases in professional and consulting fees discussed above, and the increase in revenues of $9,039 related to the $150,000 investment in a real estate loan.

As of December 31, 2016, the real estate properties and corresponding assets and liabilities included in the Exchange Offer qualified as assets held for disposition, and the results of operations to be reported as discontinued operations for the current and prior periods presented.

The ~~following is a summary of the results of operations reported as discontinued operations for the years ended December 31, 2016 and 2015:~~

~~Revenues~~ for the year ended December 31, 2016, increased by $72,133 to $697,9997 compared with revenue of $625,864 for the year ended December 31, 2015. Revenues from discontinued operations were generated as a result of rental income from operating leases on three real estate properties held for disposition as of December 31, 2016. The increase in revenue for 2016 was primarily the result of rental income generated by our third real estate property acquired in May 2015 and increases in certain property expenses reimbursed to the Company.

~~Certain property expenses are reimbursable to the Company through our existing leasing arrangements. During the year ended December 31, 2016, the~~ Company recorded ~~$79,976~~$64,521 of ~~revenue pursuant to operating lease agreements to offset a portion of the~~

~~property expenses incurred during the respective periods compared with $57,223 of revenue recorded~~interest expense during the year ended December 31, ~~2015, to offset a portion of the property expenses incurred during the respective periods.~~

~~Property expenses~~ ~~consist of those costs~~2017. The interest expense was associated with ~~acquiring and leasing real estate properties held for disposition. These expenses include costs for commissions, appraisals, real property taxes, insurance, repairs and maintenance. For~~an investor’s advance of $350,000 to fund the ~~year ended December 31, 2016, we incurred property expenses~~acquisition of ~~$121,434 compared with $123,589~~a Provisional Grow License in February 2017. Interest expense for the year ~~ended December 31, 2015. The decrease~~was comprised of ~~$2,155 in property expenses for 2016 was primarily attributed to~~ a ~~decrease of $33,281 for property repairs and utility fees, partially offset by an increase of $31,142 in costs for real property taxes during 2016.~~

~~Depreciation expense~~ recorded for real estate properties held for disposition was $116,159 for the year ended December 31, 2016, compared with depreciation expense of $102,415 for the year ended December 31, 2015. The increase in depreciation expense for 2016 was primarily associated with a full year of depreciation recorded for the third real estate property acquired in May 2015.

Interest expense paid to related party, associated with promissory notes held on certain real estate properties held for disposition, for the year ended December 31, 2016, increased by $31,445 to $272,500 compared with interest expense of $241,055 for the year ended December 31, 2015. The increase in interest expense for 2016 was$50,000 fee due to ~~a full year~~the investor for consideration of ~~interest expense incurred on a $925,000 promissory note used to fund a real estate property acquisition in May 2015.~~

~~Interest expense associated with~~the advance and the amortization of debt issuance costs ~~decreased by $3,988 to $9,222 compared~~paid in conjunction with ~~interest expense of $13,210 for~~securing the year ended December 31, 2015. As of December 31, 2016, $2,135 of debt issuance costs are included on the Balance Sheet, netted against outstanding notes payables, within current liabilities held for disposition.$350,000 advance.

The following table summarizes the cash flows for the ~~years~~year ended December 31, ~~2016 and 2015:~~2017:

The Company had cash of ~~$463,773~~$2,513,863 at December 31, ~~2016,~~2017, compared with cash of ~~$303,368~~$0 at December 31, ~~2015, an increase of $160,405.~~2016. The increase in cash during ~~2016~~2017 was attributed to cash ~~generated from operating~~provided by financing activities of ~~$164,379,~~$2,953,851, partially offset by ~~$3,974~~$317,535 of cash used ~~for building improvements on one~~in investing activities and $122,453 of ~~the real estate properties held for disposition.~~cash used in operating activities.

~~We had net~~Net cash used in operating activities for ~~continuing operations of $82,859 for~~ the year ended December 31, ~~2016,~~2017, was $122,453, which consisted of a net loss ~~from continuing operations~~ of ~~$84,133,~~$334,788, plus an increase in prepaids and other assets of $22,883; partially offset by ~~depreciation~~non-cash expenses of ~~$667~~$169,086 and an increase in accounts payable and accrued liabilities of ~~$607.~~$66,132.

Net cash used in ~~operating~~investing activities ~~for continuing operations of $103,472 for~~during the year ended December 31, ~~2015,~~2017, was $317,535, which consisted of the purchase of a ~~net loss from continuing operations~~provisional grow license issued in the State of ~~$257,376, offset by non-cash stock compensation~~Nevada for $300,000 and building improvements of ~~$139,134, an increase in accounts payable and accrued liabilities of $14,659, and depreciation of $667.~~$17,535.

We had net cash provided by operating activities from discontinued operations of $247,238 for the year ended December 31, 2016, which consisted of net income from discontinued operations of $178,682, non-cash charges of $111,115; partially offset by an increase in working capital requirements of $42,559, consisting of an increase in accounts receivables and other assets of $30,956, a decrease in security deposits of $25,035 and an increase in accounts payable and accrued liabilities of $13,432.

We had net cash provided by operating activities from discontinued operations of $213,825 for the year ended December 31, 2015, which consisted of net income from discontinued operations of $145,595, non-cash charges of $95,469; partially offset by an increase in working capital requirements of $27,239, consisting of a decrease in accounts payable and accrued liabilities of $91,259, a decrease in security deposits of $6,842, and a decrease in prepaid assets and other assets of $70,862.

Pursuant to the terms of the lease agreement for the real estate property located in Aurora, Colorado, the Company agreed to contribute $150,000 to improvements to the property. During the year ended December 31, 2016, we paid $3,974 for building improvements to the property in Aurora, Colorado. As of December 31, 2016, the Company had paid $150,000 towards the improvements to the property in Aurora, Colorado.

During 2017, the ~~year ended December 31, 2015, we purchased a 3,828 square feet retail building~~Company raised $2,643,372 through the sale of shares of the Company’s common stock at $0.75 per share and will continue to raise capital in ~~Denver, Colorado for $771,750.~~2018 to fund the build out and development of our business operations. In addition, ~~we paid $123,393 for building improvements to property in Aurora, Colorado and $2,000 for computer equipment and software.~~

~~We had $914,366 in net cash provided by financing activities for~~ the ~~year ended December 31, 2015, as a result of~~Company received gross proceeds of ~~$925,000~~$350,000 from an investor advance to fund the ~~issuance~~purchase of a ~~promissory note,~~provisional grow license issued by the State of Nevada, partially offset by debt issuance costs of ~~$10,634, used~~$14,521 and the $25,000 distribution to ~~finance~~founding member.

The Company expects to begin generating revenues during the ~~purchase~~third quarter of ~~a third real estate property in May 2015.~~

2018 but will likely incur additional net losses during this time period. Although we can provide no assurances, we believe our cash on hand and our ability to raise additional capital will provide sufficient liquidity and capital resources to fund our business for the next twelve months. In the event we experience liquidity and capital resources constraints because of unanticipated operating losses, we may need to raise additional capital in the form of equity and/or debt financing. If such additional capital is not available on terms acceptable to us or at all then we may need to curtail our operations and/or take additional measures to conserve and manage our liquidity and capital resources, any of which would have a material adverse effect on our business, results of operations and financial condition.

We are subject to the legal proceedings described in “Item 3. Legal Proceedings” of this report. 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.

Neither inflation nor changing prices for the ~~years~~year ended December 31, ~~2015 and 2014~~2017 had a material impact on our operations.

The information required by this Item 8 is incorporated by reference herein from “Item 15. Exhibits and Financial Statement Schedules” of this report.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our ~~Co-Chief~~Chief Executive ~~Officers~~Officer and our ~~Principal~~Chief Financial Officer, to allow timely decisions regarding required disclosure.

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, ~~2016.~~2017. Based upon that evaluation, our ~~Co-Chief~~Chief Executive ~~Officers~~Officer and our ~~Principal~~Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of December 31, ~~2015.~~2017.

We are responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined by Securities Exchange Act Rule 13a-15(f). Our internal controls are designed to provide reasonable assurance as to the reliability of our financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Internal control over financial reporting has inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable, not absolute, assurance with respect to financial statement preparation and presentation. Further, because of changes in conditions, the effectiveness of internal control over financial reporting may vary over time.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Under the supervision and with the participation of our ~~Co-Chief~~Chief Executive ~~Officers~~Officer and our Chief Financial Officer, we have evaluated the effectiveness of our internal control over financial reporting as of December 31, ~~2016,~~2017, as required by Securities Exchange Act Rule 13a-15(c). In making our assessment, we have utilized the criteria set forth by the 2013 Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. We concluded that based on our evaluation, our internal control over financial reporting was not effective as of December 31, ~~2016.~~2017.

In connection with the preparation of our financial statements for the year ended December 31, 2017, due to resource constraints, material weaknesses became evident to management regarding our inability to generate all the necessary disclosure for inclusion in our filings with the Securities and Exchanges Commission due to the lack of resources and segregation of duties. We lack sufficient personnel with the appropriate level of knowledge, experience and training in GAAP to meet the demands for a public company, including the accounting skills and understanding necessary to fulfill the requirements of GAAP-based reporting. This weakness causes us to not fully identify and resolve accounting and disclosure issues that could lead to a failure to perform timely internal control and reviews. In addition, the Company has not established an audit committee, does not have any independent outside directors on the Company’s Board of Directors, and lacks documentation of its internal control processes.

The Company is neither an accelerated filer nor a large accelerated filer, as defined in Rule 12b-2 under the Exchange Act, and there is not otherwise included in this Annual Report an attestation report of the Company’s registered public accounting firm regarding

internal control over financial reporting. Management’s report was not required to be attested by the Company’s registered public accounting firm pursuant to Item 308(b) of Regulation S-K.

There were no changes in our internal control over financial reporting that occurred during the fourth quarter ended December 31, ~~2016, or subsequent to the date the Company completed its evaluation,~~2017, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. During 2018, as our business operations expand, the Company plans to hire additional employees and engage outside professionals to address the material weaknesses identified above.

The names of our directors and executive officers and certain information about them are set forth below:

~~Shawn Chemtov~~Paris Balaouraswas appointed ~~Co-CEO~~CEO and ~~a member~~Chairman of the Board of Directors of MJ Holdings, Inc. on December 15, 2017. Mr. Balaouras has significant experience in the ~~Registrant on February 10, 2014.~~development and operations of legal cannabis businesses, including license acquisition, facility management, cannabis cultivation and legislative initiatives. During the past five years Mr. Chemtov is an active commercial real estate developer who owns and manages a portfolio of income producing commercial and residential property. Mr. Chemtov is also the CEO of CMG Capital, a licensed mortgage lender, which he founded in 2004. CMG Capital is a direct correspondent lender and an FHA licensee and portfolio lender which has closed more than a billion dollars in residential and commercial property loans since its inception andBalaouras has raised over $100,000,000 for the development, construction and ~~is currently servicing approximately $50,000,000~~launch of cannabis related businesses in ~~real estate loans.~~Arizona, California and Nevada. Mr. ~~Chemtov~~Balaouras was the founding and managing partner of Acres Medical, LLC until February 2016. While with Acres Medical Paris was instrumental in raising investment capital for the acquisition of five Nevada Medical and Recreational Marijuana Establishment Certificates, the development and opening of a 20,000 sq. ft dispensary in Las Vegas, and the opening of a 37-acre cultivation facility in the Amargosa Valley, creating the largest cultivation site in the State of Nevada. In 2016, while serving as the Principal Officer at Natural Remedy Patient Center, Paris obtained an Arizona dispensary, cultivation and production license. Mr. Balaouras is a member of the ~~Florida Association~~NDA (Nevada Dispensary Association), ASA (Americans for Safe Access) and NORML (the National Organization for the Reform of ~~Mortgage Professionals and Entrepreneurs Organization respectively.~~Marijuana Laws).

~~Adam Laufer~~John R. Wheeler, Jr. has over 40 years of experience in accounting and 10 years with companies in the cannabis industry. Mr. Wheeler graduated from the University of Arizona with a Bachelors in Accounting and received his CPA license in 1979. Starting his career, Mr. Wheeler worked for the IRS for 6 years and later worked for multiple CPA companies in California for 10 years. For the last 27 years, Mr. Wheeler ran his own CPA companies: Rocky Wheeler CPA and Wheeler & Associates CPA’s.

Andrew Boutsikakis has over 15 years of sales experience in financial services, communications and business development. In 2014 Mr. Boutsikakis formed AB Consulting Group to focus his efforts in the emerging medical marijuana industry in Nevada and Arizona. AB Consulting provided corporate consulting services primarily in sales, licensing and mergers & acquisition to the legal cannabis industry. Previously, Andrew was ~~appointed~~the sales director at Markets Media and director of business development at Cohere Communication. In March of 2017, Mr. Boutsikakis became a consultant for Red Earth, LLC and joined MJ Holdings, Inc as ~~Co-CEO~~their President in December 2017.

We do not currently have any significant employees other than our executive officers.

There are no familial relationships by and ~~a member of~~between Mr. Balaouras and any director, executive officer, or person nominated or chosen by the ~~Board of Directors of the registrant on February 10, 2014. Mr. Laufer, is an entrepreneur and corporate securities attorney. In 2013, Mr. Laufer, prior~~Company to ~~his resignation as CEO and~~become a director of Soleil Capital LP (OTC:JOBI,) successfully negotiated and executed the acquisition of a portfolio of electronic cigarette and personal vaporizer patents. In 2009, Mr. Laufer executed a reverse merger transaction with Vapor Corp. (OTC:VPCO), an electronic cigarette company. And from 2009-2013, Mr. Laufer continued to serve the electronic cigarette company as an advisor; consulting on matters of corporate strategy and regulatory issues related to electronic cigarette products, during which time the company’s revenues grew from approx $1M to approx $23M. Mr. Laufer has significant experience in working with, start-up and development stage businesses in defining their corporate strategy, identifying funding and growth opportunities, and in implementing liquidity strategies. Mr. Laufer is a member in good standing of the Florida Bar.or executive officer.

Our board does not have a standing audit committee, a compensation committee, or a nominating and governance ~~committee.~~committee, or committees performing similar functions, and, therefore, the entire board of directors performs such functions. The Company’s common stock is not currently listed on any national exchange and we are not required to maintain such committees by any self-regulatory agency. Management does not believe it is necessary for the board of directors to appoint such committees because the volume of matters that currently and historically has come before the board of directors for consideration permits each director to give sufficient time and attention to such matters to be involved in all decision making.

The Company does not currently have an audit committee financial expert. Management does not believe it is necessary to for the board of directors to designate an audit committee financial expert at this time due to our limited operating history and the limited volume of matters that come before the board of directors requiring such an expert.

Our board does not have any non-employee directors and no additional compensation is paid to any of our employee directors for serving as a director.

We are a voluntary filer and Section 16(a) of the Securities Exchange Act of 1934, as amended, is not applicable to us.

The Company has adopted a code of ethics within the meaning of Item 406 of Regulation S-K promulgated under the Securities Act of 1933, as amended, titled, “Business Conduct: “Code of Conduct and Policy,” that applies to all of the ~~Company’s~~Company's employees, including its principal executive officer, principal financial officer and principal accounting officer, and the Board. The Company intends to disclose any changes in or waivers from its code of ethics by posting such information on its website or by filing a Current Report on Form 8-K.

The following table provides certain summary information concerning the compensation earned for services rendered to the Company for the fiscal years ended December 31, ~~2016~~2017 and ~~2015,~~2016, by our Chief Executive Officer and our two other most highly compensated executive officers (the “named executive officers”) who served in such capacities at the end of the fiscal year ended December 31, ~~2016.~~2017. Except as provided below, none of our named executive officers received any other compensation required to be disclosed by law in excess of $10,000 annually.

The following table provides information with respect to outstanding stock option awards for shares of our common stock classified as exercisable and unexercisable as of December 31, ~~2016,~~2017, for the named executive officers.

The following table sets forth information regarding the beneficial ownership of our common stock as of ~~March~~July 20, ~~2017, and reflects the reduction of 1,800,000 shares outstanding as a result of the Exchange Offer accepted in January 2017:~~2018:

Except as otherwise indicated, each person and each group shown in the table has sole voting and investment power with respect to the shares of common stock indicated. For purposes of the table below, in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, a person is deemed to be the beneficial owner, of any shares of our common stock over which he or she has or shares, directly or indirectly, voting or investment power or of which he or she has the right to acquire beneficial ownership at any time within 60 days. As used in this ~~prospectus,~~Annual Report, “voting power” is the power to vote or direct the voting of shares and “investment power” includes the power to dispose or direct the disposition of shares. Common stock beneficially owned and percentage ownership was based on ~~12,227,939~~63,310,522 shares outstanding on ~~March 15, 2017, plus 166,665 shares deemed outstanding pursuant to Rule 13d-3, for a total of 12,394,604 shares outstanding.~~July 20, 2018.

~~Unless otherwise indicated, the address for each person is our address at 4141 NE 2nd Avenue Suite #204A., Miami, Florida 33137.~~

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The following is a description of transactions since ~~January 1, 2015,~~October 17, 2016, to which we have been a party in which:

On December 15, 2017, as part of the Reverse Merger transaction, the Company ~~acquired real estate property in Denver, Colorado for $2,214,000. The acquisition was partially funded with proceeds from the issuance of~~issued a ~~secured promissory~~convertible note payable in the amount of ~~$1,800,000. The promissory note is held by Chemtov Mortgage Group (“CMG”), an entity wholly-owned by~~$900,000 to the now-former members of Red Earth. At the time of the transaction, Paris Balaouras, the Company’s ~~co-CEO, Shawn Chemtov. CMG has assigned all ownership~~Chief Executive Officer, was a 50% partner and ~~security interest granted to it pursuant to the promissory note to 5353 Mortgage Loan, LLC, a single purpose entity created solely for the purpose~~managing member of this transaction. CMG invested $100,000 of the $1,800,000 of funds used to finance the purchase of the promissory note. CMG acts as the loan servicing entity for the promissory note, administering the note, processing payments from the Company, and transferring all payments to 5353 Mortgage Loan, LLC. CMG charges no administration fees for servicing the promissory note. During the years ended December 31, 2016 and 2015, the Company paid $180,000 and $180,000, respectively, of interest to CMG pursuant to the promissory note held by CMG.Red Earth.

In ~~May 2015~~December 2017, upon completion of the Company acquired real estate property in Denver, Colorado for $771,750. The acquisition was funded with proceeds from the issuance of a secured promissory note in the amount of $925,000. The promissory note is held by CMG, an entity wholly-owned byReverse Merger, the Company’s ~~co-CEO, Shawn Chemtov. CMG has assigned all ownership and security interest granted to it pursuant to~~$400,000 debt obligation was assumed by Paris Balaouras, the ~~promissory note to a single purpose entity created solely for~~Chief Executive Officer of the ~~purpose of this transaction. CMG acts as the loan servicing entity for the promissory note, administering the note and processing payments from the~~ Company. CMG charges no administration fees for servicing the promissory note. During the years ended December 31, 2016 and 2015, the Company paid $92,500 and $53,346, respectively, of interest to CMG pursuant to the promissory note held by CMG.

In May 2016, the Company invested $150,000 in a $1,750,000 promissory note secured by the assignment of a mortgage on real estate property located in Miami, Florida. The mortgage was held by CMG, an entity wholly-owned by the Company’s co-CEO, Shawn

Chemtov. The Company did not incur any loan origination fees or any other costs associated with the mortgage investment. The promissory note paid interest at 12% per annum and provided for cash interest payments on a monthly basis, commencing on July 1, 2016. The outstanding principal amount and any unpaid interest were due on May 19, 2017. The promissory note contained a prepayment charge equal to six months of interest on the prepaid amount less interest paid to the date of such prepayment. In September 2016, the promissory note was repaid in full, including $3,600 of additional interest as a result of the prepayment. During 2016, the Company recorded $9,039 of revenue generated by interest income from the $150,000 real estate loan.

Our business and affairs are managed under the direction of the board of directors. Our board of directors is currently comprised of ~~two members, Messrs. Chemtov and Laufer.~~one member, Mr. Paris Balaouras. Because of ~~their relationships with us, none of them are~~his relationship to the Company, Mr. Balaouras is not “independent” under the rules of any national securities exchange or Rule 10A-3 under the Securities Exchange Act of 1934, ~~or the Exchange Act.~~as amended.

Paritz & Company, P.A. (“Paritz”) has served as the Company’s independent registered public accounting firm for the years ended December 31, ~~2016~~2017 and ~~2015.~~2016. In accordance with the requirements of the Sarbanes-Oxley Act of 2002, all audit and audit-related services and all non-audit services performed by our current independent public accounting firm are approved in advance by our Board of Directors, including the proposed fees for any such service, in order to assure that the provision of any such service does not impair the accounting firm’s independence. The Board of Directors is informed of each service actually rendered.

The following table sets forth fees billed, or expected to be billed, to the Company by the Company’s independent auditors for the years ended December 31, ~~2016~~2017 and ~~2015,~~2016, for (i) services rendered for the audit of the Company’s annual financial statements and the review of the Company’s quarterly financial statements; (ii) services rendered that are reasonably related to the performance of the audit or review of the Company’s financial statements that are not reported as Audit Fees; (iii) services rendered in connection with tax preparation, compliance, advice and assistance; and (iv) all other services:

~~Consolidated Statement of Operations for the years ended December 31, 2016 and 2015~~

~~Consolidated Statement of Changes in Stockholders’ Equity for the years ended December 31, 2016 and 2015~~

~~Consolidated Statements of Cash Flows for the years ended December 31, 2016 and 2015~~

~~All other schedules~~Schedules are omitted because they are not applicable, or because the required information is included in the financial statements or notes thereto.

We have audited the accompanying consolidated balance sheets of MJ Holdings, Inc. (the “Company”) as of December 31, ~~2016~~2017 and ~~2015,~~2016, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the ~~years then ended. Our audit also includes~~year ended December 31, 2017 and for the period from inception (October 17, 2016) to December 31, 2016, and the related notes (collectively referred to as the financial ~~statement schedule listed~~statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for the year ended December 31, 2017 and for the period from inception (October 17, 2016) to December 31, 2016, in conformity with accounting principles generally accepted in the ~~index at Item 15. MJ Holding’s management is responsible for these~~United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 4 to the financial statements, 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 timing of final approvals from the appropriate authorities. The Company has not generated any revenues from inception (October 17, 2016) to December 31, 2017 and has an accumulated deficit of $362,521. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are described in Note 4. The financial ~~statement schedule.~~statements do not include any adjustments that might result from the outcome of this uncertainty.

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on ~~these~~the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the ~~Public Company Accounting Oversight Board (United States).~~PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material ~~misstatement.~~misstatement, whether due to error or fraud. The ~~company~~Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. ~~Our audit included consideration~~As part of our audits, we are required to obtain an understanding of internal control over financial reporting, ~~as a basis for designing audit procedures that are appropriate in the circumstances,~~ but not for the purpose of expressing an opinion on the effectiveness of the ~~company’s~~Company’s internal control over financial reporting. Accordingly, we express no such opinion. ~~An audit also includes~~

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence ~~supporting~~regarding the amounts and disclosures in the financial ~~statements, assessing~~statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial ~~statement presentation.~~statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of MJ Holdings, Inc. as of December 31, 2016 and 2015, and the results of its operations and its cash flows for each of the years in the two year period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America./s/ Paritz& Company, P.A.

~~The accompanying financial statements referred to above~~We have ~~been prepared assuming that MJ Holdings, Inc. will continue~~served as a going concern. As discussed in note 4 to the financial statements, the Company announced its plans to divest their real estate properties and associated business. During the year ended December 31, 2016, the Company generated a loss from continuing operations of $84,133 and used $82,859 of cash from operating activities. Subsequent to the divesture of its real estate business in January 2017, the Company does not expect to generate revenues for the next six to nine months. These factors, among others, raise substantial doubt regarding the Company’s ~~ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.~~auditor since 2011.

~~/s/Paritz & Company, P.A.~~

~~Hackensack, NJ~~

~~March 30, 2017~~F-1

MJ Holdings, Inc.

Consolidated Balance Sheets

As of December 31, ~~2016~~2017 and ~~2015~~2016

	2016			2015			2017			2016
Assets
Current assets:
Cash	$	463,773		$	303,368		$	2,513,863		$	—
Accounts receivable		30,187			—
Prepaid assets		6,862			6,093			5,500			—
Current assets held for disposition		54,419			68,521
Total current assets		555,241			377,982			2,519,363			—
Property and equipment, net of accumulated depreciation of $778 and $111		1,222			1,889
Deposits								42,383			25,000
Intangible assets, net of accumulated amortization of $0								300,000			—
Property and equipment, net of accumulated depreciation of $0								17,535			—
Noncurrent assets held for disposition		3,807,782			3,891,600			584			—
Total Assets	$	4,364,245		$	4,271,471		$	2,879,865		$	25,000

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	130,889		$	118,983		$	70,382		$	—
Accrued liabilities due to related party		2,132			—
Current liabilities held for disposition		2,722,865			1,795,902
Convertible note payable due to related party								900,000			—
Total current liabilities		2,855,886			1,914,885			970,382			—
Security deposits		70,168			95,203
Noncurrent liabilities held for disposition		—			917,741
Deferred rent								104,565			—
Total Liabilities		2,926,054			2,927,829			1,074,947			—

Commitments and contingencies

Stockholders’ Equity
Preferred stock, par value $0.001, 5,000,000 shares authorized; 0 shares issued and outstanding		—			—			—			—
Common stock, par value $0.001, 95,000,000 shares authorized; 14,027,939 shares issued and outstanding		14,028			14,028
Common stock, par value $0.001, 95,000,000 shares authorized; 62,675,407 and 52,732,969 shares issued and outstanding as of December 31, 2017 and 2016, respectively								62,675			52,733
Additional paid-in capital		2,779,105			2,779,105			1,704,764			—
Common stock to be issued of 533,333 shares								400,000			—
Accumulated deficit		(1,354,942	)		(1,449,491	)		(362,521	)		(27,733	)
Total Stockholders’ Equity		1,438,191			1,343,642			1,804,918			25,000
Total Liabilities and Stockholders’ Equity	$	4,364,245		$	4,271,471		$	2,879,865		$	25,000

See accompanying notes to financial statements

F-2

MJ Holdings, Inc.

Consolidated Statements of Operations

~~For the years ended December 31, 2016 and 2015~~

2016 2015
Revenues:
Interest income from real estate loan $ 9,039 $ —

Operating Expenses:
General and administrative expenses 92,600 257,318
Depreciation expense 667 111
Total operating expenses 93,267 257,429

Operating loss (84,228 ) (257,429 )

Other income 95 53

Loss before income taxes (84,133 ) (257,376 )

Provision for income taxes — —

Loss from continuing operations, net of tax (84,133 ) (257,376 )

Income from discontinued operations, net of tax 178,682 145,595

Net income (loss) $ 94,549 $ (111,781 )

Basic and diluted net income (loss) per common share:
Continuing operations $ (0.00 ) $ (0.02 )
Discontinued operations 0.01 0.01
Net income (loss) per common share $ 0.01 $ (0.01 )

Weighted average shares outstanding, basic and diluted 14,027,939 13,958,592

	For the Year Ended December 31, 2017			From Inception (October 17, 2016) to December 31, 2016
Net revenues	$	—		$	—

Operating Expenses:
General and administrative expenses		270,267			—
Total operating expenses		270,267			—

Operating loss		(270,267	)		—

Interest expense		(64,521	)		—

Loss before provision for income taxes		(334,788	)		—

Provision for income taxes		—			—

Net loss	$	(334,788	)	$	—

Basic and diluted net loss per common share:
Weighted average shares outstanding		53,149,168			52,732,969
Net loss per common share	$	(0.01	)	$	0.00

See accompanying notes to financial statements

F-3

MJ Holdings, Inc.

Consolidated Statements of Changes in Stockholders’ Equity

For the ~~years~~year ended December 31, ~~2016~~2017 and ~~2015~~from Inception (October 17, 2016) to December 31, 2016

Preferred Stock Common Stock Additional
Accumulated
Deficit
Total
Shares Amount Shares Amount Paid-in
Capital Stockholders’
Equity
Balance at January 1, 2015 — $ — 13,878,522 $ 13,879 $ 2,640,120 $ (1,337,710 ) $ 1,316,289

Common stock issued for services — — 149,417 149 138,985 — 139,134
Net Loss — — — — — (111,781 ) (111,781 )
Balance at December 31, 2015 — $ — 14,027,939 $ 14,028 $ 2,779,105 $ (1,449,491 ) $ 1,343,642

Net income — — — — — 94,549 94,549
Balance at December 31, 2016 — $ — 14,027,939 $ 14,028 $ 2,779,105 $ (1,354,942 ) $ 1,438,191

	Preferred Stock			Common Stock				Common Stock to be		Additional Paid-in			Accumulated			Total Stockholders’
	Shares		Amount	Shares		Amount		Issued		Capital			Deficit			Equity
Balance at Inception (October 17, 2016)	—	$	—	—	$	—	$	—	$	—		$	—		$	—

Common stock issued to founder	—		—	52,732,969		52,733		—		(25,000	)		(27,733	)		—
Capital contribution	—		—	—		—		—		25,000			—			25,000

Balance at December 31, 2016	—		—	52,732,969		52,733		—		—			(27,733	)		25,000

Distribution	—		—	—		—		—		(25,000	)		—			(25,000	)
Effect of reverse merger	—		—	6,951,275		6,951		—		(510,617	)		—			(503,666	)
Issuance of common stock in private placement	—		—	2,991,163		2,991		—		2,240,381			—			2,243,372
Common stock subscribed, but not issued	—		—	—		—		400,000		—			—			400,000
Net loss	—		—	—		—		—		—			(334,788	)		(334,788	)

Balance at December 31, 2017	—	$	—	62,675,407	$	62,675	$	400,000	$	1,704,764		$	(362,521	)	$	1,804,918

See accompanying notes to financial statements

F-4

MJ Holdings, Inc.

Consolidated Statements of Cash Flows

~~For the years ended December 31, 2016 and 2015~~

2016 2015
Cash flow from operating activities:
Net income (loss) $ 94,549 $ (111,781 )
Less: income from discontinued operations, net of tax (178,682 ) (145,595 )
Loss from continuing operations, net of tax (84,133 ) (257,376 )
Adjustments to reconcile loss from continuing operations to net cash provided by operating activities:
Depreciation 667 111
Stock-based compensation — 139,134
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities 607 14,659
Net cash used in operating activities, continuing operations (82,859 ) (103,472 )
Net cash provided by operating activities, discontinued operations 247,238 213,825
Net Cash Provided by Operating Activities 164,379 110,353

Cash flow from investing activities:
Acquisition of computer equipment and software — (2,000 )
Investment in real estate loans receivable (150,000 ) —
Repayment of investment in real estate loans receivable 150,000 —
Net cash used in investing activities, continuing operations — (2,000 )
Net cash used in investing activities, discontinued operations (3,974 ) (895,143 )
Net Cash Used in Investing Activities (3,974 ) (897,143 )

Cash flow from financing activities:
Proceeds from notes payable - related party — 925,000
Payment of debt issuance costs — (10,634 )
Net Cash Provided by Financing Activities — 914,366

Net increase in cash 160,405 127,576

Cash at beginning of year 303,368 175,792
Cash at end of year $ 463,773 $ 303,368

Supplemental disclosure of cash flow information:
Cash paid for interest to related party $ 272,500 $ 233,346

	For the year ended December 31, 2017			From Inception (October 17, 2016) to December 31, 2016
Cash flow from operating activities:
Net loss	$	(334,788	)	$	—

Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt issuance costs		14,521			—
Amortization of deferred rent expense		104,565			—
Non-cash interest expense		50,000			—
Changes in operating assets and liabilities:
Prepaid assets		(5,500	)		—
Deposits		(17,383	)		(25,000	)
Accounts payable and accrued liabilities		66,132			—
Net Cash Used in Operating Activities		(122,453	)		(25,000	)

Cash flow from investing activities:
Purchase of provisional grow license		(300,000	)		—
Purchase of property, equipment, and building improvements		(17,535	)		—
Net Cash Used in Investing Activities		(317,535	)		—

Cash flow from financing activities:
Capital contribution		—			25,000
Distribution		(25,000	)		—
Proceeds from issuance of common stock		2,243,372			—
Proceeds from common stock to be issued		400,000			—
Proceeds from issuance of note payable		350,000			—
Payment of debt issuance costs		(14,521	)		—
Net Cash Provided by Financing Activities		2,953,851			25,000

Net increase in cash		2,513,863			—

Cash at beginning of year		—			—
Cash at end of year	$	2,513,863		$	—

Supplemental disclosure of cash flow information:
Cash paid for interest	$	—		$	—
Cash paid for income taxes	$	—		$	—

Supplemental disclosure of non-cash investing and financing activities:
Net liabilities incurred in connection with reverse merger	$	(503,666	)	$	—

See accompanying notes to financial statements

F-5

MJ Holdings, Inc.

Notes to the Consolidated Financial Statements

December 31, ~~2016~~2017

Note 1 — Description of Business

MJ Holdings, ~~owned~~Inc. is a holding company whose subsidiaries provide infrastructure, consulting and leased real estate to licensed operators in the regulated cannabis industry. Additionally, we are developing desktop and mobile social, meet-up and health and wellness applications. Our mobile and computer based applications are focused on providing cannabis for medical use content and educational materials to licensed medical professionals,construction services, in addition to ~~matching patients with medical professionals who are familiar with~~holding, and managing third party state issued cultivation and production licenses.

MJ Holdings, Inc. was originally incorporated on November 17, 2006, as Securitas EDGAR Filings, Inc. under the ~~therapeutic effects~~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 EDGAR Filings LLC merged into Securitas EDGAR Filings, Inc., a Nevada corporation. On February 14, 2014, we amended and ~~indications~~restated our Articles of ~~cannabinoids~~Incorporation and ~~making social connections by and between cannabis users.~~changed our name to MJ Holdings, Inc.

On November 22, 2016, in connection with a plan to divest ourselves of our real estate business, we submitted to our shareholders 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. ~~Subsequent~~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 real estate properties and its subsidiaries, through which the Company held 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 October 2016, in exchange for 52,732,969 shares of common stock of the Company, par value $0.001 and a Promissory Note in the amount of $900,000. The merger was accounted for as a reverse merger, whereby Red Earth was considered the accounting acquirer and became a wholly-owned subsidiary of the Company. As a result of the acquisition, the members of Red Earth became the beneficial owners of approximately 88% of the Company’s common stock immediately following the acquisition, 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 ~~Exchange Offer, which closed on January 10, 2017, MJRE~~reverse merger will ~~serve as a holding~~include the assets, liabilities and results of operations of the combined company ~~for~~from and after the ~~real estate assets and business previously owned by MJ Holdings. Shareholders who participated in~~closing date of the ~~Exchange Offer received one MJRE common unit for each share of MJ Holdings common stock accepted in the Exchange Offer.~~reverse merger.

The MJ Real Estate Partners separation was due to our inability to scale and expand our real estate business as previously planned and our intention to engage in business opportunities where we believe we have greater growth opportunities to which capital will be more readily available.

Note 2 — Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, ~~5353 Joliet,~~Red Earth, LLC, ~~MJ Havana,~~HDGLV, LLC, Icon Management, LLC, and ~~MJ Sheridan,~~Prescott Management, LLC. Intercompany balances and transactions have been eliminated in consolidation.

~~Reclassifications~~

Certain reclassifications of amounts previously reported have been made to the accompanying consolidated financial statements in order to maintain consistency and comparability between the periods presented, primarily related to discontinued operations discussed below in Note 3.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates and assumptions are required in the determination of the fair value of financial instruments and the valuation of long-lived and indefinite-lived assets. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates.

F-6

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy that requires classification based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:

	●	Level one - Quoted market prices in active markets for identical assets or liabilities;

	●	Level two - Inputs other than level one inputs that are either directly or indirectly observable; and

●

Level three - Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter.

Financial instruments include cash, payables, and debt obligations. Except as described below, due to the short-term nature of the financial instruments, there are no financial instruments measured at fair value on a recovery basis.

Warrants to Purchase Common Stock and Other Derivative Financial Instruments

We classify as equity any contracts that require physical settlement or net-share settlement or provide us a choice of net-cash settlement or settlement in our own shares (physical settlement or net-share settlement) provided that such contracts are indexed to our own stock. We classify as assets or liabilities any contracts that require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside our control) or give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). We assess the classification of warrants issued to purchase our

common stock and any other financial instrument at each reporting date to determine whether a change in classification between assets and liabilities is required.

Cash

Cash includes cash on hand and deposits placed with banks or other financial institutions, which are unrestricted as to withdrawal and use and with an original maturity of three months or less. The Company maintains its cash in bank deposit accounts.

The Company has cash in financial institutions in excess of Federally insured limits. However, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on its cash balances. Cash exceeding federally insured limits amounted to ~~$213,773 and $53,368~~$2,263,863 as of December 31, ~~2016 and 2015, respectively.~~2017.

~~Deferred Leasing Costs~~

Commissions and other direct costs associated with the acquisition of tenants, or lessees, are capitalized and amortized on a straight-line basis over the terms of the related leases. Costs associated with unsuccessful leasing opportunities are expensed as incurred.

Debt Issuance Costs

Costs associated with obtaining, closing, and modifying loans and/or debt instruments such as, but not limited to placement agent fees, attorney fees and state documentary fees are capitalized, netted against the carrying amount of the debt instrument, and charged to interest expense over the term of the loan.

~~Real Estate Property Held for Disposition~~

Real estate property is recorded at cost, less accumulated depreciation and amortization. Real estate property, excluding land, is depreciated using the straight-line method over the estimated useful life of the respective assets. Leasehold improvements are amortized using the straight-line method over the shorter of the related lease term or useful life. Maintenance, repairs, and minor improvements are charged to expense as incurred; major renewals and betterments that extend the useful life of the associated asset are capitalized. When real estate property is sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in results of operations for the period.

Long –lived Assets

Long-lived assets, including real estate property and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If the assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair value. We did not record any impairments of long-lived assets during the year ended December 31, 2017, and from inception (October 17, 2016) to December 31, 2016.

F-7

Revenue Recognition

The Company ~~records interest income~~has not generated any revenues for the year ended December 31, 2017, and from investments in real estate loans on an accrual basis over the life of the investment using the effective interest method. Direct loan origination fees and origination or acquisition costs, if applicable, are amortized over the term of the loan as an adjustmentinception (October 17, 2016) to ~~interest income.~~December 31, 2016.

Prior to the disposal of the real estate properties in the Exchange Offer, the Company recorded revenues from rental income generated by leasing acquired real estate properties to licensed marijuana operators. All leases are classified as operating leases. Rental income is recognized on a straight-line basis over the terms of the leases. Straight-line rent is recognized for all tenants with contractual fixed increases in rent. Deferred rent receivable represents rental revenue recognized on a straight-line basis in excess of billed rents. Reimbursements from tenants for real estate taxes and other recoverable operating expenses are recognized as rental income in the period the applicable costs are incurred.

Stock-Based Compensation

The Company estimates the fair values of share-based payments on the date of grant using a Black-Scholes option pricing model, which requires assumptions for the expected volatility of the share price of our common stock, the expected dividend yield, and a risk-free interest rate over the expected term of the stock-based financial instrument.

Since the number of outstanding and free-trading shares of the Company’s common stock is limited and the trading volume is relatively low, we do not have sufficient company specific information regarding the volatility of our share price on which to base an estimate of expected volatility. As a result, we use the average historical volatilities of similar entities within our industry as the expected volatility of our share price.

The expected dividend yield is 0% as the Company has not paid any dividends on its common stock and does not anticipate it will pay any dividends in the foreseeable future.

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant date with a remaining term equal to the expected term of the stock-based award.

For stock-based financial instruments issued to parties other than employees, we use the contractual term of the financial instruments as the expected term of the stock-based financial instruments.

The assumptions used in calculating the fair value of stock-based financial instruments represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future.

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities.

Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

Operating Leases

The Company leases production and warehouse facilities and office space under operating leases. Operating lease agreements may contain rent escalation clauses, rent holidays or certain landlord incentives, including tenant improvement allowances. Rent expense with scheduled rent increases or landlord incentives are recognized on a straight-line basis over the lease term, beginning with the effective lease commencement date, which is generally the date in which the Company takes possession of or controls the physical use of the property.

F-8

Income Taxes

~~Advertising Costs~~

~~Costs related to advertising are expensed as incurred and are included in general and administrative expenses.~~

~~Research and Development Costs~~

Costs related to research and development activities of new business units related to the regulated marijuana industry are expensed as incurred and are included in general and administrative expenses, totaling $4,144 and $3,905 for 2016 and 2015, respectively.

Recent Accounting Pronouncements

In ~~May 2014,~~December 2017, the Securities and Exchange Commission (“SEC”) released accounting guidance for the accounting for income taxes for the reporting period that includes the enactment of the Tax Act. The Bulletin provides guidance in those situations where the accounting for certain income tax effects of the Tax Act will be incomplete by the time financial statements are issued for the reporting period that includes the enactment date. For those elements of the Tax Act that cannot be reasonably estimated, no effect will be recorded. The SEC has provided in the Bulletin that in situations where the accounting is incomplete for certain effects of the Tax Act, a measurement period which begins in the reporting period that includes the enactment of the Tax Act and ends when the entity has obtained, prepared and analyzed the information is needed in order to complete the accounting requirements. The measurement period shall not exceed one year from enactment.

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued an accounting standard update related to accounting for leases. The guidance introduces a lessee model that requires most leases to be reported on the balance sheet. The accounting standard update aligns many of the underlying principles of the new lessor model with those in the FASB’s new revenue recognition standard. The guidance also eliminates the requirement in current U.S. GAAP for an entity to use bright-line tests in determining lease classification. This accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2020, with early adoption in fiscal 2019 permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements.

In May 2014, FASB issued guidance to clarify the principles for recognizing revenue. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a comprehensive framework for revenue recognition that supersedes current general revenue guidance and most industry-specific guidance. In addition, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. An entity should apply the

guidance either retrospectively to each prior reporting period presented or retrospectively with the cumulative adjustment at the date of the initial application. In July 2015, the FASB delayed the effective date of the new guidance to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is now permitted after the original effective date of December 15, 2016. The Company is still evaluating the impact of adopting the new accounting guidance but does not expect the adoption to have a material impact on its consolidated financial statements.

~~In August 2014, FASB~~Note 3 — Reverse Merger

On December 15, 2017, the Company acquired all of the issued ~~guidance that requires management to evaluate whether there are conditions or events that raise substantial doubt about~~and outstanding membership interests of Red Earth LLC, a Nevada limited liability company (“Red Earth”) established in October 2016, in exchange for 52,732,969 shares of common stock of the ~~entity’s ability to continue~~Company, par value $0.001 and a Promissory Note in the amount of $900,000. The merger was accounted for as a ~~going concern,~~reverse merger, whereby Red Earth was considered the accounting acquirer and ~~to provide certain disclosures when it is probable that~~became a wholly-owned subsidiary of the ~~entity will be unable to meet its obligations~~Company. As a result of the acquisition, the members of Red Earth became the beneficial owners of approximately 88% of the Company’s common stock immediately following the acquisition, obtained controlling interest of the Company, and retained key management positions of the Company. In accordance with the accounting treatment for a “reverse merger,” Red Earth was treated as ~~they become due within one year after~~ the ~~date that~~“acquiring company” and MJ Holdings was treated as the “acquired company.” The Company’s historical financial statements ~~are issued. The Company adopted this guidance for~~prior to the ~~annual period ending December 31, 2016, beginning~~reverse merger were replaced with the ~~first quarter ended March 31, 2016. The adoption~~historical financial statements of ~~this guidance primarily addressed certain disclosures~~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 ~~had no impact on our financial position,~~ results of operations ~~or cash flows.~~of the combined company from and after the closing date of the reverse merger.

In April 2015, the FASB issued guidance to simplify the presentation of debt issuance costs. This guidance provides that debt issuance costs related to a recognized liability be presented in the balance sheet as a direct reduction

F-9

The assets acquired and liabilities assumed recorded from the ~~carrying amount~~acquisition of that debt liability, consistent with debt discounts. The Company adopted this guidance with the annual and the interim period beginning January 1, 2016, and applied the standard on a retrospective basisMJ Holdings were recognized at their fair values as of the effective acquisition date, December ~~31, 2015. As of December 30, 2016~~15, 2017. The following table summarizes the fair values assigned to the assets acquired and 2015, we had $2,135 and $11,357, respectively, of debt issuance costs associated with $2.7 million of notes payable that were reclassified from other assets to a reduction in the carrying amount of the notes payable included in current and noncurrent liabilities ~~held for disposition. The adoption of this standard did not have a material impact on our financial position and did not impact our results of operations or cash flows.~~assumed:

~~Note 3 — Discontinued Operations~~

As of December 31, 2016, the real estate properties and corresponding assets and liabilities included in the Exchange Offer qualified as assets held for disposition and the results of operations reported as discontinued operations.

~~A summary of the assets and liabilities held for disposition as of December 31, 2016 and 2015, is as follows:~~

2016 2015
Assets held for disposition
Current assets:
Deferred rent receivable $ 26,631 $ 40,733
Deferred leasing costs 27,788 27,788
Current assets held for disposition 54,419 68,521
Noncurrent assets:
Land 747,389 747,389
Building and improvements 3,145,167 3,141,193
Less: accumulated depreciation (256,747 ) (140,588 )
Real estate property, net 3,635,809 3,747,994
Deferred rent receivable 70,085 13,931
Deferred leasing costs 101,888 129,675
Noncurrent assets held for disposition 3,807,782 3,891,600

Total assets held for disposition $ 3,862,201 $ 3,960,121

Liabilities held for disposition
Current liabilities:
Notes payable, net of unamortized debt issuance costs $ 2,722,865 $ 1,795,902
Current liabilities held for disposition 2,722,865 1,795,902
Noncurrent liabilities:
Notes payable, net of unamortized debt issuance costs — 917,741
Noncurrent liabilities held for disposition — 917,741

Total liabilities held for disposition $ 2,722,865 $ 2,713,643

~~A summary of the results of operations reported as discontinued operations for the years ended December 31, 2016 and 2015:~~

2016 2015

Net revenues $ 697,997 $ 625,864

Operating expenses:
Property expenses 121,434 123,589
Depreciation expense 116,159 102,415
Total operating expenses 237,593 226,004

Operating income 460,404 399,860

Interest expense, net - related party (272,500 ) (241,055 )
Interest expense, net (9,222 ) (13,210 )

Income before income taxes 178,682 145,595

Provision for income taxes — —

Income from discontinued operations, net of tax $ 178,682 $ 145,595

~~A summary of the operating and investing cash flows of discontinued operations for the years ended December 31, 2016 and 2015:~~

2016 2015
Cash flows from operating activities:
Income from discontinued operations, net of tax $ 178,682 $ 145,595
Adjustments to reconcile income from discontinued operations to net cash provided by operating activities:
Depreciation 116,159 102,415
Deferred rental income (42,053 ) (47,728 )
Amortization of deferred leasing and debt costs 37,009 40,782
Changes in operating assets and liabilities:
Accounts receivable (30,187 ) —
Deferred leasing costs — 17,511
Prepaid and other assets (769 ) 53,351
Security deposits (25,035 ) (6,842 )
Accounts payable and accrued liabilities 13,432 (91,259 )
Net Cash Provided by Operating Activities 247,238 213,825

Cash flow from investing activities:
Acquisition of real estate property and building improvements (3,974 ) (895,143 )
Net Cash Used in Investing Activities $ (3,974 ) $ (895,143 )

	December 15, 2017
Assets Acquired:
Website (recorded as Asset Held for Disposition)	$	584

Liabilities Assumed:
Accounts payable and accrued liabilities		(4,250	)
Convertible note payable due to related party		(900,000	)
Less: Assumption of existing liability by related party (see Note 7)		400,000

Net Liabilities Acquired	$	(503,666	)

Note 4—Going Concern

The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. In ~~November 2016, the Company announced its plan to divest their real estate properties and associated business. During the year ended~~ December ~~31, 2016, the Company generated a loss~~

~~from continuing operations of $84,133 and used $82,859 of cash for operating activities. Subsequent to the divestiture of its real estate business in January~~ 2017, the Company ~~does not expect~~acquired 100% of the assets and operations of Red Earth, as discussed above in Note 3, and changed its business operations to ~~generate revenues~~provide a 360-degree spectrum of infrastructure, construction, cultivation management, production management, distribution consulting and operating services to cultivation and production operators in the regulated cannabis industry.

Red Earth is a development stage company 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 ~~next six~~cultivation of medical marijuana. There is no assurance on the receipt and/or timing of final approvals from the appropriate authorities. The Company has not generated any revenues from inception (October 17, 2016) to ~~nine months.~~December 31, 2017 and has an accumulated deficit of $362,521. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

During 2017, the Company raised $2.6 million through the sale of the Company’s common stock at $0.75 per share and will continue to raise capital in 2018 to fund the build out and development of our business operations. The Company ~~is developing mobile and computer based applications focused on providing cannabis for medical use content and educational materials~~expects to ~~licensed medical professionals, in addition to matching patients with medical professionals who are familiar with~~begin generating revenues during the ~~therapeutic effects and indications~~third quarter of ~~cannabinoids and making social connections by and between cannabis users.~~

Our goal is to develop a “freemium” based business model, where we offer our services for free in an effort to build and develop a user-base. We expect to generate revenues in the future through advertising and by marketing premium products and services to our growing user-base.

In the event the Company experiences liquidity and capital resource constraints because of unanticipated operating losses, we may need to raise additional capital in the form of equity and/or debt financing. If such additional capital is not available on terms acceptable to us or at all, then we may need to curtail our operations and/or take additional measures to conserve and manage our liquidity and capital resources, any of which would have a material adverse effect on our financial position, results of operations, and our ability to continue in existence. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Note 5 — ~~Investment in Real Estate Loan~~Intangible Assets

In ~~May~~October 2016, Red Earth entered into an Asset Purchase and Sale Agreement with the owner of a provisional Medical Marijuana Establishment Registration Certificate (the “Provisional Grow License”) issued by the State of Nevada for the cultivation of medical marijuana for $300,000. To initiate the purchase and transfer the Provisional Grow License, the Company ~~invested $150,000~~paid a $25,000 deposit to the seller in ~~a $1,750,000 promissory note secured by~~October 2016. In February 2017, an investor advanced the ~~assignment~~Company $350,000 (see Note 7) to fund the purchase of ~~a mortgage on real estate property located in Miami, Florida. The mortgage was held by Chemtov Mortgage Group (“CMG”), an entity wholly-owned by~~ the ~~Company’s co-CEO, Shawn Chemtov. The Company did not incur any loan origination fees or any other costs associated with the mortgage investment.~~Provisional Grow License.

The ~~promissory~~Provisional Grow License remains in a provisional status until the Company has completed the build out of a cultivation facility and obtained approval from the State of Nevada to begin cultivation in the approved facility. Once approval from the State of Nevada is received and the Company begins the cultivation process, the intangible asset will be amortized over its useful life.

F-10

Note 6 — Convertible Note Payable Due to Related Party

As part of the Reverse Merger transaction described above in Note 3, on December 15, 2017, the Company issued a convertible note ~~paid~~payable in the amount of $900,000 to the members of Red Earth. The managing partner and 50% owner of Red Earth at the time of the transaction was Paris Balaouras, the Company’s Chief Executive Officer. The convertible note payable is due October 15, 2018. The note is convertible into shares of the Company’s common stock at the holder’s discretion at a conversion price of $0.75 per share. The note accrues interest, commencing six months from the issuance date, at ~~12% per annum and provided for cash interest payments on~~ a ~~monthly basis, commencing on July 1, 2016. The outstanding principal amount and any unpaid interest were due on May 19, 2017. The promissory note contained a prepayment charge~~rate equal to ~~six months~~one half of ~~interest~~one percent (0.50%) per annum. Interest shall be payable on the ~~prepaid amount less interest paid~~maturity date or the conversion date, if applicable.

The Company assessed the embedded conversion feature of the note payable and determined that the fair value of the underlying common stock at inception did not exceed the conversion price of the convertible note. Since, at the time the convertible note was issued, the Company’s common stock had limited publicly traded volume, the Company based the fair value of the Company’s common stock on the sales of the Company’s common stock, which were sold at $0.75 per share, described below in Note 8.

Note 7 — Note Payable to ~~the date~~Fund Acquisition of ~~such prepayment.~~Provisional Grow License

In ~~September 2016,~~February 2017, an investor advanced the ~~promissory note was repaid in full, including $3,600 of additional interest as a result~~Company $350,000 to fund the acquisition of the ~~prepayment. During~~Provisional Grow License discussed above in Note 5. The Company incurred $14,521 of debt issuance costs in association with the advance. The note, plus a $50,000 fee for consideration of the advance, was due within sixty days upon approval by the State of Nevada of the transfer of the Provisional Grow License to the Company. In December 2017, upon completion of the Reverse Merger discussed above in Note 3, the debt obligation, including the $50,000 fee, was assumed by Paris Balaouras, the Chief Executive Officer of the Company. The Company recorded $64,521 of interest expense, the $50,000 fee plus the $14,521 of debt issuance costs, during the year ended December 31, ~~2016, the Company recorded $9,039 of revenue generated by interest income from the $150,000 real estate loan.~~2017.

Note 68 — Sales of Unregistered Securities.—~~Real Estate Property Held for Disposition~~

~~5353 Joliet Street~~

In June 2014, through its wholly-owned subsidiary, 5353 Joliet LLC, the Company acquired an owner-occupied 22,144 square feet industrial building situated on 1.4 acres of land in Denver, Colorado for $2,214,000. The acquisition was fundedconnection with ~~proceeds from the issuance of a secured promissory note in the amount of $1,800,000~~ and $414,000 of cash on-hand. The promissory note is held by CMG, an entity wholly-owned by the Company’s co-CEO, Shawn Chemtov. CMG has assigned all ownership and security interest granted to it pursuant to the promissory note to 5353 Mortgage Loan, LLC, a single purpose entity created solely for the purpose of this transaction. CMG invested $100,000 of the $1,800,000 of funds used to finance the purchase of the promissory note. CMG acts as the loan servicing entity for the promissory note, administering the note, processing payments from the Company, and transferring all payments to 5353 Mortgage Loan, LLC. CMG charges no administration fees for servicing the promissory note.

The promissory note bears interest at 10% per annum, provides for cash interest payments on a monthly basis, matured on June 1, 2016. The Company is currently in the process of refinancing or extending the due date of the promissory note. In the interim, the Company continues paying the monthly interest payments. The Company has guaranteed the promissory note and has pledged its ownership interest in 5353 Joliet LLC, and as such its fee-simple ownership interest in the property as security for the promissory note.

~~For the years ended December 31, 2016 and 2015, the Company recorded $180,000 and $180,000, respectively, of interest expense related to the promissory note.~~

Effective December 1, 2014, the Company entered in a seven-year lease agreement for the property. Insurance and real property taxes shall be paid by the Company and, subsequently, charged to the lessee as additional rent based on the actual expenses incurred - see Note 7 below for additional lease details.

~~503 Havana Street~~

In September 2014, through its wholly-owned subsidiary, MJ Havana LLC, the Company acquired an owner-occupied 1,250 square foot building situated on 23,625 square feet of land in Aurora, Colorado for $756,000, exclusive of closing costs. The acquisition was funded with cash on-hand. The property is zoned B-2 and has been approved by the city of Aurora as a retail dispensary for recreational marijuana.

Prior to closing on the property acquisition, the Company had pre-negotiated a 10-year lease agreement with a third-party, a licensed marijuana dispensary company serving both medical and adult (21+) customers in Colorado. Once the closing of the property was completedcontemporaneous with the seller, the pre-negotiated lease was executed in September 2014 with the third-party. Pursuant to the terms of the lease agreement, the Company agreed to contribute $150,000 to improvements to the property - see Note 7 belowReverse Merger, for ~~additional lease details. As of December 31, 2016, the Company had paid $150,000 towards the tenant’s building improvements.~~

~~1126 South Sheridan Boulevard~~

In May 2015, through its wholly-owned subsidiary, MJ Sheridan LLC, the Company acquired real estate property located at 1126 South Sheridan Boulevard in Denver, Colorado, for $771,750, exclusive of closing costs. The Company funded the acquisition through the issuance of a promissory note in the amount of $925,000 to a related party of which $771,750 was used to purchase the property. The balance of the funds will be used by the Company as working capital. The acquired property is 17,729 square feet with a 3,828 square foot one story free-standing building. The property is zoned B-2 and has been approved by the city of Denver as a retail dispensary for recreational marijuana.

The promissory note is held by CMG, an entity wholly-owned by the Company’s co-CEO, Shawn Chemtov. CMG has assigned all ownership and security interest granted to it pursuant to the promissory note to a single purpose entity created solely for the purpose of this transaction. CMG acts as the loan servicing entity for the promissory note, administering the note and processing payments from the Company. CMG charges no administration fees for servicing the promissory note.

The promissory note bears interest at 10% per annum, provides for cash interest payments on a monthly basis, matures on June 1, 2017. The promissory note is collateralized with the Company’s ownership interest in the newly acquired property and its previously acquired property located at 503 Havana Street in Aurora, Colorado. The promissory note does not restrict the Company’s ability to incur future indebtedness. For the years ended December 31, 2016 and 2015, the Company recorded $92,500 and $61,054, respectively, of interest expense related to the promissory note.

~~A summary of real estate property held for disposition at December 31, 2016 and 2015, is as follows:~~

Estimated
Life 2016 2015
Buildings 30 years $ 2,995,167 $ 2,995,167
Improvements 9-10 years 150,000 146,026
Land Not depreciated 747,389 747,389
Total real estate property 3,892,556 3,888,582
Less: Accumulated depreciation (256,747 ) (140,588 )
Real estate property, net $ 3,635,809 $ 3,747,994

~~Note 7~~—~~Operating Leases Held for Disposition~~

The Company generated revenues by leasing its acquired real estate properties through operating leasing arrangements. A summary of revenues generated from our rental properties, which have been reclassified as discontinued operations for the years ended December 31, 2016 and 2015, is as follows:

2016 2015
Revenues:
Rental payments $ 575,968 $ 520,913
Reimbursed operating expenses 79,976 57,223
Deferred rental income 42,053 47,728
Total revenues from rental properties $ 697,997 $ 625,864

~~503 Havana Street~~

In September 2014, the Company entered into a non-cancelable operating lease agreement with a marijuana dispensary (the “Lessee”) to move into the Company’s acquired property located at 503 Havana Street in Aurora, Colorado. The lease agreement is for a term of ten years and an initial monthly rent obligation of $11,250, subject to annual increases of 3% per year. Insurance and real property taxes shall be paid by the Company and, subsequently, charged to the Lessee as additional rent based on the actual expenses incurred. Pursuant to the terms of the lease agreement, the Company agreed to contribute $150,000 to improvements to the property.

Upon the expiration of the term of ten years, the Lessee has the option to renew the lease agreement for one additional ten-year term, on the same terms as provided in the lease agreement. During the third year of the lease agreement, the Lessee may exercise an option to purchase the Property.

~~5353 Joliet Street~~

In September 2014, the Company entered into a lease agreement for its property and warehouse building located at 5353 Joliet Street in Denver, Colorado. The lease agreement is for a term of seven years and a monthly rent obligation of $25,835, subject to annual increases of 2% per year. Insurance and real property taxes shall be paid by the Company and, subsequently, charged to the lessee as additional rent based on the actual expenses incurred.

The lease was contingent upon the lessee, obtaining city and state licenses and permits for its intended operations at the premises, within the dates provided in the lease agreement. The contingencies were met by the lessee, and the lease agreement became effective December 1, 2014.

~~Upon the expiration of the seven-year term, the lessee has the option to renew the lease for two separate five-year terms, subject to rent reviews and adjustments, as set out in the lease agreement.~~

~~1126 South Sheridan Boulevard~~

In May 2015, the Company entered into a lease agreement for its acquired property located at 1126 South Sheridan Boulevard in Denver, Colorado. The lease agreement is for a term of ten years and a monthly rent obligation of $10,945, subject to annual increases of 3% per year. Insurance and real property taxes shall be paid by the Company and, subsequently, charged to the Lessee as additional rent based on the actual expenses incurred.

~~Future minimum rental payments, excluding the reimbursement of specified operating expenses, for non-cancelable operating lease agreements are as follows as of December 31, 2016:~~

2017 590,069
2018 604,530
2019 619,359
2020 634,568
2021 532,046
Thereafter 957,816
Total minimal rental payments $ 3,938,388

~~Note 8~~—~~Related Party Transactions~~

During the years ended December 31, 2016 and 2015, the Company paid $272,500 and $233,346, respectively, for interest due pursuant to $2,725,000 of promissory notes held by CMG, wholly-owned by the Company’s co-CEO and shareholder, Shawn Chemtov - see Note 6 above for additional details regarding promissory notes held by related party.

~~During~~ the year ended December 31, ~~2016,~~2017, the Company ~~received interest income~~sold and issued an aggregate of ~~$9,039 from a $150,000 investment in a $1,750,000 promissory note secured by the assignment~~2,991,163 shares of ~~a mortgage on real estate property located in Miami, Florida. The mortgage was held by Chemtov Mortgage Group (“CMG”), an entity wholly-owned by~~ the Company’s ~~co-CEO, Shawn Chemtov.~~common stock at a price of $0.75 per share for proceeds of $2,243,372 as part of an offering of the Company’s securities. In addition, the Company sold $400,000, or 533,333 additional shares of common stock, as part of the offering, but the shares had not been issued as of December 31, 2017, and were presented in the consolidated balance sheet as common stock to be issued under the equity section. The ~~$150,000~~proceeds of the common stock sales will be used to develop certain business opportunities, including but not limited to monetizing the acquired Red Earth assets describe above in Note 3.

The shares were issued pursuant to an exemption from the registration requirements under Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D promulgated thereunder (“Regulation D”) since, among other things, the transactions did not involve a public offering and the securities were acquired for investment ~~was repaid~~purposes only and not with a view to or for sale in ~~September 2016 - see Note 5 above for additional details regarding~~connection with any distribution thereof. Offers and sales were made solely to persons qualifying as “accredited investors” (as such term is defined by Rule 501 of Regulation D).

The securities offered will not be and have not been registered under the ~~$150,000 investment.~~Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Note 9—Stock Based Compensation

Warrants

Prior to the Reverse Merger, the Company had issued warrants as compensation for consulting services. The warrants expire between June 2019 and October 2019. A summary of the warrants issued, exercised and expired ~~during the years ended December 31, 2015 and 2016,~~ is as follows:

			Weighted				Weighted
			Avg.				Avg.
			Exercise				Exercise
Warrants:	Shares		Price		Shares		Price
Balance at January 1, 2015		166,665	$	5.88
Issued		—		—
Exercised		—		—
Expired		—		—
Balance at December 31, 2015		166,665	$	5.88
Balance at Inception (October 17, 2016)						166,665	$	5.88
Issued		—		—		—		—
Exercised		—		—		—		—
Expired		—		—		—		—
Balance at December 31, 2016		166,665	$	5.88		166,665	$	5.88
Issued						—		—
Exercised						—		—
Expired						—		—
Balance at December 31, 2017						166,665	$	5.88

~~Common Stock~~

~~During~~

F-11

Note 10 — Commitments and Contingencies

Operating Leases

The Company leases an office facility and a production / warehouse facility under two non-cancelable operating leases that expire in May 2019 and June 2027, respectively. Future minimal rental and lease commitments under non-cancelable operating leases with terms in excess of one year as of December 31, 2017, are as follows:

	Amount
Fiscal year ending December 31:
2018	$	162,270
2019		249,090
2020		230,640
2021		230,640
2022		230,755
Thereafter		1,043,315
Total minimum lease payments	$	2,146,710

Rent expense, including deferred rent expense of $104,565, incurred pursuant to operating leases for the year ended December 31, ~~2015, the Company issued 149,417 shares~~2017, was $112,815.

Litigation

There are no legal proceedings which are pending or have been threatened against us or any of ~~common stock, respectively, for consulting services and recorded $139,134~~our officers, directors or control persons of ~~stock-based compensation expense for these consulting services,~~ which has been classified as General and administrative expenses. The stock-based compensation expense was calculated based on the grant date fair value of the common stock shares issued in exchange for the consulting services.management is aware.

Note 1011 —Income Taxes

The Company had no operation in 2016 and had no net loss carryforward to the year 2017.

The Company did not incur any federal or state income tax expense or benefit for the ~~years~~year ended December 31, ~~2016 and 2015.~~2017.

The provision for income taxes differs from the amounts which would result from applying the federal statutory rate of 34% to the Company’s loss before income taxes as follows:

	December 31, 2017
Computed “expected” income tax benefit	$	(113,828	)
State income tax benefit, net of federal benefit		15,209
Change in valuation allowance		(191,667	)
Permanent differences, net		(106,919	)
Change in federal income tax rate		120,784
IRC section 382 limitations on future NOL utilization		249,208
Write-off of property & equipment deferred tax asset		27,213

Provision for income taxes	$	—

F-12

For the years ended December 31,
2016 2015
Computed “expected” income tax benefit $ 32,147 $ (38,006)
State income tax benefit, net of federal benefit 2,867 (5,773)
Change in valuation allowance (35,047) 70,007
Nondeductible expenses 33 122
True-up of deferred tax asset for stock compensation — (26,350)

Provision for income taxes $ — $ —

Temporary differences that give rise to the components of deferred tax assets and liabilities are as follows:

	As of December 31,
	2016		2015		2017
Deferred tax assets:
Deferred expenses	$	147,648	$	174,384	$	176,030
Net operating loss carry-forwards		225,472		253,278
Accrued expenses		5,531		—
Property and equipment		27,740		14,492		(65	)
Advance payment		9,319		8,603

Capitalized start-up expenses						48,078
Deferred tax assets		415,710		450,757		224,043
Less: Valuation allowance		(415,710)		(450,757)		(224,043	)

Net deferred tax assets	$	—	$	—	$	—

As of December 31, ~~2016,~~2017, the Company ~~had~~did not have any net operating losses ~~of approximately $608,000~~ for federal ~~and~~or state income tax ~~purposes that can be carried forward for up to twenty years and deducted against future federal taxable income. The net operating loss carryforwards expire in various years through 2035.~~purposes. All of the federal and state net operating losses incurred ~~prior to 2014~~through December 15, 2017, are subject to 100 percent limitation under the provisions of Internal Revenue Code section 382 due to anvarious ownership ~~change~~changes and the continuity of business requirement.

The U.S. Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017 and introduces significant changes to U.S. income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35% to 21%. The Company’s deferred tax assets were calculated to reflect the reduction in the U.S. corporate income tax rate from 35% to 21%. As of December 31, ~~2016 and 2015,~~2017, management determined a valuation allowance against the net deferred tax assets of ~~$415,710 and $450,757, respectively.~~$224,043. In assessing the ability to realize a portion of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities and projected future taxable income in making the assessment.

~~The~~For 2017 and prior years, the Company ~~files~~filed federal and state income tax returns. These returns remain subject to examination by taxing authorities for all years after December 31, ~~2012.~~2013.

Note 1112 — Basic and Diluted Earnings (Loss) per Common Share

Basic earnings (loss) per share is computed by dividing the net income or net loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated using the treasury stock method and reflects the potential dilution that could occur if warrants were exercised and were not anti-dilutive.

For the ~~years~~year ended December 31, ~~2016 and 2015,~~2017, basic and diluted ~~earnings (loss)~~loss per common share were the same since there were no potentially dilutive shares outstanding during the respective periods. The outstanding warrants as of December 31, ~~2016 and 2015,~~2017, to purchase 166,665 shares of common stock were not included in the calculations of diluted ~~income~~loss per share because the impact would have been ~~anti-dilutive for each~~anti-dilutive.

Note 13 — Subsequent Events

In January 2018, the $900,000 convertible note payable due to a related party was repaid in full.

From January 2018 through June 2018, the Company sold and issued an aggregate of 628,667 shares of the ~~periods presented.~~Company’s common stock at $0.75 per share for gross proceeds of $471,500. In addition, the Company received $100,000 pursuant to a stock subscription agreement to purchase 133,333 shares of common stock at $0.75 per share, but the shares had not been issued as of the filing of this Annual Report.

~~Note 12 — Subsequent Events~~

~~On January 10, 2017,~~In March 2018 and June 2018, the Company ~~accepted for exchange 1,800,000~~issued an aggregate of 6,448 shares of the Company’s common stock in exchange for ~~1,800,000 shares~~professional services.

In April 2018, the State of ~~MJRE’s common units, representing membership interests~~Nevada finalized and approved the transfer of the Provisional Grow License, discussed above in ~~MJRE. Effective February 1, 2017,~~Note 5, to the Company.

In April 2018, the Company

~~transferred its ownership interests~~ entered into a management agreement with a Nevada company (the “Licensed Operator”) that holds a cultivation license, such that it can lawfully engage in the ~~real estate properties and its subsidiaries, through which~~cultivation of marijuana for sale under the laws of the State of Nevada. The term of the agreement is for 8 years. The Licensed Operator has engaged the Company ~~holds ownership~~to develop, manage, and operate a licensed cultivation facility on 3 acres of property owned by the Licensed Operator. The Company, at its sole cost and expense, has agreed to complete the construction of an outdoor grow facility meeting the local and state building codes and regulations to cultivate marijuana.

Upon completion of the ~~real estate properties,~~build-out of the outdoor grow facility and obtaining the appropriate approvals from the local and state authorities, the Company has agreed to ~~MJRE. MJRE will also assume~~generate sales of at least $5 million per year from product cultivated from the ~~senior notes and~~outdoor grow facility. The Licensed Operator may terminate the agreement if annual sales fall below the $5 million minimum requirement as defined in the agreement. Prior to the termination of the agreement by the Licensed Operator, the Company may cure any ~~and all obligations associated with~~applicable deficiency by paying 10% of the ~~real estate properties and business, effective February 1, 2017.~~deficiency to the Licensed Operator.

~~On February 1, 2017,~~Pursuant to the ~~1,800,000 shares~~management agreement, the Licensed Operator will retain 15% of the ~~Company’s common stock acquired in~~net revenues generated from product cultivated from the ~~Exchange Offer will be recorded as an acquisition~~outdoor grow facility and pay 85% of ~~treasury stock at a cost equal~~the net revenues to the ~~market value~~Company. Upon execution of the ~~shares~~agreement, the Company paid $300,000 to the Licensed Operator as consideration for the opportunity to construct and manage the outdoor grow facility on the Licensed Operator’s property. In exchange for the initial consideration, the Licensed Operator has agreed not to retain 15% of the ~~Company’s common stock accepted in~~first $2 million of net revenues generated from the ~~exchange offer. Any difference between~~outdoor grow facility. In addition, once the ~~net book value~~outdoor grow facility begins production, the Company has agreed to pay the Licensed Operator $7,000 per month for compliance, security, and other administration costs incurred by the Licensed Operator during the term of the assets and liabilities exchanged and the market value of the shares of the Company’s common stock acquired at that date will be recorded as additional paid-in capital due to the common controlling interests between the two entities involved with the Exchange Offer. The historical results of the disposed assets and liabilities will be shown in the Company’s financial statements as discontinued operations for periods presented before the exchange. In subsequent periods, the Company’s financial statements will no longer reflect the assets, liabilities, results of operations or cash flows attributable to the disposed assets and liabilities.agreement.

F-13

~~MJ Holdings, Inc.~~

~~Schedule III - Real Estate and Accumulated Depreciation~~

~~December 31, 2016~~

~~As of December 31, 2016, the following real estate properties were held for disposition - see Note 3— Discontinued Operations in the accompanying notes to the financial statements:~~

Initial Cost Total Cost Life on
Which
Depreciation
in Latest
Income
Statement is
Computed
Description / Location
of Property
Encumbrances Land Buildings &
Improvements
Improvement
Costs
Capitalized
Subsequent to
Acquisition
Land Buildings &
Improvements Total Accumulated
Depreciation
Net
Real
Estate
Year of
Construction Date
Acquired
5353 Joliet Street
Industrial Building
Denver, Colorado
$ 1,800,000 $ 324,912 $ 1,889,088 $ —   $ 324,912 $ 1,889,088 $ 2,214,000 $ 159,348 $ 2,054,652 1980 6/19/2014 30 yrs.⁽¹⁾
503 Havana Street
Retail Store
Aurora, Colorado
—   226,339 530,467 150,000 226,339 680,467 906,806 65,575 841,231 1967 9/24/2014
30 yrs.⁽¹⁾
9 yrs.⁽²⁾
1126 S Sheridan Blvd
Retail Store
Denver, Colorado

925,000 196,138 575,612 —   196,138 575,612 771,750 31,824 739,926 1973 5/4/2015 30 yrs.⁽¹⁾
$ 2,725,000 $ 747,389 $ 2,995,167 $ 150,000 $ 747,389 $ 3,145,167 $ 3,892,556 $ 256,747 $ 3,635,809

⁽¹⁾ Estimated useful life for buildings
⁽²⁾ Estimated useful life for building improvements

~~The following table reconciles the changes in the balance of real estate held for disposition during the years ended December 31, 2016 and 2015:~~

2016 2015
Balance at beginning of period $ 3,888,582 $ 2,993,439
Additions:
Acquisitions during period — 771,750
Improvements 3,974 123,393
Deductions:
Dispositions during period — —
Balance at end of period $ 3,892,556 $ 3,888,582

~~The following table reconciles the changes in the balance of accumulated depreciation during the years ended December 31, 2016 and 2015:~~

2016 2015
Balance at beginning of period $ 140,588 $ 38,173
Depreciation expense during period 116,159 102,415
Dispositions during period — —
Balance at end of period $ 256,747 $ 140,588

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the ~~Registrant~~registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly ~~authorized in the City of Miami, Florida this 30th day of March 2016.~~authorized.

	MJ HOLDINGS, INC.

	By:	/s/ ~~Shawn Chemtov~~Paris Balaouras
		~~Shawn Chemtov~~Paris Balaouras
		~~co-Chief~~Chief Executive Officer

	~~By:~~	~~/s/ Adam Laufer~~
		~~Adam Laufer~~
		~~co-Chief Executive Officer~~Date: July 27, 2018

Pursuant to the requirements of the Securities Exchange Act of 1934, ~~this report has been signed below by~~ the following persons on behalf of the ~~Registrant~~registrant and in the capacities and on the dates ~~indicated:~~indicated have signed this report below.

Name	Title		Date
~~/s/Shawn Chemtov~~		~~March 30, 2017~~
~~Shawn Chemtov~~/s/ Paris Balaouras	Chief Executive Officer and Director		July 27, 2018
Paris Balaouras	(~~Principal Executive Officer, Principal Financial Officer)~~principal executive officer)

~~/s/Adam Laufer~~		~~March 30, 2017~~
~~Adam Laufer~~/s/ John R. Wheeler	Chief ~~Executive~~Financial Officer		July 27, 2018
John R. Wheeler	(principal financial and ~~Director~~ ~~(Principal Executive Officer)~~accounting officer)

NEVADA		20-8235905
(State or other jurisdiction of incorporation or organization)		~~20-8235905~~ (I.R.S. Employer Identification No.)

Large accelerated filero ☐		Accelerated filer ☐		Non-accelerated filer ☐		~~Accelerated filer~~o		~~Non-accelerated filer~~o		Smaller reporting companyþ
				(Do not check if a smaller reporting company)		Emerging growth company ☐

PART I

	Item 1. Business	~~Business~~	31
	Item 1A.	Risk Factors	54
	Item 1B.	Unresolved Staff Comments	514
	Item 2. Properties	~~Properties~~	514
	Item 3.	Legal Proceedings	514
	Item 4.	Mine Safety Disclosures	5

~~PART II~~			14

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	615
	Item 6.	Selected Financial Data	615
	Item 7.	Management’s Discussion And Analysis of Financial Condition And Results of Operations	616
	Item 7A.	Quantitative and Qualitative Disclosure About Market Risk	6
	Item 8.	Financial Statements and Supplementary Data	1219
	Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	1219
	Item 9A.	Controls and Procedures	1219
	Item 9B.	Other Information	13

~~PART III~~			20

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	1421
	Item 11.	Executive Compensation	1422
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	1524
	Item 13.	Certain Relationships and Related Transactions, and Director Independence	1625
	Item 14.	Principal Accountant Fees and Services	16

~~PART IV~~			25

PART IV

Item 15.	Exhibits and Financial Statement Schedules	1726

SIGNATURES	~~SIGNATURES~~	3527

	Fiscal 2016		Fiscal 2015		Closing Bid Price per Share 2017				Closing Bid Price per Share 2016
	High	Low	High	Low	High		Low		High		Low
First Quarter	0.62	0.62	3.00	0.88		1.08		0.58		0.62		0.62
Second Quarter	1.00	0.65	2.00	0.55		1.00		0.75		1.00		0.65
Third Quarter	1.00	0.635	2.00	0.50		0.95		0.55		1.00		0.635
Fourth Quarter	3.50	0.53	2.00	0.50		4.10		0.63		3.50		0.53

Name of Director	Age		Position with Company	Director Since
~~Shawn Chemtov~~Paris Balaouras		4346		~~Co-CEO, Co-Chairman~~CEO and Chairman of the Board of Directors	~~February 10, 2014~~December 15, 2017
~~Adam Laufer~~John R. Wheeler		4366		~~Co-CEO, Co-Chairman of the Board of Directors~~CFO	~~February 10, 2014~~-
Andrew Boutsikakis	41		President	-

	●	The need for continued development of our financial and information management systems;

	●	The need to manage strategic relationships and agreements with manufacturers, customers, and partners; and

	●	Diversion of medical marijuana from states where it is legal to states where it is not;

	●	Using state authorized marijuana activity as a pretext of other illegal drug activity;

	●	Preventing violence in the cultivation and distribution of marijuana;

	●	lack of a majority of independent members and a lack of a majority of outside directors on our Board of Directors (“Board”), resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures;

	●	inadequate segregation of duties consistent with control objectives; and

	2016			2015

Rental income	$	697,997		$	625,864

Operating expenses:
Property expenses		121,434			123,589
Depreciation expense		116,159			102,415
Total operating expenses		237,593			226,004

Operating income		460,404			399,860

Interest expense, net - related party		(272,500	)		(241,055	)
Interest expense, net		(9,222	)		(13,210	)

Income before income taxes		178,682			145,595

Provision for income taxes		—			—

Income from discontinued operations, net of tax	$	178,682		$	145,595

	2016			2015
Cash Flows:


Operating Activities:
Continuing operations	$	(82,859	)	$	(103,472	)
Discontinued operations		247,238			213,825
Net cash provided by (used in) operating activities		164,379			110,353

Investing Activities:
Continuing operations		—			(2,000	)
Discontinued operations		(3,974	)		(895,143	)
Net cash used in investing activities		(3,974	)		(897,143	)

Net cash provided by financing activities		—			914,366

Net increase in cash		160,405			127,576
Cash at beginning of period		303,368			175,792

Cash at end of period	$	463,773		$	303,368

Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)	Option Awards ($)		Non-Equity Incentive Plan Compensation ($)	Change in Pensions Value and Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)

Paris Balaouras	2017		-					��					-
Chief Executive Officer	2016		-										-

John R. Wheeler	2017		-										-
Chief Financial Officer	2016		-										-

Andrew Boutsikakis	2017	$	15,000									$	15,000
President	2016		-										-

Shawn Chemtov	2017	$	75,000	$	75,000							$	150,000
Former co-Chief Executive Officer	2016		-										-

Adam Laufer	2017	$	74,120	$	75,000							$	149,120
Former co-Chief Executive Officer	2016		-										-

	●	Preventing drugged driving;

Beneficial Owner	# of Shares	% of Total
*Directors and Executive Officers:*

Shawn Chemtov	5,771,583	46.57%
co-Chief Executive Officer

Adam Laufer	5,671,582	45.76%
co-Chief Executive Officer

All directors and executive officers as a group (2 persons)	11,443,165	92.32%

*Over 5% Shareholders:*
None

•	●	each person whom we know beneficially owns more than 5% of our common stock;
•

	●	each of our named executive officers and directors; and
•

Name of Beneficial Owner/Management and Address	Number of Shares of Common Stock Beneficially Owned		Percent of Total Shares of Common Stock Beneficially Owned
Directors and Executive Officers:

Paris Balaouras (1) (3)		20,319,500		32.1	%
Chief Executive Officer and Director

John R. Wheeler (2) (3)		700,000		1.1	%
Chief Financial Officer

Andrew Boutsikakis (3)		150,000		0.2	%
President

All directors and executive officers as a group (3 persons)		21,169,500		33.4	%
Five Percent Beneficial Owner:
Red Dot Development LLC (4)		25,056,484		39.6	%

(1)	Mr. Balaouras beneficially owns 20,319,500 shares of our common stock, held by Roll On LLC, a limited liability company in which Mr. Balaouras is a member and manager.

(2)	Mr. Wheeler acquired his shares in our recent private placement at $0.75 per share, for an aggregate cost of $500,000.

•	●	the amounts involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at ~~year end~~year-end for the last two completed fiscal years; and
•

	Paritz & Company, P.A.				Paritz & Company, P.A.
	2016		2015		2017		2016
Audit fees	$	15,475	$	14,610	$	28,200	$	15,475
Audit related fees		500		−		-		500
Tax fees		−		−		-		-
Other fees		−		−		-		-
Total Fees	$	15,975	$	14,610	$	28,200	$	15,975

	●	Report of Paritz & Co., Independent Registered Public Accounting Firm

	●	Consolidated Balance Sheets as of December 31, 2017 and 2016

	●	Consolidated Statements of Operations for the year ended December 31, 2017 and from inception (October 17, 2016) to December 31, 2016

	●	Consolidated Statements of Cash Flows for the year ended December 31, 2017 and from inception (October 17, 2016) to December 31, 2016

Exhibit Number		Description of Exhibit
3.1		Amended and Restated Certificate of Incorporation of the Registrant (1)
3.2		Bylaws of the Registrant (2)
4.4		Specimen Common Stock Certificate (2)
10.1 *		Lease for Principal Corporate Office
10.2 *		Lease for Cultivation Facility
21.1 *		Subsidiaries of the Registrant
14.1		Code of Ethics (2)
~~31.1~~31.1*		Rule 13a14(a)/15d-14(a) Certification of ~~co-Chief~~Chief Executive Officer
31.2*		Rule 13a14(a)/15d-14(a) Certification of Chief Financial Officer
~~31.3~~32.1*	~~Rule 13a14(a)/15d-14(a) Certification of co-Chief Executive Officer~~
~~32.1~~	Section 1350 Certification of ~~co-Chief~~Chief Executive Officer
32.2*		Section 1350 Certification of Chief Financial Officer
~~32.3~~101.INS *	~~Section 1350 Certification of co-Chief Executive Officer~~
101.INS*	XBRL Instance Document
101.SCH101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF101.DEF		XBRL Taxonomy Definition Linkbase Document

*	Filed herewith.

(1)	Incorporated by reference to the Registrant’s Periodic Report on Form 8-K as filed with the SEC on February 28, 2014.

(2)	Incorporated by reference to Registration Statement on Form S-1, filed with the Securities and Exchange Commission, Registration Statement File No. 333-167824, on June 28, 2010.

		~~Paritz & Company, P.A.~~	~~15 Warren Street, Suite 25~~ ~~Hackensack, New Jersey 07601~~ ~~(201)342-7753~~ ~~Fax: (201) 342-7598~~

	2016			2015
Revenues:
Interest income from real estate loan	$	9,039		$	—

Operating Expenses:
General and administrative expenses		92,600			257,318
Depreciation expense		667			111
Total operating expenses		93,267			257,429

Operating loss		(84,228	)		(257,429	)

Other income		95			53

Loss before income taxes		(84,133	)		(257,376	)

Provision for income taxes		—			—

Loss from continuing operations, net of tax		(84,133	)		(257,376	)

Income from discontinued operations, net of tax		178,682			145,595

Net income (loss)	$	94,549		$	(111,781	)

Basic and diluted net income (loss) per common share:
Continuing operations	$	(0.00	)	$	(0.02	)
Discontinued operations		0.01			0.01
Net income (loss) per common share	$	0.01		$	(0.01	)

Weighted average shares outstanding, basic and diluted		14,027,939			13,958,592

	Preferred Stock			Common Stock			Additional		Accumulated Deficit			Total
	Shares	Amount		Shares	Amount		Paid-in Capital		Accumulated Deficit			Stockholders’ Equity
Balance at January 1, 2015	—	$	—	13,878,522	$	13,879	$	2,640,120	$	(1,337,710	)	$	1,316,289

Common stock issued for services	—		—	149,417		149		138,985		—			139,134
Net Loss	—		—	—		—		—		(111,781	)		(111,781	)
Balance at December 31, 2015	—	$	—	14,027,939	$	14,028	$	2,779,105	$	(1,449,491	)	$	1,343,642

Net income	—		—	—		—		—		94,549			94,549
Balance at December 31, 2016	—	$	—	14,027,939	$	14,028	$	2,779,105	$	(1,354,942	)	$	1,438,191

	2016			2015
Assets held for disposition
Current assets:
Deferred rent receivable	$	26,631		$	40,733
Deferred leasing costs		27,788			27,788
Current assets held for disposition		54,419			68,521
Noncurrent assets:
Land		747,389			747,389
Building and improvements		3,145,167			3,141,193
Less: accumulated depreciation		(256,747	)		(140,588	)
Real estate property, net		3,635,809			3,747,994
Deferred rent receivable		70,085			13,931
Deferred leasing costs		101,888			129,675
Noncurrent assets held for disposition		3,807,782			3,891,600

Total assets held for disposition	$	3,862,201		$	3,960,121

Liabilities held for disposition
Current liabilities:
Notes payable, net of unamortized debt issuance costs	$	2,722,865		$	1,795,902
Current liabilities held for disposition		2,722,865			1,795,902
Noncurrent liabilities:
Notes payable, net of unamortized debt issuance costs		—			917,741
Noncurrent liabilities held for disposition		—			917,741

Total liabilities held for disposition	$	2,722,865		$	2,713,643

	2016			2015
Cash flows from operating activities:
Income from discontinued operations, net of tax	$	178,682		$	145,595
Adjustments to reconcile income from discontinued operations to net cash provided by operating activities:
Depreciation		116,159			102,415
Deferred rental income		(42,053	)		(47,728	)
Amortization of deferred leasing and debt costs		37,009			40,782
Changes in operating assets and liabilities:
Accounts receivable		(30,187	)		—
Deferred leasing costs		—			17,511
Prepaid and other assets		(769	)		53,351
Security deposits		(25,035	)		(6,842	)
Accounts payable and accrued liabilities		13,432			(91,259	)
Net Cash Provided by Operating Activities		247,238			213,825

Cash flow from investing activities:
Acquisition of real estate property and building improvements		(3,974	)		(895,143	)
Net Cash Used in Investing Activities	$	(3,974	)	$	(895,143	)

	Estimated
	Life		2016			2015
Buildings		30 years	$	2,995,167		$	2,995,167
Improvements		9-10 years		150,000			146,026
Land		Not depreciated		747,389			747,389
Total real estate property				3,892,556			3,888,582
Less: Accumulated depreciation				(256,747	)		(140,588	)
Real estate property, net			$	3,635,809		$	3,747,994

2017		590,069
2018		604,530
2019		619,359
2020		634,568
2021		532,046
Thereafter		957,816
Total minimal rental payments	$	3,938,388

	For the years ended December 31,
	2016		2015
Computed “expected” income tax benefit	$	32,147	$	(38,006)
State income tax benefit, net of federal benefit		2,867		(5,773)
Change in valuation allowance		(35,047)		70,007
Nondeductible expenses		33		122
True-up of deferred tax asset for stock compensation		—		(26,350)

Provision for income taxes	$	—	$	—